A highly concentrated tech-heavy portfolio with aggressive growth potential and high risk

Report created on Dec 19, 2024

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily concentrated, with over half of its assets in NVIDIA, followed by significant stakes in Microsoft and Apple. Such concentration in a few stocks, particularly within the tech sector, increases potential returns but also elevates risk. Diversification is crucial to manage risk, so consider spreading investments across more sectors or asset types. A more balanced portfolio might include bonds or real estate, which can provide stability during market downturns and reduce overall volatility.

Growth Info

Historically, the portfolio has shown a remarkable CAGR of 47.81%, indicating strong growth. However, it's important to note the high maximum drawdown of -63.78%, which highlights significant volatility and risk. This performance suggests that while the portfolio can deliver impressive returns, it can also suffer substantial losses. It's critical to understand that past performance doesn't guarantee future results, and maintaining a diversified approach can help mitigate extreme drawdowns.

Projection Info

Forward projections using Monte Carlo simulations suggest a broad range of potential outcomes, with a median return of 3,146.14%. Monte Carlo simulations use historical data to predict future performance, but remember they are not foolproof. The high variability in outcomes underscores the portfolio's riskiness. To improve predictability, consider reallocating assets to achieve a more balanced risk-return profile. Diversifying into different asset classes can help stabilize future returns.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly invested in stocks, with nearly 100% allocation, which limits diversification. While stocks offer high growth potential, they also come with high volatility. Introducing bonds or alternative investments could reduce risk and enhance stability. A more diversified asset class mix can help cushion against market fluctuations and provide more consistent returns over time. Consider adding a small percentage of bonds or commodities to achieve a more balanced allocation.

Sectors Info

  • Technology
    83%
  • Consumer Discretionary
    8%
  • Telecommunications
    7%

The portfolio is heavily weighted towards the technology sector, which comprises over 83% of assets. While tech stocks have driven significant growth, they are also susceptible to sector-specific risks such as regulatory changes or market saturation. Diversifying into other sectors like healthcare or consumer staples can mitigate these risks. A sector-balanced portfolio can provide more resilience against market volatility and ensure consistent performance across different economic cycles.

Regions Info

  • North America
    95%
  • Asia Emerging
    5%

Geographically, the portfolio is predominantly focused on North America, with limited exposure to other regions. This concentration can increase vulnerability to local economic downturns. Expanding into emerging markets or European equities could enhance diversification and tap into growth opportunities abroad. A more geographically diverse portfolio can benefit from global economic trends and reduce reliance on any single region's performance.

Risk vs. return

This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.

Click on the colored dots to explore allocations.

The portfolio's risk-return profile could be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. This involves reallocating assets to achieve a balance between risk and return based on current holdings. While this optimization focuses on the existing assets, it doesn't necessarily improve diversification. Regularly reviewing and adjusting the portfolio can help maintain optimal performance in line with changing market conditions.

Dividends Info

  • Apple Inc 0.40%
  • Alphabet Inc Class A 0.30%
  • KraneShares CSI China Internet ETF 0.10%
  • Microsoft Corporation 0.70%
  • Vanguard Information Technology Index Fund ETF Shares 0.50%
  • Weighted yield (per year) 0.18%

The portfolio's dividend yield is relatively low at 0.18%, reflecting its focus on growth stocks. While dividends can provide steady income, growth stocks often reinvest earnings for expansion. If income generation is a goal, consider adding higher-yielding stocks or dividend-focused funds. Balancing growth and income can help achieve long-term financial objectives while providing a buffer during market downturns.

Ongoing product costs Info

  • KraneShares CSI China Internet ETF 0.69%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Weighted costs total (per year) 0.05%

The portfolio's costs are relatively low, with a total expense ratio of 0.05%. Low costs are beneficial as they enhance net returns over time. However, the KraneShares CSI China Internet ETF has a higher fee of 0.69%. Consider whether this cost is justified by its potential returns. Evaluating and minimizing costs is crucial for maximizing long-term performance, so periodically review and adjust investments to ensure cost-effectiveness.

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