A tech-heavy growth portfolio with moderate risk and limited geographic diversification

Report created on Dec 27, 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 is heavily weighted towards technology, with 64.77% of assets in this sector. It includes a mix of ETFs, common stocks, and funds, with a significant portion in large-cap tech companies. This concentration in technology may lead to higher volatility, especially during market downturns. A more balanced asset allocation could help mitigate risks associated with sector-specific fluctuations. Consider diversifying into other sectors to reduce dependency on technology and enhance stability.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 10.8%, which is impressive. However, the maximum drawdown of -34.57% indicates significant volatility. This means that while the portfolio has performed well, it has also experienced large fluctuations. Comparing this performance to a relevant benchmark can help assess relative success. To smooth out volatility, consider incorporating more stable, non-tech investments which may offer a more balanced risk-return profile.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a wide range of potential returns for this portfolio. With a 50th percentile outcome of -53.18%, the projections indicate a higher risk of negative returns. These simulations highlight the uncertainty of relying solely on past performance. To improve future projections, consider reallocating assets to achieve a more stable return profile, potentially by reducing exposure to highly volatile sectors.

Asset classes Info

  • Stocks
    93%

The portfolio is predominantly composed of stocks, accounting for over 93% of the allocation, with minimal cash holdings. This heavy stock allocation aligns with growth objectives but increases exposure to market volatility. Diversifying across more asset classes like bonds or real estate could reduce risk and provide more consistent returns. Consider balancing the portfolio by incorporating assets with different risk-return characteristics to enhance diversification.

Sectors Info

  • Technology
    65%
  • Telecommunications
    9%
  • Real Estate
    8%
  • Utilities
    8%
  • Industrials
    2%
  • Consumer Discretionary
    2%

With technology comprising over 64% of the portfolio, there is a significant sector concentration. This focus can lead to substantial gains in tech bull markets but also exposes the portfolio to sector-specific downturns. A more evenly distributed sector allocation can mitigate these risks. Consider increasing exposure to underrepresented sectors such as healthcare or consumer staples, which may offer stability and growth potential in different economic conditions.

Regions Info

  • North America
    66%
  • Japan
    14%
  • Europe Developed
    12%
  • Asia Emerging
    1%

Geographically, the portfolio is concentrated in North America, accounting for over 66% of the allocation. While this provides exposure to a stable market, it limits the benefits of global diversification. Expanding investments in other regions like Europe or Asia could enhance growth opportunities and reduce geographic risk. Consider a more balanced geographic allocation to leverage diverse economic conditions and currency movements.

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 could be optimized for better risk-return efficiency using the Efficient Frontier, which identifies the best possible risk-return ratio. Currently, a more efficient portfolio with the same risk level could achieve an expected return of 3.80%. Adjusting allocations within existing assets might improve returns without increasing risk. Consider rebalancing the portfolio to align more closely with the Efficient Frontier for optimized performance.

Dividends Info

  • Cisco Systems Inc 2.70%
  • Fidelity Govt Cash Rsrvs 4.50%
  • Corning Incorporated 2.30%
  • Hannon Armstrong Sustainable Infrastructure Capital Inc 5.90%
  • iShares Self-Driving EV and Tech ETF 1.30%
  • Intel Corporation 1.90%
  • SAP SE ADR 1.00%
  • Sony Group Corp 1.60%
  • Xcel Energy Inc 2.40%
  • Technology Select Sector SPDR® Fund 0.50%
  • Weighted yield (per year) 1.61%

The portfolio's dividend yield is 1.61%, with notable contributions from stocks like Hannon Armstrong and Cisco Systems. While dividends provide a steady income stream, the focus on growth stocks means lower dividend income. For investors seeking income, increasing exposure to high-dividend stocks or funds could be beneficial. Consider balancing growth and income objectives by incorporating more dividend-paying assets into the portfolio.

Ongoing product costs Info

  • ALLIANZGI GLOBAL WATER FUND CLASS A 1.22%
  • Fidelity Govt Cash Rsrvs 0.26%
  • iShares Self-Driving EV and Tech ETF 0.47%
  • First Trust Cloud Computing ETF 0.60%
  • Technology Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.11%

The portfolio's Total Expense Ratio (TER) is relatively low at 0.11%, which is advantageous for long-term growth as lower costs can enhance net returns. The Technology Select Sector SPDR® Fund, with a TER of 0.09%, contributes positively to this cost efficiency. Maintaining low-cost investments while ensuring adequate diversification can optimize returns. Regularly review fund fees and consider replacing high-cost assets with more cost-effective alternatives.

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