Growth-Oriented Portfolio with High Technology Exposure and Broad Diversification

Report created on Dec 4, 2024

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.

Positions

The portfolio is composed of four ETFs, with a significant focus on Islamic-compliant investments. iShares MSCI USA Islamic UCITS and iShares MSCI World Islamic UCITS ETFs make up a combined 55% of the portfolio, reflecting a strong emphasis on global Islamic stocks. The VanEck Semiconductor UCITS ETF accounts for 25%, indicating a specific interest in the tech sector. The Invesco Dow Jones Islamic Global Developed Markets ETF rounds out the portfolio with 20%. This setup suggests an inclination towards growth-oriented investments while maintaining compliance with Islamic financial principles.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 15.95%. This impressive growth is counterbalanced by a maximum drawdown of -24.69%, indicating periods of significant volatility. The portfolio's returns are concentrated, with just 12 days accounting for 90% of gains, suggesting that timing and market conditions play a crucial role in performance. This highlights the need for a long-term perspective to ride out volatility and capture substantial growth over time.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This method uses random sampling to model potential outcomes, assuming a hypothetical initial investment. The results show a broad range of outcomes, with the 5th percentile yielding a 49.38% return and the 67th percentile reaching 964.08%. The median projection is a 622.95% increase, with an annualized return of 17.77%. This suggests a promising outlook, albeit with inherent uncertainty typical of growth-oriented portfolios.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily skewed towards stocks, with 99.84% allocated to equities and a negligible 0.16% in cash. This allocation aligns with a growth-focused strategy, as equities typically offer higher returns over the long term compared to other asset classes. However, the lack of diversification into bonds or other asset classes could increase volatility and risk. To balance risk and return, consider gradually introducing other asset classes, such as bonds, which can provide stability during market downturns.

Sectors Info

  • Technology
    57%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Industrials
    7%
  • Energy
    7%
  • Basic Materials
    5%
  • Consumer Staples
    4%
  • Telecommunications
    2%
  • Real Estate
    1%
  • Financials
    1%
  • Utilities
    1%

Sector allocation is dominated by technology, which comprises 56.61% of the portfolio. This concentration reflects a strong belief in the growth potential of tech companies but also exposes the portfolio to sector-specific risks. Other sectors, such as healthcare and consumer cyclicals, have smaller allocations. To mitigate risk, consider diversifying further across various sectors. This can help cushion the portfolio against adverse developments in any single sector, ensuring a more stable performance over time.

Regions Info

  • North America
    84%
  • Europe Developed
    10%
  • Asia Developed
    3%
  • Japan
    2%
  • Australasia
    1%

Geographically, the portfolio is heavily concentrated in North America, which accounts for 84.29% of the allocation. This reflects a strong reliance on the performance of North American markets. While this region has historically been a strong performer, geographic diversification can reduce risk by spreading exposure across different economic environments. Consider gradually increasing allocations to other regions, such as Europe and Asia, to capture growth opportunities and mitigate regional risks.

Redundant positions Info

  • iShares MSCI World Islamic UCITS
    iShares MSCI USA Islamic UCITS
    High correlation

The portfolio contains highly correlated assets, particularly between the iShares MSCI World Islamic UCITS and iShares MSCI USA Islamic UCITS ETFs. This correlation suggests that these assets tend to move in the same direction, providing limited diversification benefits. To enhance diversification, consider reducing the overlap between these holdings. By reallocating some of the investment into less correlated assets, the portfolio can achieve a more balanced risk-return profile.

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 optimizing the portfolio, focus on reducing asset overlap to enhance diversification. Highly correlated assets, like the iShares MSCI World Islamic UCITS and iShares MSCI USA Islamic UCITS, offer limited diversification benefits. By reallocating to less correlated assets, the portfolio can achieve a more balanced risk-return profile. Once the overlap is addressed, consider moving along the efficient frontier to adjust risk levels. Increasing bond allocation can create a more conservative portfolio, while more equities can increase risk and potential returns.

Ongoing product costs Info

  • Invesco Markets II plc - Invesco Dow Jones Islamic Global Developed Markets UCITS ETF USD Acc 0.40%
  • iShares MSCI USA Islamic UCITS 0.50%
  • iShares MSCI World Islamic UCITS 0.60%
  • VanEck Semiconductor UCITS ETF 0.35%
  • Weighted costs total (per year) 0.47%

The total expense ratio (TER) for the portfolio is 0.47%, indicating a relatively low cost of investment. The individual ETFs have varying expense ratios, with the highest being 0.6% for the iShares MSCI World Islamic UCITS ETF. Keeping costs low is crucial for maximizing net returns, especially in a growth-focused portfolio. Regularly reviewing and comparing the expense ratios of the holdings can help ensure that investment costs remain competitive and do not erode returns over time.

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