A growth-oriented portfolio with a strong focus on momentum and geographical diversification

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 seeking high growth with a moderate to high risk tolerance and a medium to long-term investment horizon. It's ideal for individuals comfortable with market volatility and looking to capitalize on momentum within the equity markets. The investor should be prepared for periods of significant fluctuations and have the financial stability to remain invested through market downturns, leveraging the potential for higher returns over time.

Positions

  • FIDELITY ZERO TOTAL MARKET INDEX FUND
    FZROX - US31635T7081
    40.00%
  • Invesco S&P 500® Momentum ETF
    SPMO - US46138E3392
    40.00%
  • Invesco S&P International Developed Momentum ETF
    IDMO - US46138E2220
    20.00%

The portfolio is heavily weighted towards equity, with a 40% allocation in the Fidelity Zero Total Market Index Fund, another 40% in the Invesco S&P 500® Momentum ETF, and the remaining 20% in the Invesco S&P International Developed Momentum ETF. This composition reflects a clear growth orientation, leveraging momentum strategies both domestically and internationally. The focus on momentum ETFs indicates a preference for stocks demonstrating strong recent performance, which can lead to higher volatility but potentially higher returns. The absence of fixed income or alternative asset classes suggests a higher risk tolerance, aligning with the portfolio's growth profile.

Growth Info

Historically, the portfolio has shown impressive growth, with a Compound Annual Growth Rate (CAGR) of 18.66%. However, it has also experienced significant volatility, as indicated by a maximum drawdown of -32.68%. This volatility is inherent in growth and momentum strategies, especially in portfolios heavily weighted towards equities. The days contributing to 90% of returns being limited to 26 suggests that the portfolio's performance is highly dependent on specific periods of strong market gains, which underscores the importance of staying invested during volatile times.

Projection Info

Monte Carlo simulations project a wide range of outcomes, with a median increase of 900.9%, highlighting the potential for substantial growth. However, the wide spread between the 5th and 67th percentiles (159.7% to 1,356.5%) underscores the high level of uncertainty and risk. These projections, based on historical data, do not guarantee future performance but provide a useful framework for understanding potential volatility and reward. It’s important to remember that such simulations assume market conditions and volatilities will mirror the past, which is not always the case.

Asset classes Info

  • Stocks
    100%
  • Other
    0%
  • Cash
    0%

The portfolio is entirely composed of stocks, aligning with its growth-oriented strategy. This allocation to 100% equities exposes the portfolio to higher market volatility but also positions it for potential higher returns over the long term. The absence of bonds or other asset classes means there's no buffer against market downturns, which could be a concern for those with lower risk tolerance. Diversifying across different asset classes could help manage risk without significantly compromising growth potential.

Sectors Info

  • Technology
    24%
  • Financials
    23%
  • Industrials
    11%
  • Telecommunications
    11%
  • Consumer Discretionary
    7%
  • Consumer Staples
    7%
  • Health Care
    6%
  • Consumer Discretionary
    4%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

With a heavy emphasis on Technology and Financial Services, the portfolio is poised to capitalize on growth trends in these sectors. However, this concentration also exposes it to sector-specific risks, such as regulatory changes or economic downturns affecting these industries disproportionately. The moderate presence of Industrials, Communication Services, and Consumer Cyclical sectors provides some diversification, but the portfolio could benefit from a more balanced sector allocation to mitigate risks associated with sector concentration.

Regions Info

  • North America
    84%
  • Europe Developed
    11%
  • Japan
    2%
  • Australasia
    2%
  • Asia Developed
    1%
  • Africa/Middle East
    0%
  • Asia Emerging
    0%
  • Latin America
    0%

The geographic allocation is heavily skewed towards North America (84%), with modest exposure to Europe Developed (11%) and minimal allocations to Japan, Australasia, and Asia Developed. This concentration in developed markets, particularly the U.S., may limit exposure to potential growth in emerging markets. Diversifying geographically could reduce the portfolio's vulnerability to regional economic downturns and capitalize on growth opportunities in faster-growing economies.

Market capitalization Info

  • Mega-cap
    49%
  • Large-cap
    33%
  • Mid-cap
    14%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's emphasis on Mega (49%) and Big (33%) cap stocks is consistent with its momentum strategy, as these companies often lead market movements. However, the limited exposure to Medium, Small, and Micro cap stocks may restrict potential upside from smaller companies' growth. Increasing the allocation to smaller cap stocks could enhance returns, albeit with additional volatility and risk.

Dividends Info

  • FIDELITY ZERO TOTAL MARKET INDEX FUND 1.00%
  • Invesco S&P International Developed Momentum ETF 1.90%
  • Invesco S&P 500® Momentum ETF 0.50%
  • Weighted yield (per year) 0.98%

The portfolio's average dividend yield of 0.98% reflects its growth focus over income generation. While the yields from the Invesco S&P International Developed Momentum ETF are higher, the overall portfolio yield is modest. Investors seeking income in addition to growth might consider reallocating a portion towards higher-dividend-yielding assets, although this could potentially dilute the growth focus.

Ongoing product costs Info

  • Invesco S&P International Developed Momentum ETF 0.25%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Weighted costs total (per year) 0.10%

With a total expense ratio (TER) averaging 0.10%, the portfolio benefits from relatively low costs, enhancing net returns. The low costs are particularly advantageous for a growth strategy, where the compounding effect of saved expenses can significantly impact long-term performance. Maintaining a focus on cost efficiency is crucial, especially in strategies where high turnover can incur additional costs.

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.

Considering the portfolio's current composition and the Efficient Frontier analysis, there might be opportunities to optimize the risk-return profile without drastically altering the growth focus. Adjusting the asset allocation slightly, such as increasing exposure to underrepresented sectors or diversifying geographically, could enhance returns for the same level of risk. This optimization process, however, should be guided by the investor's risk tolerance and investment horizon.

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