Growth-Oriented Portfolio with High Tech Exposure and Moderate Diversification for Risk-Tolerant Investors

Report created on Dec 2, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists of a diverse range of ETFs, heavily skewed towards equities, with a minor cash component. The largest holdings include the Vanguard S&P 500 ETF and Invesco QQQ Trust, indicating a strong focus on large-cap U.S. stocks. This composition suggests a growth-oriented strategy, with a significant tilt towards technology and large-cap equities. While the portfolio is moderately diversified, it leans heavily on a few sectors and geographies, which could expose it to sector-specific or regional risks. Balancing the portfolio with more varied asset classes could enhance its resilience against market volatility.

Growth Info

Historically, the portfolio has delivered a commendable CAGR of 18.56%, reflecting its strong performance over time. However, it also experienced a maximum drawdown of -29.79%, highlighting its vulnerability during market downturns. This performance suggests that while the portfolio has the potential for high returns, it also carries significant risk. Investors should be aware of the possibility of substantial fluctuations in value. To mitigate this, it may be beneficial to incorporate more stable, income-generating assets that can provide a buffer during volatile periods.

Projection Info

Using a Monte Carlo simulation, which involves running thousands of scenarios to predict future performance, the portfolio shows promising potential. With a hypothetical initial investment, the 50th percentile projection suggests an 808.45% return. The simulation indicates a high probability of positive returns, with 997 out of 1,000 simulations yielding gains. This suggests that the portfolio is well-positioned for future growth, albeit with inherent risks. To capitalize on this potential, maintaining a balance between growth and security by diversifying further could be beneficial.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly composed of equities, with a minor allocation to cash. This indicates a high-risk, high-reward strategy typical of growth-oriented portfolios. While equities can drive significant capital appreciation, the lack of bonds or other fixed-income securities may expose the portfolio to heightened volatility. To improve risk management, incorporating a mix of asset classes, such as bonds or real estate, could provide stability and income, helping to cushion against market fluctuations and providing a more balanced risk-return profile.

Sectors Info

  • Technology
    38%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    9%
  • Industrials
    7%
  • Consumer Staples
    4%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio's sector allocation is heavily weighted towards technology, making up over 38% of the total holdings. Financial services and consumer cyclicals follow, contributing to its growth profile. While the focus on tech has historically driven high returns, it also increases exposure to sector-specific risks. A downturn in the tech industry could significantly impact the portfolio's performance. Diversifying across more sectors, such as healthcare or consumer staples, could reduce sector concentration risk and enhance the portfolio's resilience against sector-specific downturns.

Regions Info

  • North America
    89%
  • Europe Developed
    5%
  • Japan
    2%
  • Asia Developed
    1%
  • Asia Emerging
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly focused on North America, with nearly 90% of assets allocated there. This heavy regional focus could expose the portfolio to risks specific to the U.S. market. While this aligns with the strong performance of U.S. equities, it may limit exposure to growth opportunities in other regions. To mitigate regional risks and capture global growth, diversifying more into international markets, including emerging economies, could enhance the portfolio's geographical balance and potential for returns.

Redundant positions Info

  • Fidelity® Nasdaq Composite Index® ETF
    Vanguard S&P 500 ETF
    SPDR® Portfolio S&P 500 ETF
    Fidelity® Blue Chip Growth ETF
    SPDR® Portfolio S&P 500 Growth ETF
    Invesco QQQ Trust
    High correlation
  • Vanguard Total International Stock Index Fund ETF Shares
    iShares Core MSCI International Developed Market
    High correlation

The portfolio contains several highly correlated assets, particularly among U.S. large-cap and tech-focused ETFs. These correlations can limit diversification benefits, as these assets tend to move in the same direction during market shifts. While this can amplify gains during bull markets, it also magnifies losses in downturns. To improve diversification, reducing overlap by selecting ETFs with different sector or regional focuses could help. This strategy can lower the portfolio's overall risk and enhance its ability to withstand market volatility by spreading exposure across uncorrelated assets.

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.

Before considering portfolio optimization, addressing the high correlation among assets is crucial. By reducing overlap, one can enhance diversification benefits. Once this is achieved, the portfolio can be adjusted along the efficient frontier to align with desired risk levels. Moving towards a riskier portfolio could involve increasing exposure to high-growth sectors, while a more conservative approach might include adding fixed-income assets. Optimizing the portfolio requires balancing growth potential with risk management, ensuring alignment with financial goals and risk tolerance.

Dividends Info

  • Fidelity® MSCI Health Care Index ETF 1.40%
  • Fidelity® MSCI Financials Index ETF 1.40%
  • ETFMG Prime Cyber Security ETF 0.20%
  • iShares Core MSCI International Developed Market 3.00%
  • Fidelity® Nasdaq Composite Index® ETF 0.60%
  • Invesco QQQ Trust 0.60%
  • Schwab U.S. Dividend Equity ETF 3.30%
  • iShares Semiconductor ETF 0.70%
  • SPDR® Portfolio S&P 500 ETF 1.20%
  • SPDR® Portfolio S&P 500 Growth ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Invesco S&P MidCap Quality ETF 4.70%
  • Weighted yield (per year) 1.28%

The portfolio's dividend yield is relatively modest at 1.28%, reflecting its growth-oriented nature. While some holdings, like the Schwab U.S. Dividend Equity ETF, offer higher yields, the focus remains on capital appreciation rather than income generation. For investors seeking regular income, this may not be ideal. To boost dividend income, incorporating more high-yielding ETFs or dividend-focused stocks could be beneficial. This approach can provide a steady income stream, balancing the portfolio's growth focus with some level of income stability, especially during volatile market periods.

Ongoing product costs Info

  • Fidelity® Blue Chip Growth ETF 0.59%
  • Fidelity® MSCI Health Care Index ETF 0.08%
  • Fidelity® MSCI Financials Index ETF 0.08%
  • ETFMG Prime Cyber Security ETF 0.60%
  • iShares Core MSCI International Developed Market 0.04%
  • Fidelity® Nasdaq Composite Index® ETF 0.21%
  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • iShares Semiconductor ETF 0.35%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • SPDR® Portfolio S&P 500 Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Invesco S&P MidCap Quality ETF 0.25%
  • Weighted costs total (per year) 0.15%

The portfolio's total expense ratio (TER) is 0.15%, indicating a cost-effective structure. While most ETFs have low expense ratios, a few, like the ETFMG Prime Cyber Security ETF, have higher costs. Keeping investment costs low is crucial for maximizing returns over time. To enhance cost efficiency, reviewing and potentially replacing higher-cost funds with similar, lower-cost alternatives could be advantageous. This strategy ensures that a larger portion of returns is retained, contributing to the portfolio's long-term growth and overall performance.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey