A tech-heavy portfolio with significant short-term treasury exposure and moderate risk

Report created on Jan 7, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio is heavily weighted towards technology-focused ETFs, with a significant portion in a short-term treasury bond ETF. The iShares® 0-3 Month Treasury Bond ETF comprises 50% of the portfolio, providing a stable, low-risk anchor. The remaining 50% is divided among technology and growth-oriented ETFs. Compared to a balanced benchmark, this portfolio is less diversified, with a strong focus on technology. Balancing the tech exposure with other sectors could enhance diversification and provide more stability during tech sector downturns.

Growth Info

Historically, the portfolio has shown strong performance with a CAGR of 14.81%. However, it experienced a significant max drawdown of -32.61%, indicating vulnerability to market volatility. Compared to a diversified benchmark, these figures suggest above-average returns but also heightened risk. Understanding that past performance doesn't guarantee future results, consider diversifying across more sectors to mitigate drawdowns while maintaining growth potential.

Projection Info

Forward projections using Monte Carlo simulations show a wide range of potential outcomes, with a 50th percentile return of 865.74%. The simulations use historical data to estimate future performance, but it's important to note that these are not predictions. The high variability in outcomes highlights the portfolio's risk profile. To improve predictability, consider reducing exposure to highly volatile assets and incorporating more stable investments.

Asset classes Info

  • Cash
    54%
  • Stocks
    45%

The portfolio's asset class distribution is heavily skewed towards cash and stocks, with minimal bonds or other assets. This composition limits diversification benefits typically gained from a broader mix of asset classes. Common benchmarks often include a more balanced mix of stocks, bonds, and cash. Introducing a wider range of asset classes could enhance portfolio resilience against market fluctuations.

Sectors Info

  • Technology
    38%
  • Telecommunications
    4%
  • Consumer Discretionary
    4%
  • Consumer Staples
    1%
  • Health Care
    1%
  • Industrials
    1%

With nearly 38% of the portfolio in technology, there is a notable sector concentration. While tech investments can offer high growth, they may also lead to increased volatility, especially during economic downturns or interest rate hikes. A diverse sector allocation, more aligned with broad market benchmarks, could provide a buffer against sector-specific risks and stabilize returns.

Regions Info

  • North America
    47%
  • Asia Developed
    2%
  • Europe Developed
    1%

The portfolio is predominantly focused on North American assets, with limited exposure to other regions. This geographical concentration may miss out on growth opportunities in emerging markets or other developed regions. Expanding geographic diversification can reduce regional risk and tap into global growth trends, aligning the portfolio with more global benchmarks.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Vanguard Information Technology Index Fund ETF Shares
    ProShares UltraPro QQQ
    High correlation

The portfolio contains highly correlated assets, particularly within the technology sector. This high correlation means that these assets tend to move together, reducing the diversification benefits. During market downturns, this can amplify losses. To improve diversification, consider replacing some correlated assets with those that have lower correlation to each other, enhancing risk management.

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.

Optimization on the Efficient Frontier suggests potential for better risk-return balance. However, the current high correlation among tech assets limits diversification, affecting efficiency. Adjusting allocations to reduce overlap and incorporate less correlated assets can enhance the portfolio's position on the Efficient Frontier, optimizing risk and return.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • iShares® 0-3 Month Treasury Bond ETF 5.10%
  • VanEck Semiconductor ETF 0.40%
  • ProShares UltraPro QQQ 1.20%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Weighted yield (per year) 2.90%

The portfolio's total dividend yield stands at 2.9%, largely driven by the iShares® 0-3 Month Treasury Bond ETF. While dividends contribute to consistent returns, the tech-heavy portion offers lower yields. For those seeking income, incorporating higher-yielding assets could bolster income streams. However, prioritize aligning dividend strategy with overall investment goals.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • VanEck Semiconductor ETF 0.35%
  • ProShares UltraPro QQQ 0.88%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Weighted costs total (per year) 0.22%

The portfolio's total expense ratio (TER) of 0.22% is relatively low, which is beneficial for long-term performance. Lower costs mean more of the portfolio's returns remain in your pocket. While the ProShares UltraPro QQQ has a higher fee, overall costs are well-managed. Continually reviewing and optimizing for cost efficiency can further improve net returns.

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