A growth-focused portfolio heavily invested in S&P 500 ETFs with minimal diversification
Report created on Aug 8, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
IV iShares Core S&P 500 ETF
IVV - US4642872000 48.75% -
SP SPDR S&P 500 ETF Trust
SPY - US78462F1030 27.30% -
VO Vanguard S&P 500 ETF
VOO - US9229083632 12.75% -
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 11.20%
This portfolio is heavily concentrated in S&P 500 ETFs, with nearly 89% allocated across three specific ETFs that track the same index, and an additional 11.2% in a total stock market ETF. Such a composition indicates a strong focus on large-cap U.S. equities, with all investments within the stock asset class. This setup suggests an overlap in holdings and a redundancy that could limit diversification benefits, despite the portfolio's apparent growth orientation.
Growth
Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 14.42%, with a maximum drawdown of -33.98%. These figures reflect the performance characteristics of the S&P 500 over the review period, highlighting periods of significant growth as well as vulnerability to market downturns. The days contributing to 90% of returns being limited to 31 suggests that a few key periods have driven the majority of the portfolio's gains, underscoring the importance of staying invested through market cycles.
Projection
Monte Carlo simulations project a wide range of potential outcomes, with the median scenario suggesting a 530.5% return. This optimistic projection is balanced by the reality that a small percentage of simulations result in significantly lower outcomes. Such forward-looking projections, while useful for planning, are inherently uncertain and should be viewed as one of many tools in assessing potential future performance, not guarantees.
Asset classes
- Stocks 100%
The portfolio's allocation is exclusively in stocks, with no presence of bonds, real estate, commodities, or cash. This singular focus on equities, particularly within a specific index, maximizes exposure to stock market volatility and growth potential but lacks the risk mitigation benefits that come from broader asset class diversification.
Sectors
- Technology 34%
- Financials 14%
- Consumer Discretionary 11%
- Telecommunications 10%
- Health Care 9%
- Industrials 8%
- Consumer Staples 5%
- Energy 3%
- Utilities 2%
- Real Estate 2%
- Basic Materials 2%
Sector allocation closely mirrors the S&P 500, with heavy emphasis on technology, financial services, and consumer cyclicals. This reflects broader market trends but also concentrates risk in sectors that can be highly volatile or susceptible to market downturns. The absence of significant allocations to more defensive sectors like utilities or consumer staples further tilts the portfolio towards growth at the expense of stability.
Regions
- North America 99%
Geographic exposure is almost exclusively North American, with no significant investment in developed European or Asian markets, nor in emerging markets. This geographic concentration enhances exposure to U.S. economic and market conditions while missing potential opportunities for growth and risk diversification available in international markets.
Market capitalization
- Mega-cap 46%
- Large-cap 34%
- Mid-cap 18%
- Small-cap 2%
The focus on mega and big-cap stocks, which comprise 80% of the portfolio, aligns with the goal of capturing the growth of the largest U.S. companies. However, the minimal exposure to medium, small, and micro-cap stocks limits potential upside from faster-growing but riskier segments of the market.
Redundant positions
-
High correlationVanguard S&P 500 ETFiShares Core S&P 500 ETFSPDR S&P 500 ETF TrustVanguard Total Stock Market Index Fund ETF Shares
The high correlation among the portfolio's assets, given their overlap in S&P 500 exposure, significantly limits diversification benefits. In market downturns, this lack of diversification can lead to higher portfolio volatility and drawdowns, as all assets may move in tandem.
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 heavy concentration in highly correlated assets, optimization should focus on reducing overlap to enhance diversification without necessarily sacrificing growth potential. Exploring assets with lower correlations, both within and outside the stock asset class, could improve the risk-return profile.
Dividends
- iShares Core S&P 500 ETF 1.30%
- SPDR S&P 500 ETF Trust 1.10%
- Vanguard S&P 500 ETF 1.20%
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Weighted yield (per year) 1.22%
The dividend yields across the ETFs average to 1.22%, contributing to the portfolio's total return. While not the focus of a growth-oriented strategy, these dividends provide a modest income stream and can offer some cushion during market volatility.
Ongoing product costs
- iShares Core S&P 500 ETF 0.03%
- SPDR S&P 500 ETF Trust 0.10%
- Vanguard S&P 500 ETF 0.03%
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Weighted costs total (per year) 0.05%
The portfolio benefits from low total expense ratios (TERs), averaging 0.05% across the ETFs. This cost efficiency is commendable, as lower costs directly translate to higher net returns for investors over the long term.
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