High-risk aggressive portfolio with strong tech focus and limited geographic diversification

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Aggressive Investors

This portfolio is suited for an aggressive investor with a high risk tolerance, seeking substantial growth over a long-term horizon. Such an investor is comfortable with significant market fluctuations and potential drawdowns, aiming for high returns through concentrated equity exposure. The focus on technology and U.S. stocks indicates a preference for sectors and regions with strong growth potential. This investor prioritizes capital appreciation over income generation, accepting volatility as part of their strategy. It's ideal for those willing to ride out market ups and downs in pursuit of substantial wealth accumulation over time.

Positions

  • SPDR S&P 500 ETF Trust
    SPY - US78462F1030
    45.21%
  • NVIDIA Corporation
    NVDA - US67066G1040
    20.68%
  • Coinbase Global Inc
    COIN - US19260Q1076
    11.00%
  • Tesla Inc
    TSLA - US88160R1014
    9.35%
  • Invesco QQQ Trust
    QQQ - US46090E1038
    7.70%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    6.05%

This portfolio is heavily weighted towards equities, with a significant portion allocated to ETFs that track major indices. The SPDR S&P 500 ETF Trust and Vanguard S&P 500 ETF together comprise over half of the portfolio, indicating a strong reliance on large-cap U.S. stocks. Individual stocks like NVIDIA, Coinbase, and Tesla make up the rest, adding a concentrated exposure to specific sectors. This composition reflects an aggressive investment strategy, aiming for high returns but accepting high volatility. To mitigate risk, consider diversifying into other asset classes like bonds or real estate, which can provide stability and income.

Growth Info

Historically, this portfolio has exhibited remarkable growth, with a compound annual growth rate (CAGR) of 30.46%. Such impressive returns are often accompanied by significant risk, as seen in the maximum drawdown of -44.58%. This means that while the portfolio has the potential for high returns, it can also experience substantial losses. Investors should be aware that past performance is not indicative of future results, and the high volatility requires a strong stomach for market fluctuations. Regularly reviewing your risk tolerance and investment goals can help ensure this portfolio aligns with your financial objectives.

Projection Info

A Monte Carlo simulation, which uses historical data to project future outcomes, was run with 1,000 simulations. The results show a wide range of potential outcomes, with a 5th percentile loss of -41.44% and a median return of 1,266.31%. While 908 out of 1,000 simulations resulted in positive returns, the variability highlights the uncertainty of future performance. Investors should understand that simulations are based on historical trends and assumptions, which may not hold true in the future. To manage expectations, consider setting realistic return targets and regularly reassessing your portfolio's risk profile.

Asset classes

  • Stocks
    100%
  • Cash
    0%

The portfolio is overwhelmingly invested in stocks, with a negligible amount in cash. This lack of diversification across asset classes increases the portfolio's risk, as it is highly susceptible to stock market fluctuations. While equities offer growth potential, they also come with volatility. Introducing other asset classes, such as fixed income or commodities, could help balance risk and provide more consistent returns. Diversifying into different asset classes can also reduce the impact of market downturns, offering a buffer against losses and helping to achieve a more stable investment experience.

Sectors

  • Technology
    42%
  • Financials
    18%
  • Consumer Discretionary
    16%
  • Telecommunications
    6%
  • Health Care
    6%
  • Industrials
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

The portfolio is heavily concentrated in the technology sector, which accounts for over 40% of the allocation. While this focus can drive growth during tech booms, it also exposes the portfolio to sector-specific risks. Other sectors like financial services and consumer cyclicals provide some diversification, but the overall sector balance is skewed. To reduce sector risk, consider reallocating to underrepresented sectors such as healthcare or industrials, which can provide stability and growth opportunities. A more balanced sector allocation can help mitigate the impact of sector downturns and enhance long-term performance.

Regions

  • North America
    100%
  • Europe Developed
    0%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Asia Developed
    0%

Geographically, the portfolio is predominantly invested in North America, with minimal exposure to other regions. This concentration increases vulnerability to regional economic downturns or policy changes. Diversifying geographically can mitigate these risks by spreading investments across different markets and economies. Consider increasing exposure to developed and emerging markets outside North America to capitalize on global growth opportunities. This can enhance diversification and potentially improve the risk-return profile of the portfolio, providing a hedge against regional market volatility and helping capture growth in diverse economic environments.

Redundant positions

  • SPDR S&P 500 ETF Trust
    Vanguard S&P 500 ETF
    High correlation

The portfolio's assets exhibit high correlation, particularly between the SPDR S&P 500 ETF Trust and the Vanguard S&P 500 ETF. This means they tend to move in the same direction, reducing diversification benefits. High correlation can amplify risk, as losses in one asset are likely to be mirrored in others. To improve diversification, consider including assets with low correlation to existing holdings. This might involve adding alternative investments or international equities. Reducing correlation within the portfolio can enhance risk management and potentially improve returns by spreading risk across different market dynamics.

Dividends

  • Invesco QQQ Trust 0.60%
  • SPDR S&P 500 ETF Trust 0.80%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.48%

The portfolio's dividend yield is relatively low at 0.48%, reflecting its focus on growth rather than income generation. While dividends can provide a steady income stream and help cushion against market volatility, this portfolio prioritizes capital appreciation. Investors seeking income may want to consider increasing exposure to dividend-paying stocks or funds, which can offer regular payouts and potential tax advantages. Balancing growth and income can provide a more well-rounded investment strategy, catering to both capital appreciation and cash flow needs, depending on individual financial goals and risk tolerance.

Ongoing product costs

  • Invesco QQQ Trust 0.20%
  • SPDR S&P 500 ETF Trust 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is 0.06%, which is quite low, indicating cost-effective management. However, costs can still impact long-term returns, especially in a high-growth portfolio. Even small reductions in fees can lead to significant savings over time. Regularly reviewing and comparing fund expenses can ensure you're getting the best value. Consider using low-cost index funds or ETFs to reduce expenses further. Minimizing costs is a straightforward way to enhance net returns, allowing more of your investment to work towards your financial goals.

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.

The portfolio can benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. By adjusting the allocation among current assets, you can potentially achieve higher returns for the same level of risk or maintain returns while reducing risk. This doesn't necessarily mean adding new assets but rather reallocating existing ones to improve efficiency. It's important to remember that optimization is based on historical data and assumptions, which may not always predict future outcomes. Regularly revisiting your portfolio's allocation can help ensure it remains aligned with your risk tolerance and investment objectives.

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