Capital Allocation: deploying capital across domain niches
AI 30%, FinTech 20%, Crypto 15%, Geo 15%, Brandable 20% — proposed structure for a $250K portfolio in 2026. Stress-tested under 3 market scenarios.
How should a $250,000 domain portfolio be structured in 2026? The recommended split is 30/20/15/15/20 across five niches: AI 30%, FinTech 20%, Crypto 15%, Geo 15%, Brandable 20%. This is not arbitrary — it derives from a 24-month back-test against NameBio volume data and per-TLD performance.
Why 30% to AI but not 50%?
AI domains were the fastest-growing sector — up 18% YoY in Q1/2026. But putting 50% into AI creates concentration risk reminiscent of dot-com 2000: when the sector cools, the entire NAV drawdowns synchronously. 30% balances upside participation with optionality for other sectors to outperform.
FinTech 20% and Crypto 15% are sleeves with strong defensibility — there is always an end-user (exchange, neobank, wallet) willing to pay premium. Geo 15% is the portfolio anchor: location-based names rarely face significant downside because local demand persists.
Three-scenario stress test
Scenario 1 (Bull, 30% probability): AI continues its bull run, portfolio NAV +35% over 12 months. AI sleeve leads, FinTech +15%, Crypto +20%, Geo flat, Brandable +12%.
Scenario 2 (Base, 50% probability): NAV +12-18%. AI cools -10% but FinTech and Crypto compensate due to regulatory clarity. Brandable .com appreciates +8-10% as inflation hedge.
Scenario 3 (Bear, 20% probability): If the .ai bubble bursts as .com did in 2001, AI sleeve could be -40%. Total portfolio drawdown in worst case roughly -8% — Geo and Brandable provide defence. This is why no single sector exceeds 30% is non-negotiable.
Good allocation is not about picking the winning sector — it is about ensuring you still have capital when the next round begins.
When to rebalance
Rule: rebalance when one sleeve drifts more than ±5 percentage points from target. AI drifting from 30% to 38% (price appreciation) → trim AI back to 30%, redeploy into FinTech or Geo. Realistic frequency: 2-3 times per year, no more (transaction cost is high in this asset class).
Brief #007 covers the seven valuation methods to determine "fair value" for each name in the portfolio. Brief #009 addresses UDRP risk hedging — important when AI and Brandable sleeves grow large.
Frequently asked
Do I need a $250K portfolio to apply this formula?
No. The formula is percentage-based — apply at $25K, $50K, $100K, or $1M. The difference is name count per sleeve. With $25K you might hold 1 AI name ($7.5K), 2 FinTech ($5K), 1 Crypto ($3.75K), 1 Geo ($3.75K), 2 Brandable ($5K) — enough to test the framework.
Will these ratios change over time?
Yes. The 30/20/15/15/20 split is for 2026. By 2027, if .ai shows mature/cooldown signals, the AI weight may drop to 20%, redeployed to a new emerging sector (could be Web3, Quantum, or something not yet named). Review the framework annually.
Is Brandable 20% too small given it is the broadest segment?
20% sounds small but the dollar value is meaningful — for a $250K portfolio that is $50K. Brandable has high liquidity but lower yield (% appreciation/year) than specialised sectors. 20% balances diversification with capital efficiency.
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