A high-risk growth portfolio with concentrated exposure to energy and gold

Report created on Feb 10, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is heavily concentrated in two main positions: PIMCO Energy & Tactical Credit Opps and SPDR Gold MiniShares, making up nearly 80% of the total allocation. This high concentration in specific assets can lead to increased volatility and risk. Diversification is limited, which can be a concern for risk management. It's essential to consider spreading investments across different asset types and sectors to mitigate potential downturns in specific areas. Introducing more varied asset classes or funds might enhance diversification and potentially stabilize returns.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 16.74%. This impressive growth rate suggests strong past performance, but it's crucial to remember that past results don't guarantee future success. The portfolio's maximum drawdown of -35.53% indicates significant volatility, which could be concerning for risk-averse investors. It would be wise to prepare for potential downturns by considering strategies to reduce volatility, such as diversifying into less correlated assets or increasing cash reserves.

Projection Info

Monte Carlo simulations, which use historical data to forecast future performance, suggest a wide range of potential outcomes for this portfolio. With a 50th percentile projection of 570% growth, the potential for high returns is evident. However, the 5th percentile at 10.4% highlights the risk of underperformance. It's important to note that these are probabilistic outcomes, and actual results may vary. Consider stress-testing the portfolio against various economic scenarios to better understand potential risks and adjust allocations accordingly.

Asset classes Info

  • Stocks
    48%
  • Other
    40%
  • Bonds
    29%

The portfolio's asset class allocation is dominated by stocks (48%) and other categories (40%), with a smaller allocation to bonds (29%). This mix suggests a focus on growth, but the limited bond exposure may increase volatility. Compared to typical balanced portfolios, this allocation leans heavily on equities and alternative assets, which can be riskier. To improve stability, consider increasing bond exposure or adding other fixed-income assets, which can act as a buffer during market downturns and provide more consistent returns.

Sectors Info

  • Technology
    7%
  • Financials
    3%
  • Consumer Discretionary
    2%
  • Health Care
    2%
  • Telecommunications
    2%
  • Industrials
    2%
  • Consumer Staples
    1%
  • Energy
    1%
  • Utilities
    1%

Sector allocation is notably skewed, with only a few sectors represented at significant levels. The energy sector, through PIMCO Energy & Tactical Credit Opps, is a key focus, potentially exposing the portfolio to sector-specific risks. A more balanced sector allocation could reduce volatility and improve resilience to economic shifts. Consider diversifying into sectors like technology, healthcare, or consumer goods, which may offer different growth opportunities and risk profiles, thus providing a more stable investment landscape.

Regions Info

  • North America
    60%
  • Europe Developed
    1%

Geographically, the portfolio is heavily concentrated in North America, with 60% exposure. This concentration may limit diversification benefits and increase vulnerability to regional economic downturns. Global diversification can help mitigate these risks by spreading investments across various economies and political climates. Consider incorporating more international assets, particularly from emerging markets, to enhance diversification and potentially capture growth opportunities outside of North America.

Market capitalization Info

  • Mega-cap
    9%
  • Large-cap
    7%
  • Mid-cap
    4%

The portfolio's market capitalization exposure is primarily in mega and big-cap stocks, with minimal representation from medium or small-cap companies. This bias towards larger companies can provide stability but may limit growth potential compared to smaller, more dynamic firms. Including small and medium-cap stocks could enhance growth prospects, as these companies often have more room to grow. However, they come with increased volatility, so balancing this exposure with more stable investments is crucial.

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 benefit from optimization using the Efficient Frontier, which helps identify the best possible risk-return ratio for a given set of assets. By adjusting the allocation between existing holdings, it's possible to enhance returns without necessarily increasing risk. This approach focuses on maximizing efficiency rather than diversification. Regularly reviewing and adjusting the portfolio to align with the Efficient Frontier can ensure that it remains optimized for current market conditions and risk tolerance.

Dividends Info

  • PIMCO Energy & Tactical Credit Opps 4.70%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 2.14%

The portfolio's dividend yield is modest, with a total yield of 2.14%. Dividends can provide a steady income stream, which is particularly valuable in volatile markets. The PIMCO Energy & Tactical Credit Opps fund contributes significantly to this yield. For investors seeking regular income, consider increasing exposure to high-dividend stocks or funds. However, ensure that this aligns with growth objectives, as high-yield investments may come with trade-offs in terms of capital appreciation.

Ongoing product costs Info

  • SPDR Gold MiniShares 0.10%
  • PIMCO Energy & Tactical Credit Opps 2.96%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 1.24%

The portfolio's total expense ratio (TER) stands at 1.24%, driven largely by the PIMCO fund's high fees of 2.96%. While the Vanguard S&P 500 ETF offers low-cost exposure at 0.03%, high fees can erode returns over time. Reducing costs is a straightforward way to improve long-term performance. Consider evaluating the cost-benefit of each holding and exploring lower-cost alternatives that can provide similar exposure. This approach can enhance net returns without sacrificing diversification or growth potential.

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