A growth-focused portfolio with high tech exposure 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

Growth Investors

This portfolio suits an investor with a high risk tolerance seeking significant growth over a long-term horizon. With a strong focus on US equities, particularly in the technology sector, it aims to capitalize on market upswings. However, the investor should be comfortable with potential volatility and drawdowns. Ideal for those looking to build wealth aggressively, it may not suit those needing regular income or who are risk-averse. Diversification could enhance stability and reduce risk.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    50.00%
  • Invesco QQQ Trust
    QQQ - US46090E1038
    30.00%
  • Vanguard Growth Index Fund ETF Shares
    VUG - US9229087369
    15.00%
  • iShares Gold Trust
    IAU - US4642852044
    5.00%

The portfolio is heavily weighted towards equities, with a significant 50% allocation in the Vanguard S&P 500 ETF. This is complemented by a 30% stake in the Invesco QQQ Trust and a 15% position in the Vanguard Growth Index Fund ETF Shares. The iShares Gold Trust makes up the remaining 5%. Compared to a typical diversified portfolio, this structure leans heavily on US large-cap stocks, particularly in the technology sector. While this can drive growth, it also means higher exposure to market volatility. Consider diversifying into other asset classes to spread risk more effectively.

Growth Info

Historically, the portfolio has performed impressively, with a Compound Annual Growth Rate (CAGR) of 15.81%. This is significantly higher than the average equity market return, which typically hovers around 7-10%. However, the maximum drawdown of -30.43% highlights the potential for significant losses during market downturns. This performance underscores the importance of balancing growth with risk management. To better weather market fluctuations, consider incorporating assets that provide downside protection or have lower volatility.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance shows a wide range of potential outcomes. The 5th percentile projects a modest 95.61% return, while the 67th percentile suggests an impressive 834.88% gain. These simulations use historical data to estimate future returns, but it's important to remember that past performance does not guarantee future results. To mitigate risk, consider adjusting allocations to achieve a more balanced risk-reward profile, potentially enhancing stability and predictability.

Asset classes

  • Stocks
    95%
  • Other
    5%
  • Cash
    0%

The portfolio is predominantly composed of stocks, making up 94.89% of the total assets, with a small allocation to gold at 5%. This heavy equity weighting suggests a strong growth focus but also increases vulnerability to stock market volatility. Compared to a diversified benchmark, this allocation lacks balance, potentially impacting long-term stability. To achieve better diversification, consider adding fixed income or alternative investments that can provide a buffer during market downturns and reduce overall risk.

Sectors

  • Technology
    39%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Health Care
    8%
  • Financials
    8%
  • Industrials
    5%
  • Consumer Staples
    5%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

There's a notable concentration in the technology sector, which accounts for 39.22% of the portfolio. While tech stocks have driven significant growth in recent years, they can also be volatile, especially during periods of economic uncertainty or rising interest rates. Other sectors like consumer cyclicals and communication services are also well-represented. To enhance sector diversification, consider increasing exposure to underrepresented areas such as utilities or real estate, which may offer more stability and income potential.

Regions

  • North America
    94%
  • Europe Developed
    1%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Asia Developed
    0%

Geographically, the portfolio is heavily concentrated in North America, with 94.03% of assets based there. This lack of international diversification exposes the portfolio to risks specific to the US market, such as economic downturns or political changes. Compared to global benchmarks, this allocation is quite narrow. To mitigate geographic risk and capture growth opportunities abroad, consider increasing exposure to developed and emerging markets outside North America.

Redundant positions

  • Vanguard Growth Index Fund ETF Shares
    Invesco QQQ Trust
    Vanguard S&P 500 ETF
    High correlation

The portfolio's assets are highly correlated, particularly among the Vanguard S&P 500 ETF, Invesco QQQ Trust, and Vanguard Growth Index Fund ETF Shares. This means they tend to move in the same direction, limiting diversification benefits. In times of market stress, such correlations can amplify losses. To improve diversification, consider adding assets with lower correlation to the existing holdings, such as bonds or international equities, which can help cushion against market volatility.

Dividends

  • Invesco QQQ Trust 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Growth Index Fund ETF Shares 0.30%
  • Weighted yield (per year) 0.76%

With a total dividend yield of 0.76%, this portfolio prioritizes growth over income. The Vanguard S&P 500 ETF contributes the most to this yield at 1.2%, while the Invesco QQQ Trust and Vanguard Growth Index Fund ETF Shares offer lower yields. For investors seeking regular income, this yield may be insufficient. Consider incorporating higher-yielding assets, such as dividend-focused ETFs or fixed-income securities, to boost income without significantly altering the growth focus.

Ongoing product costs

  • iShares Gold Trust 0.25%
  • Invesco QQQ Trust 0.20%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is impressively low at 0.09%, which is beneficial for long-term performance. Lower costs mean more of your investment returns stay in your pocket, compounding over time. This cost efficiency aligns well with best practices and enhances the portfolio's growth potential. Continue to monitor and compare expense ratios regularly to ensure they remain competitive, as cost savings can significantly impact net returns over the investment horizon.

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's current risk-return profile can be optimized using the Efficient Frontier, a concept that identifies the best possible return for a given level of risk. Currently, the portfolio's expected return is below the optimal level. By adjusting asset allocations, particularly reducing highly correlated holdings, the portfolio could achieve a more favorable risk-return balance. This optimization focuses on maximizing returns for the same level of risk, potentially improving overall performance without increasing exposure.

What next?

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.