Growth-focused portfolio with strong tech exposure and low diversification

Report created on Jul 23, 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.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio suits an investor with a high risk tolerance and a long-term investment horizon, aiming for substantial growth. It's well-suited for those who are less concerned about short-term volatility and more focused on maximizing long-term returns. This investor is likely comfortable with technology and market fluctuations, understanding that high growth sectors can experience significant swings.

Positions

This portfolio is heavily weighted towards equities, with a significant focus on the technology sector, evidenced by a 44% allocation. The inclusion of the Fidelity 500 Index Fund, Invesco QQQ Trust, and Vanguard Growth Index Fund ETF Shares shows a clear preference for growth-oriented investments. However, the portfolio's diversification is low, as indicated by its diversification score, with all investments concentrated in stock, primarily within North America. This approach aligns with a growth profile but carries higher volatility and risk due to the lack of asset class and geographic diversification.

Growth Info

Historically, the portfolio has shown impressive performance with a Compound Annual Growth Rate (CAGR) of 17.24%. This high return rate is reflective of the growth-focused strategy and the strong performance of the technology sector in recent years. However, the maximum drawdown of -31.67% highlights the potential risk and volatility associated with this strategy. It's important to remember that past performance does not guarantee future results, and such high returns can also come with significant risks.

Projection Info

Monte Carlo simulations project a wide range of potential outcomes, from a 5th percentile of 145.2% to a 67th percentile of 1,185.4%, indicating a high degree of uncertainty. This underscores the portfolio's aggressive growth stance but also highlights the potential for substantial volatility. Investors should consider whether the possibility of high returns justifies the risk of significant fluctuations in portfolio value.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is entirely in stocks, with no presence of other asset classes such as bonds or real estate. This singular focus enhances growth potential but also increases susceptibility to market downturns. Diversifying across different asset classes can reduce risk without necessarily compromising long-term returns, as different asset classes can react differently to market conditions.

Sectors Info

  • Technology
    44%
  • Telecommunications
    13%
  • Consumer Discretionary
    8%
  • Health Care
    8%
  • Financials
    7%
  • Industrials
    5%
  • Consumer Staples
    5%
  • Consumer Discretionary
    4%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    1%
  • Real Estate
    1%

The heavy emphasis on technology, with a 44% allocation, positions the portfolio to benefit from the sector's potential for high growth. However, this concentration also exposes the portfolio to sector-specific risks, such as regulatory changes or technological shifts. The presence of other sectors like communication services and healthcare provides some balance, but the overall sector distribution still leans heavily towards high-growth, high-volatility sectors.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

With 99% of assets in North America, the portfolio's geographic exposure is highly concentrated. This concentration benefits from the robust performance of the U.S. market but lacks global diversification that could mitigate region-specific risks and tap into growth opportunities in emerging markets or developed economies outside North America.

Market capitalization Info

  • Mega-cap
    54%
  • Large-cap
    31%
  • Mid-cap
    14%

The portfolio's focus on mega and big-cap stocks, which comprise 85% of the allocation, aligns with its growth and risk profile, favoring established companies with potential for steady growth. However, the absence of small-cap investments limits exposure to potentially higher-growth, albeit riskier, companies that could offer diversification benefits and higher returns.

Redundant positions Info

  • Vanguard Growth Index Fund ETF Shares
    Invesco QQQ Trust
    High correlation

The high correlation between the Vanguard Growth Index Fund ETF Shares and the Invesco QQQ Trust suggests redundancy, limiting diversification benefits. This overlap indicates that the portfolio might not be as diversified as it could be, even within the equity asset class. Diversifying across less correlated assets could reduce risk while maintaining the portfolio's 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.

Sharpe ratios in this chart use the active CMA risk-free rate of 2.00% annualized.

Click on the colored dots to explore allocations.

Optimizing the portfolio involves addressing the high correlation between assets and enhancing diversification. While the current asset allocation has favored growth, incorporating less correlated investments could improve the risk-return profile. Utilizing the Efficient Frontier could help in finding an allocation that offers the best possible risk-return ratio based on the current assets.

Dividends Info

  • Fidelity 500 Index Fund 0.90%
  • Invesco QQQ Trust 0.40%
  • Vanguard Growth Index Fund ETF Shares 0.40%
  • Weighted yield (per year) 0.60%

The portfolio's overall dividend yield of 0.60% is relatively low, which is typical for growth-focused investments that prioritize capital appreciation over income. For investors seeking growth, reinvesting dividends can compound returns over time. However, those requiring income might consider diversifying into assets with higher yield potentials.

Ongoing product costs Info

  • Fidelity 500 Index Fund 0.02%
  • Invesco QQQ Trust 0.20%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) of 0.10% is impressively low, which is beneficial for long-term growth as lower costs translate to higher net returns. This cost efficiency is a strong aspect of the portfolio, allowing more of the investment's return to compound over time.

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