A concentrated high risk equity portfolio with heavy exposure to space energy and US large caps

Report created on Nov 6, 2024

Risk profile Info

7/7
Speculative
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

Observation: The portfolio is 100% equities and highly concentrated with three single stocks and one sector ETF making up the bulk of assets. Education: Concentration raises idiosyncratic risk meaning a few company outcomes drive overall returns which increases volatility compared with broad benchmarks. Recommendation: Reduce single stock weightings and add more diversified exposures or asset classes; shifting toward broader ETFs and introducing fixed income or cash cushions will smooth returns and lower the chance that one stock dictates portfolio outcomes.

Growth Info

Observation: Historic metrics show an exceptional CAGR of 49.85% alongside a max drawdown near -33.7% and 22 days that explain 90% of returns. Education: CAGR (Compound Annual Growth Rate) summarizes average yearly growth like an average speed on a road trip but it masks the path and volatility; heavy concentration makes returns lumpy with a few big positive days. Recommendation: Recognize that past outsized gains came with sizeable declines and concentrate on volatility reduction through rebalancing and diversification to guard against future large drawdowns.

Projection Info

Observation: Monte Carlo results from 1,000 simulations show a skewed distribution with most scenarios positive and very high median annualized gains but a nontrivial downside tail. Education: Monte Carlo simulates many possible future paths using historical return patterns to estimate probabilities; it is useful for scenario thinking but depends on past data and assumptions so it may understate rare shocks. Recommendation: Use Monte Carlo as a planning tool not a prediction; combine it with downside controls such as position limits and liquidity buffers to reduce exposure to low probability high loss scenarios.

Asset classes Info

  • Stocks
    100%

Observation: Asset allocation is pure equity with 0% cash and 0% fixed income which departs sharply from common multi-asset benchmarks. Education: A typical benchmark or balanced portfolio often includes bonds or cash to dampen equity volatility and provide liquidity; without them the portfolio fully participates in market swings. Recommendation: Introduce a stable allocation to fixed income or short-term cash equivalents to lower portfolio volatility and provide dry powder for rebalancing after market moves; even a modest allocation will materially change risk profile.

Sectors Info

  • Technology
    33%
  • Industrials
    23%
  • Energy
    19%
  • Consumer Discretionary
    14%
  • Financials
    4%
  • Health Care
    2%
  • Telecommunications
    2%
  • Consumer Staples
    1%
  • Utilities
    1%
  • Basic Materials
    1%

Observation: Sector weights show a large tilt toward Technology 33% Industrials 23% and Energy 19% with smaller weights elsewhere which creates sector concentration. Education: Sector concentration means industry specific cycles will significantly affect returns for example tech sensitivity to interest rates and energy to commodity cycles. Recommendation: Consider trimming overweight sectors and reallocating into underrepresented sectors or broad market ETFs to lower sector-specific risk while preserving growth exposure.

Regions Info

  • North America
    92%
  • Europe Developed
    8%

Observation: Geographic exposure is heavily North America at 92% with only 8% in developed Europe and no emerging or Asia developed exposure. Education: Geographic concentration increases home country risk meaning economic currency regulation or region specific shocks can disproportionately impact returns compared with globally diversified benchmarks. Recommendation: Broaden geographic exposure by adding international developed and emerging market allocations via low cost ETFs to better capture global growth drivers and reduce reliance on a single market.

Market capitalization Info

  • Large-cap
    55%
  • Mega-cap
    31%
  • Mid-cap
    13%

Observation: Market cap breakdown is dominated by Big and Mega caps at 55% and 31% respectively with 13% mid cap and negligible small or micro cap exposure. Education: Large caps provide relative stability and liquidity but miss the diversification and potential alpha small caps can offer; caps also affect volatility and sector representation. Recommendation: If seeking truly diversified equity exposure, add measured mid and small cap exposure or ETFs that include these segments, and cap single stock exposure to avoid undue company specific risk.

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.

Observation: Portfolio optimization using the Efficient Frontier would focus on reallocating current assets to improve the risk return ratio subject to constraints rather than

Dividends Info

  • CES Energy Solutions Corp 1.20%
  • Vanguard FTSE Europe Index Fund ETF Shares 2.80%
  • Vanguard S&P 500 ETF 1.10%
  • Exxon Mobil Corp 3.30%
  • Weighted yield (per year) 0.76%

Observation: The portfolio’s aggregate yield is low around 0.76% though individual holdings like Exxon and the Europe ETF provide higher yields. Education: Dividend yield contributes to total return and offers income stability especially for conservative allocations; however high growth or speculative portfolios often have low yields because capital gains are the primary return driver. Recommendation: Decide whether income is a goal; if so increase allocation to higher yield stable names or dividend ETFs, otherwise keep yield low for a growth oriented approach but accept that cash flow is minimal.

Ongoing product costs Info

  • Vanguard FTSE Europe Index Fund ETF Shares 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.01%

Observation: Fund-level costs are impressively low with the Vanguard S&P 500 ETF at 0.03% and the FTSE Europe ETF at 0.06% keeping TERs minimal; however single stock trading and turnover can raise effective costs. Education: TER (Total Expense Ratio) is the annual fee charged by funds and even small differences compound over time; trading fees taxes and bid/ask spreads on individual stocks also impact net returns. Recommendation: Favor low cost ETFs for broader exposure reduce unnecessary turnover and be mindful of trading execution and tax implications when trimming concentrated stock positions.

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