A tech-focused high-risk portfolio with significant concentration in large-cap US equities

Report created on Jan 22, 2025

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

The portfolio is heavily weighted towards US equities, with 70% of assets in ETFs tracking major indices and 30% in individual tech stocks. This composition suggests a focus on growth, primarily through capital appreciation. Compared to a typical balanced portfolio, this allocation shows a lack of diversification across asset classes, as it is entirely composed of stocks. Diversifying into other asset classes like bonds or real estate could help mitigate risk and provide more stable returns, particularly during market downturns.

Growth Info

Historically, the portfolio has delivered impressive returns, with a CAGR of 26.72%. This growth significantly outpaces many benchmarks, reflecting the strong performance of US large-cap and tech stocks. However, the high maximum drawdown of -42.12% indicates substantial volatility. While past performance is promising, it's important to remember that it doesn't guarantee future success. Consider whether this level of risk aligns with your financial goals and risk tolerance, and explore diversification to manage potential downturns.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with a median return of 2,192.8%. This method uses historical data to simulate future performance, but it's not a crystal ball. The optimistic projections reflect the portfolio's growth focus, but the high variance highlights the inherent risk. As such, it's crucial to regularly review your investment strategy and adjust based on changing market conditions and personal circumstances.

Asset classes Info

  • Stocks
    100%

The portfolio is exclusively invested in stocks, indicating a high-risk, high-reward approach. While this can lead to significant gains, it also exposes the portfolio to market volatility. In comparison, a more balanced portfolio might include bonds or other asset classes to cushion against market swings. Consider diversifying into different asset classes to reduce risk and enhance stability, especially if nearing a financial goal or retirement.

Sectors Info

  • Technology
    57%
  • Consumer Discretionary
    8%
  • Telecommunications
    7%
  • Financials
    7%
  • Health Care
    6%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    1%
  • Real Estate
    1%

With 57% of the portfolio in technology, there's a notable sector concentration. While tech stocks have driven substantial growth, they can also be volatile, especially during economic shifts or regulatory changes. This concentration might lead to higher returns in tech booms but poses risks if the sector underperforms. Balancing exposure across sectors like healthcare or consumer goods could provide more consistent returns and reduce sector-specific risk.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio is heavily concentrated in North American markets, with 99% exposure, which limits geographic diversification. While the US market has been a strong performer, this concentration increases vulnerability to regional economic downturns. Incorporating international equities could provide exposure to different economic cycles and growth opportunities, potentially enhancing long-term returns and reducing risk.

Market capitalization Info

  • Mega-cap
    54%
  • Large-cap
    34%
  • Mid-cap
    11%

The portfolio's focus on mega-cap (54%) and big-cap (34%) stocks suggests a preference for established companies with robust market presence. While these stocks often offer stability and reliable growth, the lack of small-cap exposure could mean missing out on potential high-growth opportunities. Diversifying market cap exposure by adding small or mid-cap stocks can enhance growth potential and balance risks across different economic 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 seeks the best possible risk-return ratio. This involves adjusting the allocation among current assets to maximize returns for a given level of risk. While this doesn't necessarily mean adding new assets, it emphasizes reallocating existing ones for better efficiency. Regular reviews can ensure the portfolio remains aligned with your goals and market conditions.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 0.72%

The portfolio's dividend yield is modest at 0.72%, reflecting its growth focus. While dividends can provide a steady income stream, this portfolio prioritizes capital appreciation. If income generation is a goal, consider incorporating higher-yielding assets. However, for growth-focused investors, this yield aligns with the strategy of reinvesting earnings to maximize returns over time.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.04%

Portfolio costs are impressively low, with a total TER of 0.04%, supporting better long-term performance. Low costs mean more of your investment returns stay in your pocket, compounding over time. This efficiency is beneficial for growth-focused portfolios, allowing you to maximize returns. Continue to monitor and manage costs, ensuring they remain competitive as your investment strategy evolves.

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