A tech-focused growth portfolio with high risk and limited geographic diversification

Report created on Jan 20, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed entirely of ETFs, each holding a 12.5% allocation. The focus is on sectors like technology, communication, and financial services. This composition reflects a growth-oriented strategy with a higher risk profile. While ETFs offer diversification, the sector concentration may expose the portfolio to sector-specific risks. Compared to a benchmark with broader asset classes, this portfolio is less diversified. To enhance diversification, consider incorporating ETFs covering additional sectors or asset classes like bonds.

Growth Info

Historically, the portfolio has demonstrated strong performance with a CAGR of 32.23%. This indicates a robust growth trajectory, though it also experienced a significant drawdown of -25.22%. Comparing these figures to a benchmark shows that while the portfolio has outperformed in returns, it has also faced higher volatility. Past performance, however, does not guarantee future results. To mitigate potential drawdowns, consider rebalancing the portfolio to include more stable asset classes or sectors.

Projection Info

Using Monte Carlo simulations, the portfolio shows a promising forward projection with an annualized return of 38.02%. The simulations indicate a wide range of potential outcomes, with the 5th percentile at 898.9% and the 50th at 6,160.0%. This suggests a high probability of positive returns, though it also highlights the inherent risks. Monte Carlo relies on historical data, which may not predict future market conditions. To prepare for various scenarios, consider stress-testing the portfolio against different economic conditions.

Asset classes Info

  • Stocks
    75%

The portfolio is heavily weighted towards stocks, comprising 75% of the allocation, with no exposure to bonds or cash. This allocation aligns with a growth strategy but may increase volatility. Compared to a diversified benchmark, the absence of bonds or cash reduces the ability to cushion against market downturns. Introducing fixed-income or cash equivalents could enhance stability and provide a buffer during periods of market stress.

Sectors Info

  • Telecommunications
    23%
  • Technology
    22%
  • Consumer Discretionary
    15%
  • Financials
    14%

The sector allocation is concentrated, with technology and communication services making up 45% of the portfolio. This concentration aligns with a growth strategy, capitalizing on tech innovation. However, such a focus can lead to higher volatility, especially during sector-specific downturns. Compared to broader benchmarks, this allocation is more concentrated. To mitigate risk, consider diversifying into underrepresented sectors like healthcare or industrials.

Regions Info

  • North America
    65%
  • Japan
    3%
  • Asia Emerging
    3%
  • Asia Developed
    1%
  • Europe Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly exposed to North America, accounting for 65% of the allocation. This concentration reflects a bias towards U.S. markets, which may limit global diversification. Compared to a global benchmark, the portfolio is underexposed to regions like Europe and emerging markets. To enhance geographic diversification, consider adding ETFs with broader international exposure, which could reduce reliance on North American market performance.

Market capitalization Info

  • Mega-cap
    36%
  • Large-cap
    28%
  • Mid-cap
    11%
  • Small-cap
    1%

The portfolio's exposure by market capitalization is skewed towards mega and big-cap stocks, comprising 64%. This allocation reflects a preference for established companies, which can offer stability but may limit growth potential compared to small or mid-cap stocks. Compared to a more balanced benchmark, this allocation is concentrated. To capture growth opportunities, consider increasing exposure to medium and small-cap stocks, which can offer higher growth potential.

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 aims to achieve the best possible risk-return ratio. This involves reallocating existing assets to maximize returns for a given level of risk. While the current allocation is growth-focused, adjusting the weights could improve efficiency. Consider using optimization tools to explore alternative allocations that maintain the growth objective while potentially reducing risk.

Ongoing product costs Info

  • VanEck Vectors Video Gaming and eSports UCITS ETF A USD 0.55%
  • iShares S&P 500 Communication Sector UCITS ETF USD Acc 0.15%
  • Lyxor MSCI Semiconductors ESG Filtered UCITS ETF - Acc EUR 0.45%
  • iShares S&P 500 USD Information Technology Sector UCITS 0.15%
  • iShares S&P 500 Financials Sector UCITS ETF 0.15%
  • iShares S&P 500 USD Consumer Discretionary Sector UCITS 0.15%
  • Weighted costs total (per year) 0.20%

The portfolio's total expense ratio (TER) is 0.20%, which is relatively low and supports better long-term performance by minimizing costs. This aligns well with best practices for cost efficiency. Compared to industry averages, these costs are competitive. Keeping costs low is crucial for maximizing net returns over time. Ensure that any new investments maintain or improve this cost efficiency, avoiding high-fee funds that could erode returns.

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