Growth-focused portfolio with heavy tech exposure and moderate diversification

Report created on Jan 21, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards ETFs, with significant allocations to the Invesco NASDAQ 100 ETF (35%) and ProShares Ultra S&P500 (30%). The remaining investments include the Defiance Quantum ETF (25%) and Vanguard S&P 500 ETF (10%). While the focus on growth-oriented ETFs aligns with a growth profile, the concentration in a few funds may limit diversification. Typically, a more diversified portfolio would spread investments across a broader range of asset types and sectors. Consider diversifying further by incorporating different types of assets to enhance risk management and potentially improve returns.

Growth Info

Historically, this portfolio has shown impressive growth, with a Compound Annual Growth Rate (CAGR) of 21.19%. However, it also experienced a significant maximum drawdown of -38.87%, indicating potential volatility. Comparing this to a benchmark like the S&P 500, which has a lower CAGR but also less volatility, highlights the trade-off between high returns and risk. Understanding this balance is crucial for investors who prioritize growth but should be prepared for potential downturns. Consider whether the high returns justify the risk, and if not, explore strategies to mitigate volatility.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, indicates a wide range of potential results for this portfolio. With a median expected growth of 1,130.6% and a 5th percentile of 156.6%, the projections highlight both the potential for high returns and the risk of lower-than-expected performance. It's important to remember that simulations are based on past data and cannot predict the future with certainty. Investors should use these projections as a guide but remain flexible in adjusting their strategies as market conditions evolve.

Asset classes Info

  • Stocks
    94%
  • Cash
    5%
  • Other
    1%

The portfolio is predominantly composed of stocks (94%), with minimal allocations to cash (5%) and other assets (1%). This heavy stock allocation aligns with a growth strategy but may increase overall risk. A more diversified asset class mix could potentially smooth out returns and provide a buffer during market downturns. Consider adding exposure to other asset classes, such as bonds or real estate, to enhance diversification and potentially reduce volatility without sacrificing growth potential.

Sectors Info

  • Technology
    51%
  • Telecommunications
    11%
  • Consumer Discretionary
    10%
  • Industrials
    7%
  • Health Care
    6%
  • Financials
    6%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    1%
  • Real Estate
    1%

There is a notable concentration in the technology sector, which makes up 51% of the portfolio. While tech stocks have driven significant growth in recent years, they can also be volatile, especially during periods of economic uncertainty or rising interest rates. The remaining sectors are more balanced, with communication services and consumer cyclicals also having significant allocations. To mitigate sector-specific risks, consider diversifying into less-represented sectors, which can provide stability and reduce the impact of tech sector volatility.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Japan
    2%
  • Asia Developed
    1%
  • Asia Emerging
    1%

Geographically, the portfolio is heavily concentrated in North America (90%), with limited exposure to Europe and Asia. This concentration may limit the benefits of geographic diversification, which can help reduce risk by spreading investments across different economic regions. By increasing exposure to international markets, investors can potentially benefit from growth opportunities outside North America and reduce the impact of regional economic downturns. Consider rebalancing to include more global stocks to enhance diversification.

Market capitalization Info

  • Mega-cap
    38%
  • Large-cap
    35%
  • Mid-cap
    13%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio is well-distributed across market capitalizations, with significant allocations to mega (38%) and big cap stocks (35%). This balance provides a mix of stability from larger companies and growth potential from smaller ones. However, the limited exposure to small and micro cap stocks might mean missing out on higher growth opportunities. Including more small-cap stocks could enhance the growth potential, albeit with increased risk. Evaluate the desired balance between stability and growth to ensure it aligns with investment goals.

Redundant positions Info

  • Vanguard S&P 500 ETF
    ProShares Ultra S&P500
    High correlation

The high correlation between the Vanguard S&P 500 ETF and ProShares Ultra S&P500 suggests that these assets move together, limiting diversification benefits. During market downturns, highly correlated assets can exacerbate losses. Diversification relies on holding assets that do not move in sync, thereby reducing overall portfolio risk. Consider replacing one of these ETFs with a less correlated asset to enhance diversification and improve risk management, ensuring the portfolio can withstand various 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 potentially be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. This process involves adjusting the current allocations to achieve a more efficient balance, maximizing returns for a given level of risk. However, optimization is based solely on existing assets and does not consider external factors like changing market conditions. Consider rebalancing within the current asset pool to enhance efficiency, ensuring alignment with risk tolerance and investment goals.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Defiance Quantum 0.60%
  • ProShares Ultra S&P500 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.66%

The portfolio's overall dividend yield is relatively low at 0.66%, reflecting its growth-oriented focus. While dividends can provide a steady income stream and cushion during market volatility, this portfolio prioritizes capital appreciation over income generation. For investors seeking a balance between growth and income, consider incorporating higher-yielding assets. However, if growth remains the primary goal, maintaining the current allocation may be appropriate, acknowledging the trade-off between income and potential capital gains.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Defiance Quantum 0.40%
  • ProShares Ultra S&P500 0.91%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.43%

The portfolio's total expense ratio (TER) is 0.43%, which is reasonable given its composition. Lower costs can significantly enhance long-term returns by minimizing the drag on performance. The Vanguard S&P 500 ETF contributes positively with a very low cost of 0.03%, while the ProShares Ultra S&P500 has a higher expense ratio of 0.91%. Consider evaluating whether the higher-cost ETFs provide sufficient value relative to their expenses. Reducing costs where possible can improve net returns and support long-term growth.

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