A concentrated US-focused portfolio with a strong emphasis on large-cap equities

Report created on Apr 10, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily concentrated in two ETFs: SPDR® Portfolio S&P 500 ETF at 80% and Invesco NASDAQ 100 ETF at 10%, with two individual stocks, Berkshire Hathaway and JPMorgan Chase, each at 5%. This composition is heavily skewed towards large-cap US equities, making it less diversified compared to a benchmark like the MSCI World Index. While such concentration can lead to strong performance during bull markets, it also exposes the portfolio to higher risk during downturns. Consider adding more diverse asset classes, such as bonds or international equities, to reduce risk and improve diversification.

Growth Info

Historically, the portfolio has performed well, with a CAGR of 13.97%. This is a strong performance compared to many benchmarks, reflecting the robust growth of large-cap US equities over recent years. However, the portfolio also experienced a maximum drawdown of -25.53%, indicating significant volatility. It's important to remember that past performance doesn't guarantee future results, especially given the portfolio's concentration. To manage risk, consider strategies like rebalancing or incorporating more defensive assets to cushion against future market downturns.

Projection Info

Using Monte Carlo simulations, which project potential outcomes based on historical data, the portfolio shows a promising forward outlook. The median (50th percentile) projection suggests an 888.7% portfolio value increase, with 997 out of 1,000 simulations yielding positive returns. However, projections are not foolproof and rely heavily on past data, which may not account for future market conditions. It's wise to regularly review and adjust the portfolio to align with evolving market trends and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, with no allocation to other asset classes like bonds, real estate, or commodities. This lack of diversification might expose the portfolio to higher volatility. Diversifying across asset classes can help mitigate risks and smooth returns over time. For example, adding fixed-income securities could provide stability and income, especially during periods of stock market volatility. Consider diversifying into other asset classes to enhance risk-adjusted returns.

Sectors Info

  • Technology
    31%
  • Financials
    21%
  • Health Care
    9%
  • Consumer Discretionary
    9%
  • Telecommunications
    9%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

The portfolio is heavily weighted towards the technology sector at 31%, followed by financial services at 21%. While these sectors have driven growth in recent years, they also introduce sector-specific risks. For instance, tech-heavy portfolios may face increased volatility during interest rate hikes. To mitigate sector risk, consider rebalancing to achieve a more even sector distribution. This could involve adding exposure to underrepresented sectors like healthcare or consumer defensive, which may offer stability during economic downturns.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio's geographic allocation is overwhelmingly North American at 99%, with minimal exposure to other regions. This heavy US focus limits international diversification, which can help manage geopolitical and economic risks. Global diversification can provide access to growth opportunities in emerging markets and reduce reliance on the US economy. Consider gradually increasing exposure to international markets, including Europe and Asia, to achieve a more balanced global allocation.

Market capitalization Info

  • Mega-cap
    52%
  • Large-cap
    31%
  • Mid-cap
    16%
  • Small-cap
    1%

The portfolio has a strong bias towards mega-cap stocks, which make up 52% of the allocation, followed by big and medium caps. While mega-cap stocks offer stability and liquidity, they may also limit growth potential. Including small-cap stocks could enhance growth prospects, as they often outperform larger companies during economic recoveries. However, small caps can be more volatile. Balancing market caps can improve diversification and potentially enhance returns over the long term.

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 can be optimized for a better risk-return ratio using the Efficient Frontier, a concept that identifies the best possible return for a given risk level. While the current portfolio is performing well, an optimized portfolio could potentially achieve a higher expected return of 22.12% with the same risk. This involves reallocating existing assets without introducing new ones. Consider exploring optimization strategies, but keep in mind that changes should align with your risk tolerance and investment goals.

Dividends Info

  • JPMorgan Chase & Co 1.60%
  • Invesco NASDAQ 100 ETF 0.70%
  • SPDR® Portfolio S&P 500 ETF 1.40%
  • Weighted yield (per year) 1.27%

The portfolio's dividend yield is 1.27%, primarily from JPMorgan Chase and the SPDR® Portfolio S&P 500 ETF. While dividends provide a steady income stream, the current yield is relatively low. For investors seeking income, consider increasing exposure to high-dividend stocks or dividend-focused ETFs. However, it's important to balance the pursuit of yield with the potential for capital appreciation. Higher dividends can sometimes come with increased risk, so evaluate the trade-offs carefully.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Weighted costs total (per year) 0.03%

The portfolio's overall cost is impressively low, with a Total Expense Ratio (TER) of just 0.03%. This low cost structure supports better long-term performance, as it minimizes the drag on returns. Keeping costs low is a key factor in maximizing investment outcomes. Regularly review and compare the costs of your holdings to ensure they remain competitive. Low-cost index funds or ETFs can be a cost-effective way to maintain exposure to broad market trends while keeping expenses in check.

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