A technology-heavy growth portfolio with high concentration in ServiceNow and limited geographic diversity

Report created on Dec 13, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily weighted towards technology stocks, with ServiceNow Inc making up over 41% of the total. The remainder is largely composed of ETFs, with Invesco QQQ Trust and multiple S&P 500-related ETFs contributing significant portions. While ETFs provide broad market exposure, the dominance of a single stock poses a risk. Balancing individual stock positions can help mitigate this. The current composition suggests a focus on growth, but the concentration in one stock may lead to volatility. Diversifying within and across asset classes can enhance stability.

Growth Info

Historically, this portfolio has delivered strong returns, with a compound annual growth rate (CAGR) of 29.44%. However, it has also experienced significant volatility, evidenced by a maximum drawdown of -45.53%. This means that while the portfolio has potential for high returns, it can also suffer substantial losses during market downturns. Investors should be aware of this trade-off between risk and return. To manage risk, consider diversifying holdings and maintaining a long-term perspective to weather market fluctuations.

Projection Info

The Monte Carlo simulation, which uses historical data to project future performance, suggests varied outcomes for this portfolio. With 1,000 simulations, the median (50th percentile) outcome is a 74.95% increase, while the worst-case (5th percentile) is a -97.87% loss. This highlights the uncertainty and potential for extreme outcomes. While simulations provide insight into possible future scenarios, they are based on historical trends that may not repeat. Regularly reviewing and adjusting the portfolio can help navigate changing market conditions and align with personal risk tolerance.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly composed of stocks, accounting for 99.92% of the total, with minimal cash holdings. This high equity exposure aims for capital growth but increases vulnerability to market volatility. Asset class diversification, such as including bonds or other fixed-income instruments, can reduce risk and provide a buffer during market downturns. Balancing growth and stability is crucial for long-term success, particularly for investors with moderate risk tolerance or nearing retirement.

Sectors Info

  • Technology
    62%
  • Telecommunications
    7%
  • Consumer Discretionary
    6%
  • Financials
    6%
  • Health Care
    6%
  • Industrials
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

Technology dominates the portfolio, representing over 61% of the total allocation. While this sector has been a strong performer, overexposure can lead to increased risk if technology stocks face a downturn. Other sectors, like Communication Services and Consumer Cyclicals, have minor representations. A more balanced sector allocation can mitigate risks associated with sector-specific downturns. Exploring opportunities in underrepresented sectors, such as Healthcare or Industrials, may enhance diversification and provide additional growth avenues.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographic exposure is highly concentrated in North America, comprising 99.29% of the portfolio. This limited geographic diversity increases vulnerability to region-specific economic or political events. Expanding exposure to other regions, such as Europe or Asia, can provide diversification benefits and reduce reliance on a single market. Global diversification can also capture growth opportunities in emerging markets, which may offer higher returns over the long term. Balancing geographic exposure aligns with prudent risk management practices.

Redundant positions Info

  • SPDR S&P 500 ETF Trust
    Vanguard S&P 500 ETF
    iShares Core S&P 500 ETF
    High correlation

The portfolio includes highly correlated assets, particularly among the S&P 500 ETFs. These assets tend to move together, offering limited diversification benefits. High correlation can amplify losses during market downturns, as all correlated assets may decline simultaneously. Identifying and reducing overlapping positions can improve diversification and risk management. Consider adding low-correlation assets, such as bonds or alternative investments, to enhance the portfolio's 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 can be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. Currently, the portfolio includes overlapping assets, particularly among S&P 500 ETFs, which do not contribute to diversification. By reallocating assets to reduce redundancy, the portfolio can improve its efficiency. Optimization involves adjusting the weightings of existing holdings to align with desired risk and return objectives. Regularly reviewing and rebalancing the portfolio ensures it remains on the Efficient Frontier, maximizing potential returns for a given level of risk.

Dividends Info

  • Salesforce.com Inc 0.30%
  • Delta Air Lines Inc 0.80%
  • Walt Disney Company 0.40%
  • Intel Corporation 1.80%
  • iShares Core S&P 500 ETF 1.20%
  • Microsoft Corporation 0.70%
  • Nokia Corp ADR 3.20%
  • Invesco QQQ Trust 0.60%
  • Royal Caribbean Cruises Ltd 0.20%
  • SPDR S&P 500 ETF Trust 1.20%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard S&P 500 Value Index Fund ETF Shares 1.90%
  • Weighted yield (per year) 0.64%

The portfolio's dividend yield is relatively low at 0.64%, reflecting its growth-oriented nature. While dividends provide a steady income stream, this portfolio prioritizes capital appreciation over income generation. Investors seeking income may need to adjust their strategy or consider higher-yielding assets. Balancing growth and income can be challenging, but incorporating dividend-paying stocks or funds can offer stability and reduce reliance on market-driven returns. A diversified approach can achieve both growth and income objectives.

Ongoing product costs Info

  • iShares Core S&P 500 ETF 0.03%
  • Invesco QQQ Trust 0.20%
  • SPDR S&P 500 ETF Trust 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard S&P 500 Value Index Fund ETF Shares 0.10%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is 0.06%, reflecting low costs associated with its ETF holdings. Keeping costs low is crucial for maximizing long-term returns, as fees can erode gains over time. Evaluating and minimizing expenses, such as management fees and trading costs, can enhance performance. While the current cost structure is favorable, regularly reviewing expenses ensures alignment with financial goals. Low-cost investment options, like index funds or ETFs, can provide cost-effective market exposure.

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