A growth-focused portfolio with high tech exposure and moderate 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 consists of seven ETFs, each accounting for roughly 14% of the total allocation. This equal distribution suggests a balanced approach, focusing on sectors like technology and financial services. The composition aligns with a growth-oriented strategy, emphasizing equity investments. However, the portfolio lacks exposure to fixed income or other asset classes, which might limit its ability to cushion against market volatility. A more diverse asset mix could enhance stability and risk management. Consider incorporating different asset classes to improve diversification and resilience against market fluctuations.

Growth Info

Historically, the portfolio has shown impressive growth, with a Compound Annual Growth Rate (CAGR) of 17.38%. This indicates strong past performance, especially for a growth-focused portfolio. However, it also experienced a significant maximum drawdown of -31.37%, highlighting potential volatility. Comparing this to benchmarks such as the S&P 500, the performance is commendable but comes with higher risk. Past performance is not indicative of future results, so it’s crucial to maintain a balanced view. Regularly reviewing and adjusting the portfolio can help manage risks and sustain growth.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was tested under various market conditions. These simulations project a wide range of outcomes, with a median expected return of 350.67% and a worst-case scenario of -57.96%. Monte Carlo analysis provides a probabilistic view, helping investors understand potential risks and rewards. However, these are based on historical data and assumptions, which may not hold in the future. To mitigate uncertainty, consider stress testing the portfolio under different scenarios and adjusting allocations to align with risk tolerance and objectives.

Asset classes Info

  • Stocks
    71%
  • Other
    29%

The portfolio is heavily weighted towards equities, with 71.45% in stocks, while the remaining 28.6% is categorized as 'Other,' likely representing commodities like gold. This allocation reflects a growth-oriented strategy but may expose the portfolio to equity market volatility. Compared to typical balanced portfolios, there is a notable lack of fixed income or cash, which can provide stability. To enhance diversification, consider incorporating a wider range of asset classes, such as bonds or real estate, which can offer potential downside protection during market downturns.

Sectors Info

  • Technology
    36%
  • Financials
    18%
  • Consumer Discretionary
    5%
  • Telecommunications
    4%
  • Health Care
    2%
  • Industrials
    2%
  • Consumer Staples
    2%
  • Energy
    1%
  • Utilities
    1%

The portfolio is dominated by technology, comprising 36.34% of the allocation, followed by financial services at 18.43%. This concentration aligns with growth objectives but may increase sensitivity to sector-specific risks, like regulatory changes or tech market volatility. Compared to common benchmarks, this sectoral focus is more pronounced. Diversifying across additional sectors could mitigate risk and capture opportunities in other industries. Consider gradually reallocating some funds to underrepresented sectors to balance exposure and enhance long-term resilience against sector-specific downturns.

Regions Info

  • North America
    59%
  • Asia Developed
    3%
  • Japan
    3%
  • Europe Developed
    3%
  • Australasia
    1%
  • Asia Emerging
    1%

Geographically, the portfolio is heavily concentrated in North America, accounting for nearly 59% of the allocation. This focus on the region could benefit from the strong performance of US markets but may also expose the portfolio to regional economic risks. Compared to global benchmarks, there is limited exposure to emerging markets, which can offer growth potential and diversification benefits. Expanding geographic exposure to include more developed and emerging markets could enhance diversification and reduce reliance on North American economic performance.

Redundant positions Info

  • Invesco Technology S&P US Select Sector UCITS ETF
    Xtrackers NASDAQ 100 UCITS ETF 1C GBP
    High correlation

The portfolio contains highly correlated assets, particularly in the technology sector, such as the Invesco Technology S&P US Select Sector UCITS ETF and Xtrackers NASDAQ 100 UCITS ETF. High correlation means these assets tend to move together, which could limit diversification benefits and increase risk during market downturns. Diversification aims to spread risk, so reducing overlap by replacing highly correlated assets with less correlated alternatives can improve risk management. Consider evaluating asset correlations and adjusting the portfolio to enhance diversification and resilience against market volatility.

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 focuses on achieving the best possible risk-return ratio with the current assets. By adjusting allocations, the expected return could increase to 18.61% with a lower risk level of 11.47%. This optimization does not imply diversification but rather the most efficient use of existing assets. Regularly revisiting the portfolio's efficiency can help maintain alignment with investment goals and risk tolerance, ensuring that the portfolio maximizes potential returns for the given level of risk.

Ongoing product costs Info

  • Invesco CoinShares Global Blockchain UCITS ETF GBP 0.65%
  • VanEck Digital Assets Equity UCITS ETF A USD Acc 0.65%
  • iShares Physical Gold ETC 0.25%
  • VanEck Semiconductor UCITS ETF 0.35%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Invesco Technology S&P US Select Sector UCITS ETF 0.14%
  • Xtrackers NASDAQ 100 UCITS ETF 1C GBP 0.20%
  • Weighted costs total (per year) 0.33%

The portfolio's total expense ratio (TER) is 0.33%, which is relatively low and supports better long-term returns. Keeping costs down is crucial, as high fees can erode investment gains over time. Compared to industry averages, this TER is competitive, contributing positively to overall performance. It's important to periodically review fees to ensure they remain reasonable and aligned with portfolio objectives. Consider evaluating whether lower-cost alternatives could replace higher-fee assets without compromising investment strategy or performance.

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