Growth-focused portfolio with a heavy technology tilt and limited geographic diversification

Report created on Mar 6, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed entirely of ETFs and a single common stock, with a notable concentration in growth-focused funds. The VanEck Video Gaming and eSports ETF holds the largest weight at 24%, followed closely by Invesco QQQ Trust, SPDR® Portfolio S&P 500 Growth ETF, and Vanguard Russell 1000 Growth Index Fund ETF Shares, each at 22%. The remaining 10% is allocated to Palantir Technologies Inc. This composition aligns with a growth-oriented strategy, but it lacks diversity across different asset classes, which could increase susceptibility to market volatility. To enhance diversification, consider incorporating different asset types such as bonds or real estate.

Growth Info

Historically, this portfolio has delivered impressive returns, with a Compound Annual Growth Rate (CAGR) of 21.55%. However, it also experienced a significant maximum drawdown of -41.99%, indicating substantial volatility. The portfolio's returns are concentrated, with just 20 days accounting for 90% of the gains. While past performance is not indicative of future results, these metrics suggest a high-risk, high-reward profile. Consider strategies to mitigate potential downside risk, such as diversifying into less volatile sectors or asset classes.

Projection Info

Using Monte Carlo simulations, which project potential outcomes based on historical data, this portfolio shows a wide range of possible future values. The median projection suggests a 1,698.1% increase, while the best-case scenario could see a 3,298.7% rise. However, it's crucial to remember that past data doesn't guarantee future results, and these projections are just estimates. Given these potential outcomes, maintaining a balanced risk approach is advisable. Consider regular reviews to adjust allocations based on evolving market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%

This portfolio is 100% invested in stocks, with no allocation to other asset classes like bonds or cash. While an all-equity portfolio can drive high returns, it also increases exposure to market volatility. Diversification across asset classes can provide a buffer during market downturns, potentially stabilizing returns. To enhance risk management, consider introducing a mix of fixed-income assets or alternative investments to balance the equity exposure and reduce overall portfolio risk.

Sectors Info

  • Technology
    46%
  • Telecommunications
    26%
  • Consumer Discretionary
    13%
  • Financials
    4%
  • Health Care
    4%
  • Industrials
    3%
  • Consumer Staples
    3%
  • Utilities
    1%
  • Basic Materials
    1%

The portfolio is heavily weighted toward the technology sector, which comprises 46% of the total allocation, followed by communication services at 26%. While this concentration can benefit from tech sector growth, it also exposes the portfolio to higher volatility, especially during periods of regulatory scrutiny or interest rate hikes. Balancing the sector allocation by increasing exposure to more stable sectors like consumer defensives or utilities could reduce volatility and improve diversification, aligning the portfolio more closely with broader market benchmarks.

Regions Info

  • North America
    84%
  • Japan
    7%
  • Asia Emerging
    4%
  • Asia Developed
    2%
  • Australasia
    1%
  • Europe Developed
    1%
  • Europe Emerging
    1%

Geographically, the portfolio is predominantly focused on North America, which constitutes 84% of the allocation. This heavy regional concentration limits exposure to international markets, potentially missing out on growth opportunities in emerging markets or other developed regions. Diversifying geographically can help mitigate regional risks and tap into global growth trends. Consider increasing allocations to underrepresented areas, such as Europe or Asia, to achieve a more balanced international exposure.

Market capitalization Info

  • Mega-cap
    57%
  • Large-cap
    29%
  • Mid-cap
    12%
  • Small-cap
    2%

The portfolio leans heavily towards mega-cap stocks, which make up 57% of the allocation, followed by big-cap at 29%. While mega-cap stocks can provide stability and lower volatility, they may also limit growth potential compared to smaller-cap stocks. Including a more significant proportion of mid-cap or small-cap stocks could enhance growth prospects and improve overall diversification. This adjustment could offer a better balance between stability and potential returns.

Redundant positions Info

  • Vanguard Russell 1000 Growth Index Fund ETF Shares
    Invesco QQQ Trust
    SPDR® Portfolio S&P 500 Growth ETF
    High correlation

The portfolio contains highly correlated assets, particularly among the Vanguard Russell 1000 Growth Index Fund ETF Shares, Invesco QQQ Trust, and SPDR® Portfolio S&P 500 Growth ETF. High correlation means these assets tend to move together, which can limit diversification benefits. During market downturns, this could amplify losses. To improve diversification, consider replacing some of these overlapping assets with those that have lower correlations, thereby reducing overall portfolio risk and enhancing potential returns.

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's current allocation could be optimized using the Efficient Frontier, a method that seeks the best possible risk-return ratio by adjusting asset weights. However, the presence of highly correlated assets limits diversification benefits. Before optimizing, consider replacing overlapping assets to enhance diversification. Once diversification is improved, optimization can help achieve an ideal balance between risk and return, maximizing the portfolio's performance potential.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • SPDR® Portfolio S&P 500 Growth ETF 0.60%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.60%
  • Weighted yield (per year) 0.40%

The portfolio's dividend yield stands at a modest 0.40%, reflecting its growth-focused nature. While dividends can provide a steady income stream, their contribution here is minimal. For investors seeking income, this portfolio may not be ideal. However, for those prioritizing capital appreciation, this allocation aligns well with growth objectives. If income generation becomes a priority, consider integrating higher-yielding assets to balance growth with income.

Ongoing product costs Info

  • VanEck Video Gaming and eSports ETF 0.56%
  • Invesco QQQ Trust 0.20%
  • SPDR® Portfolio S&P 500 Growth ETF 0.04%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.20%

The portfolio's total expense ratio (TER) is relatively low at 0.20%, which is beneficial for long-term performance. Lower costs mean more of the portfolio's returns are retained, compounding over time. This cost efficiency aligns well with best practices for maximizing investment returns. To maintain this advantage, regularly review the cost structure and explore opportunities to reduce expenses further, such as switching to lower-cost funds or negotiating fees with financial advisors.

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