Moderate risk portfolio with focus on growth and dividend yield with strong historical performance and high potential returns

Report created on Jul 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 mix of ETFs and a single common stock, with a focus on growth and dividend yield. It's heavily weighted towards the Schwab U.S. Dividend Equity ETF, which makes up 30% of the portfolio. This indicates a preference for dividend-paying stocks. The inclusion of the MicroSectors FANG+ Index 3X Leveraged ETN and GameStop Corp adds a higher risk element. The portfolio is moderately diversified, with a variety of sectors and geographic regions represented, though it leans heavily towards North American assets.

Growth Info

Historically, the portfolio has performed exceptionally well, boasting a compound annual growth rate (CAGR) of 19.91%. However, it experienced a significant maximum drawdown of -46.03%, indicating substantial volatility. This suggests that while the portfolio can deliver impressive returns, it is also susceptible to large fluctuations. The fact that 90% of returns were generated in just 10 days highlights the importance of timing and market conditions. This performance underscores the potential for high returns, but also the need for a strong stomach for risk.

Projection Info

A Monte Carlo simulation of the portfolio, using a hypothetical initial investment, suggests a wide range of potential outcomes. With 1,000 simulations, the median return is 590.43%, and the annualized return is 42.15%. However, the 5th percentile shows a potential loss of -90.75%, indicating significant downside risk. The simulation highlights the portfolio's high growth potential but also its volatility. It's important to understand that while the median outcome is positive, the range of potential outcomes is broad, reflecting the portfolio's risk profile.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible amount in cash and other asset classes. This heavy concentration in equities aligns with a growth-oriented investment strategy. While this can lead to substantial returns, it also exposes the portfolio to market volatility. Diversifying into other asset classes, such as bonds or real estate, could help mitigate some of this risk. However, given the current asset allocation, the portfolio is well-positioned to capitalize on stock market growth.

Sectors Info

  • Industrials
    29%
  • Technology
    14%
  • Consumer Discretionary
    13%
  • Utilities
    12%
  • Financials
    8%
  • Health Care
    6%
  • Consumer Staples
    5%
  • Energy
    5%
  • Telecommunications
    4%
  • Basic Materials
    3%
  • Real Estate
    1%

The portfolio is diversified across a variety of sectors, with a notable emphasis on industrials, technology, and consumer cyclicals. This sector allocation reflects a balanced approach, capturing growth opportunities in tech and stability in industrials. However, the portfolio's exposure to sectors like real estate and basic materials is minimal, which could limit its ability to capitalize on growth in those areas. To enhance diversification, consider adjusting the sector allocation to include a broader range of industries.

Regions Info

  • North America
    84%
  • Europe Developed
    9%
  • Asia Emerging
    2%
  • Latin America
    2%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is heavily skewed towards North America, with 84.34% of assets allocated there. While this reflects a strong focus on the U.S. market, it also limits exposure to international growth opportunities. The remaining assets are spread across Europe, Asia, and other regions, but in relatively small proportions. Increasing international diversification could help reduce regional risk and capture growth in emerging markets. However, the current allocation aligns with a preference for North American stability and market familiarity.

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.

Optimizing the portfolio involves balancing risk and return along the efficient frontier. While the portfolio already demonstrates strong growth potential, adjustments can be made to either increase risk for higher returns or reduce risk for more stability. To achieve a riskier portfolio, consider increasing exposure to high-growth sectors. Conversely, for a more conservative approach, allocate more towards dividend-paying or lower volatility assets. Focus on refining the sector and geographic allocation to better align with personal risk preferences and financial goals.

Dividends Info

  • Invesco S&P Global Water Index ETF 1.40%
  • iShares U.S. Aerospace & Defense ETF 0.80%
  • First Trust NASDAQ® Clean Edge® Green Energy Index Fund 0.90%
  • Schwab U.S. Dividend Equity ETF 3.40%
  • Vanguard Total World Stock Index Fund ETF Shares 1.80%
  • Weighted yield (per year) 1.81%

The portfolio's dividend yield stands at 1.81%, with the Schwab U.S. Dividend Equity ETF contributing the highest yield at 3.4%. This suggests a focus on generating income alongside capital appreciation. While the yield is modest, it provides a steady income stream that can help offset market volatility. To enhance dividend income, consider increasing exposure to high-yielding assets. However, it's important to balance this with the overall growth objectives of the portfolio.

Ongoing product costs Info

  • Invesco S&P Global Water Index ETF 0.56%
  • MicroSectors FANG+ Index 3X Leveraged ETN 0.95%
  • iShares U.S. Aerospace & Defense ETF 0.40%
  • First Trust NASDAQ® Clean Edge® Green Energy Index Fund 0.58%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.31%

The portfolio's total expense ratio (TER) is 0.31%, which is relatively low and indicates cost-effective management. The Schwab U.S. Dividend Equity ETF and Vanguard Total World Stock Index Fund ETF Shares have particularly low expense ratios, contributing to the portfolio's cost efficiency. However, the MicroSectors FANG+ Index 3X Leveraged ETN has a higher expense ratio, which could erode returns over time. To keep costs low, consider reviewing the expense ratios of all holdings and making adjustments where necessary.

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