Growth-oriented portfolio with high concentration in US large-cap stocks and low diversification
Report created on Jul 9, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
SC Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 97.39% -
RW Invesco S&P 500 Revenue ETF
RWL - US46138G6989 2.61%
This portfolio is heavily concentrated in the U.S. large-cap growth sector, with a staggering 97.39% invested in the Schwab U.S. Large-Cap Growth ETF and the remainder in the Invesco S&P 500 Revenue ETF. Such a concentrated allocation in just two ETFs, primarily in large-cap growth stocks, indicates a strategy focused on capitalizing on the growth potential of major U.S. companies. However, this high concentration also implies limited diversification, exposing the portfolio to sector-specific and market-wide risks more acutely than a more diversified portfolio would.
Growth
Historically, this portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 17.56%, with a maximum drawdown of -34.04%. The days that make up 90% of returns number just 34, highlighting the portfolio's reliance on short, significant bursts of performance for its gains. While past performance is impressive, it's crucial to remember that it doesn't guarantee future results. The high CAGR is indicative of the growth-focused strategy's success in a bullish market, but the significant drawdown emphasizes the risk involved.
Projection
Monte Carlo simulations, which run 1,000 hypothetical scenarios to project future performance, show a wide range of outcomes for this portfolio. The 50th percentile outcome suggests a potential growth of 594.6%, while the 5th and 67th percentiles indicate 104.1% and 855.0% growth, respectively. These projections, while optimistic, underscore the risk and variability inherent in a growth-focused, low-diversity portfolio. It's important to note that such simulations use historical data and cannot predict future market conditions with certainty.
Asset classes
- Stocks 100%
The portfolio is entirely allocated to stocks, with no presence in other asset classes like bonds or real estate. This singular focus on equities enhances the portfolio's growth potential but also increases its volatility and risk, particularly in market downturns. Diversifying across different asset classes can provide a buffer against stock market volatility and potentially lead to more stable long-term returns.
Sectors
- Technology 48%
- Telecommunications 14%
- Consumer Discretionary 13%
- Health Care 9%
- Financials 7%
- Industrials 4%
- Consumer Staples 2%
- Basic Materials 2%
- Energy 1%
- Real Estate 1%
The sector allocation is heavily weighted towards technology (48%), followed by communication services and consumer cyclicals. This tech-heavy focus is common in growth-oriented portfolios but can lead to heightened volatility, especially during market corrections or when tech valuations come under scrutiny. Balancing sector exposure can help mitigate this risk while still capturing growth opportunities in other areas.
Regions
- North America 100%
Geographically, the portfolio is exclusively invested in North America, missing out on potential growth opportunities and diversification benefits from developed and emerging markets outside the U.S. Expanding geographic exposure can reduce the portfolio's vulnerability to U.S.-specific economic cycles and offer access to growth in other regions.
Market capitalization
- Mega-cap 63%
- Large-cap 23%
- Mid-cap 13%
- Small-cap 1%
The portfolio's market capitalization breakdown shows a strong bias towards mega and big-cap stocks, which is typical for growth-focused portfolios aiming for stability and consistent returns. However, this comes at the expense of the higher growth potential and diversification benefits that medium, small, and micro-cap stocks can offer. Including smaller-cap stocks could enhance returns and diversification.
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.
Considering the portfolio's current composition and performance, there's room for optimization towards the Efficient Frontier, which represents the most efficient combination of assets for the best possible risk-return ratio. Adjusting the asset allocation to include a broader mix of asset classes, sectors, and geographies could improve the portfolio's diversification and risk-adjusted returns, moving it closer to the Efficient Frontier.
Dividends
- Invesco S&P 500 Revenue ETF 1.40%
- Schwab U.S. Large-Cap Growth ETF 0.40%
- Weighted yield (per year) 0.43%
The dividend yields from the two ETFs contribute a modest income stream, with a total portfolio yield of 0.43%. While growth-focused portfolios typically prioritize capital appreciation over income, dividends can provide a useful cash flow and compounding effect over time. Investors might consider balancing growth and income-generating assets according to their cash flow needs and investment horizon.
Ongoing product costs
- Invesco S&P 500 Revenue ETF 0.39%
- Schwab U.S. Large-Cap Growth ETF 0.04%
- Weighted costs total (per year) 0.05%
The portfolio benefits from relatively low costs, with a total expense ratio (TER) of 0.05%. Low costs are crucial for enhancing long-term returns, as even small differences in fees can compound significantly over time. This focus on cost efficiency is commendable and should be maintained.
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