A focused growth portfolio centered on the Vanguard S&P 500 ETF with low diversification
Report created on Jul 17, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 100.00%
This portfolio is entirely invested in the Vanguard S&P 500 ETF, reflecting a singular focus on large-cap U.S. equities. Such a composition offers exposure to the top 500 companies in the U.S., across various sectors, albeit with a notable concentration in technology. While this streamlined approach simplifies management and aligns with growth objectives, it also limits diversification across asset classes and geographies, potentially increasing volatility and risk during market downturns.
Growth
The historical performance, showcasing a Compound Annual Growth Rate (CAGR) of 14.28%, underscores the robust growth potential of investing in large-cap U.S. equities. The maximum drawdown of -34% indicates significant volatility, typical of equity-focused portfolios. It's crucial to understand that while past performance is impressive, it's not a guaranteed indicator of future results, especially considering the inherent risks of a concentrated investment in a single ETF.
Projection
The Monte Carlo simulation, with its wide range of outcomes, emphasizes the uncertainty inherent in stock market investments. A median projected growth of over 500% is optimistic, yet the variability—illustrated by the 5th and 67th percentile outcomes—highlights the risk of significant fluctuations. These projections, while useful for planning, should be approached with caution, as they rely on historical data and cannot account for unforeseen market shifts.
Asset classes
- Stocks 100%
With 100% of the portfolio in stocks, there's a clear tilt towards growth but at the expense of diversification. While stocks are known for their potential for high returns, they also come with higher volatility compared to bonds or other asset classes. Diversifying across different asset classes can help manage risk, especially during market downturns when stocks may underperform.
Sectors
- Technology 33%
- Financials 14%
- Consumer Discretionary 11%
- Health Care 10%
- Telecommunications 10%
- Industrials 8%
- Consumer Staples 6%
- Energy 3%
- Utilities 2%
- Real Estate 2%
- Basic Materials 2%
The sector allocation within this ETF reflects a broad exposure to the U.S. economy, with a significant emphasis on technology. This tech-heavy focus aligns with growth strategies but may introduce sector-specific risks, such as regulatory changes or market sentiment shifts. Diversifying across sectors can mitigate these risks, ensuring that the portfolio isn't overly reliant on the performance of a single sector.
Regions
- North America 99%
The geographic concentration in North America, specifically the U.S., leverages the robust performance of U.S. equities but overlooks potential opportunities in international markets. Expanding geographic exposure could enhance diversification and potentially reduce volatility, as different markets may respond differently to economic events.
Market capitalization
- Mega-cap 47%
- Large-cap 35%
- Mid-cap 18%
- Small-cap 1%
The allocation across market capitalizations, with a preference for mega and big-cap stocks, supports the portfolio's growth orientation while offering some stability. However, the minimal exposure to small-cap stocks limits the potential for outsized gains that these companies can offer, albeit with higher risk. Considering a more balanced allocation could improve the risk-return profile.
Dividends
- Vanguard S&P 500 ETF 1.20%
- Weighted yield (per year) 1.20%
The dividend yield of 1.20% contributes to the portfolio's total return, providing a steady income stream in addition to potential capital gains. While not the primary focus of a growth-oriented portfolio, dividends can offer a buffer during market volatility and compound returns over time. Reinvesting these dividends can further enhance growth potential.
Ongoing product costs
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.03%
The low total expense ratio (TER) of 0.03% is a significant advantage, minimizing the drag on returns due to fees. In the long term, lower costs can have a substantial impact on net returns, making this ETF an efficient choice for investors. Continuously monitoring for any fee adjustments is advisable to ensure costs remain competitive.
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