A tech-heavy portfolio with strong growth potential but limited geographic diversification

Report created on Jan 12, 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 predominantly composed of ETFs, with a significant allocation to the Invesco NASDAQ 100 ETF at over 34%. This concentration in a single ETF suggests a focus on growth, particularly in the technology sector. The portfolio includes a mix of large-cap and dividend-focused ETFs, but the overall composition is heavily skewed towards equities, with almost 100% in stocks. Compared to a balanced benchmark, this portfolio lacks diversity, which could increase risk during market volatility. Consider introducing other asset classes, such as bonds or international equities, to enhance diversification and reduce potential risk.

Growth Info

Historically, the portfolio has demonstrated impressive growth with a Compound Annual Growth Rate (CAGR) of 14.69%. This performance is strong compared to typical market benchmarks. However, the portfolio also experienced a maximum drawdown of -26.46%, indicating vulnerability during market downturns. While past performance is not a guarantee of future results, understanding these trends can help set realistic expectations. To mitigate potential losses, consider strategies that protect against downside risk, such as diversifying into less volatile assets or incorporating hedging strategies.

Projection Info

Forward projections using a Monte Carlo simulation show a wide range of potential outcomes. With 1,000 simulations, the portfolio's annualized return averaged 15.62%, with most scenarios resulting in positive returns. The Monte Carlo method uses historical data to predict future performance, but it's important to note that these are hypothetical outcomes and not guarantees. While the median projection is optimistic, the variability underscores the importance of preparing for different scenarios. Regularly review and adjust your portfolio to align with your risk tolerance and investment goals as market conditions change.

Asset classes Info

  • Stocks
    100%

The portfolio's asset allocation is overwhelmingly in stocks, with a negligible cash position. This lack of asset class diversity may lead to increased volatility during market fluctuations. Compared to a balanced benchmark, which typically includes bonds and other asset classes, this portfolio is heavily weighted towards equities. To improve diversification and potentially stabilize returns, consider incorporating fixed-income securities or alternative investments. These additions can provide a buffer against stock market swings and help achieve a more balanced risk-return profile.

Sectors Info

  • Technology
    35%
  • Consumer Discretionary
    11%
  • Telecommunications
    11%
  • Financials
    10%
  • Health Care
    10%
  • Industrials
    7%
  • Consumer Staples
    7%
  • Energy
    4%
  • Basic Materials
    2%
  • Consumer Discretionary
    2%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is heavily concentrated in the technology sector, comprising nearly 35% of the total allocation. This concentration aligns with the focus on growth but may increase volatility, especially during periods of technological market corrections. Other sectors, like consumer cyclicals and financial services, have moderate representation, while defensive sectors like utilities and real estate are underrepresented. To mitigate sector-specific risks, consider rebalancing to achieve a more even distribution across sectors. This approach can help protect against sector downturns and capitalize on diverse market opportunities.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio's geographic allocation is overwhelmingly focused on North America, with 98.8% exposure. This lack of international diversification may limit potential growth opportunities and increase vulnerability to regional economic downturns. Compared to global benchmarks, which typically have a more balanced geographic spread, this portfolio could benefit from exposure to international markets. Consider adding investments in Europe, Asia, or emerging markets to enhance diversification and capture growth in different economic regions. This strategy can also help mitigate risks associated with currency fluctuations and geopolitical events.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Invesco NASDAQ 100 ETF
    FIDELITY ZERO TOTAL MARKET INDEX FUND
    SPDR S&P 500 ETF Trust
    FIDELITY ZERO LARGE CAP INDEX FUND
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio contains several highly correlated assets, particularly among the large-cap and growth-focused ETFs. High correlation means these assets tend to move in the same direction, which can limit diversification benefits. During market downturns, this could result in larger collective losses. To enhance diversification, consider replacing some of these correlated assets with investments that have lower correlation to each other. This approach can help reduce overall portfolio risk and improve the consistency of returns across different market conditions.

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 benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. However, the current allocation includes many highly correlated assets, limiting diversification benefits. Before optimizing, consider reducing overlap by removing or replacing some of these assets. By doing so, you can enhance the portfolio's efficiency, potentially achieving better returns for the same level of risk. Remember, optimization focuses on the current assets and their allocation, so regularly reassess your holdings to maintain alignment with your investment strategy.

Dividends Info

  • FIDELITY ZERO TOTAL MARKET INDEX FUND 1.20%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SPDR S&P 500 ETF Trust 0.90%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.33%

The portfolio has a moderate total dividend yield of 1.33%, with the Schwab U.S. Dividend Equity ETF contributing significantly at 3.7%. Dividends can provide a steady income stream, which is particularly valuable during periods of market volatility. However, the focus on growth and technology sectors means dividends are not the primary driver of returns. For investors seeking regular income, consider increasing exposure to high-dividend-paying assets. Balancing growth and income strategies can help achieve a more stable cash flow while maintaining growth potential.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR S&P 500 ETF Trust 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is impressively low at 0.08%, reflecting the cost efficiency of the chosen ETFs and funds. Low costs are beneficial for long-term performance, as they reduce the drag on returns compared to higher-cost alternatives. This efficient cost structure aligns well with best practices in portfolio management. To maintain this advantage, regularly review the expense ratios of your investments and consider replacing any high-cost assets with more cost-effective options. Keeping costs low is a key factor in optimizing net returns over time.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

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.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey