High-growth portfolio with a strong focus on US technology and large-cap stocks
Report created on Nov 17, 2024Risk profile
5/7
Diversification profile
2/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 65.00% -
QQ Invesco NASDAQ 100 ETF
QQQM - US46138G6492 35.00%
This portfolio is heavily weighted towards two major ETFs: the Vanguard S&P 500 ETF, making up 65%, and the Invesco NASDAQ 100 ETF, constituting 35%. This composition underlines a clear focus on US equity, particularly within the technology sector, which represents a significant portion of the portfolio. While this leans towards growth-oriented investments, it also indicates a low level of diversification, both geographically and across asset classes, as it is entirely allocated to stocks with no exposure to other asset types like bonds or real estate.
Growth
Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 16.16%, with a maximum drawdown of -27.94%. These figures suggest a strong performance, outpacing many traditional benchmarks. However, the significant drawdown also highlights the portfolio's vulnerability to market volatility, particularly within the tech sector. The days contributing most to returns are relatively few, indicating that a handful of strong market days drive much of the portfolio's performance.
Projection
Using Monte Carlo simulations, which project future performance based on historical data, the portfolio shows a wide range of outcomes. The median projection suggests a potential 709.1% increase, with a high likelihood (993 out of 1,000 simulations) of positive returns. However, it's crucial to understand that these projections, while useful for planning, are inherently uncertain and depend heavily on past market behavior continuing into the future.
Asset classes
- Stocks 100%
The portfolio is entirely invested in stocks, showing no allocation to other asset classes like bonds, commodities, or real estate. This single-class focus enhances growth potential but also increases risk, as there's no buffer against stock market downturns. Diversifying across different asset classes can help mitigate this risk while still aiming for attractive returns.
Sectors
- Technology 41%
- Telecommunications 12%
- Consumer Discretionary 12%
- Financials 9%
- Health Care 8%
- Industrials 6%
- Consumer Staples 5%
- Energy 2%
- Utilities 2%
- Basic Materials 2%
- Real Estate 1%
Sector allocation is heavily skewed towards technology, followed by communication services and consumer cyclicals. This concentration in high-growth sectors can lead to significant returns during bull markets but may also increase volatility and risk during downturns, especially as tech stocks are known for their pronounced price swings.
Regions
- North America 99%
- Europe Developed 1%
Geographically, the portfolio is almost entirely invested in North America, with a negligible allocation to developed Europe. This concentration in the US market, while historically strong, limits exposure to potential growth in other regions and increases susceptibility to US-specific economic downturns.
Market capitalization
- Mega-cap 50%
- Large-cap 34%
- Mid-cap 15%
- Small-cap 1%
The portfolio's focus on mega and large-cap stocks (84% combined) aligns with its growth and stability objectives, as these companies are typically more established and less volatile than their smaller counterparts. However, this also means potentially missing out on the higher growth opportunities that small and medium-cap stocks can offer.
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.
Considering the Efficient Frontier, there's potential for optimizing the risk-return ratio by diversifying across more asset classes and regions. While the current allocation has favored growth, particularly through US tech stocks, broadening exposure could reduce volatility without necessarily sacrificing expected returns. This optimization would seek to balance the portfolio more effectively between risk and reward.
Dividends
- Invesco NASDAQ 100 ETF 0.50%
- Vanguard S&P 500 ETF 1.20%
- Weighted yield (per year) 0.96%
The portfolio's dividend yield stands at 0.96%, reflecting a moderate income component alongside its growth focus. While not the primary goal, these dividends can provide a steady income stream and help cushion against market volatility, albeit to a limited extent given the portfolio's aggressive growth orientation.
Ongoing product costs
- Invesco NASDAQ 100 ETF 0.15%
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.07%
The portfolio's total expense ratio (TER) of 0.07% is impressively low, which is beneficial for long-term growth as costs can significantly erode investment returns over time. This efficiency in managing costs is a positive aspect, especially important in a growth-focused portfolio where maximizing compound returns is key.
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