A focused yet growth-oriented portfolio with a strong tilt towards US large-cap equities
Report created on May 6, 2025Risk profile
4/7
Diversification profile
2/5
Positions
-
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 40.00% -
SC Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 30.00% -
VO Vanguard S&P 500 ETF
VOO - US9229083632 30.00%
This portfolio is heavily concentrated in U.S. equities, with significant allocations to the Schwab U.S. Dividend Equity ETF, Schwab U.S. Large-Cap Growth ETF, and Vanguard S&P 500 ETF. The composition suggests a strategy focused on capitalizing on the growth and stability of large-cap U.S. companies, while also seeking dividend income. The high concentration in just three ETFs, all tracking large segments of the U.S. stock market, indicates a low level of diversification across asset classes and regions.
Growth
Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 13.53%, with a maximum drawdown of -33.00%. These figures highlight its resilience and potential for substantial growth, albeit with a significant level of risk as evidenced by the drawdown. The days contributing most to returns suggest that the portfolio's performance is subject to significant short-term fluctuations, which could be a concern for investors with a low tolerance for volatility.
Projection
Monte Carlo simulations project a wide range of potential outcomes, with the median scenario suggesting a 460.8% increase. However, the presence of a 5th percentile outcome at only 71.2% growth indicates considerable downside risk. While these projections offer a glimpse into potential future performance, it's crucial to remember that they are based on historical data and cannot guarantee future results. Diversification could help mitigate some of this risk.
Asset classes
- Stocks 100%
The portfolio is exclusively invested in stocks, with no allocation to other asset classes such as bonds or real estate. This singular focus enhances its growth potential but also increases its susceptibility to market volatility. Diversifying across different asset classes can offer a buffer against stock market fluctuations and provide more stable returns over time.
Sectors
- Technology 27%
- Health Care 12%
- Consumer Staples 11%
- Consumer Discretionary 11%
- Financials 10%
- Energy 9%
- Telecommunications 9%
- Industrials 8%
- Basic Materials 2%
- Utilities 1%
- Real Estate 1%
Sectoral allocation is led by Technology, Healthcare, and Consumer sectors, which are typically associated with growth but can also be volatile. The concentration in these sectors may expose the portfolio to sector-specific risks, such as regulatory changes or economic cycles affecting consumer spending. Balancing these with more defensive sectors could provide a more stable performance.
Regions
- North America 100%
The portfolio's geographical allocation is entirely focused on North America, missing out on potential opportunities and risk mitigation offered by international diversification. Exposure to developed and emerging markets outside of the U.S. could enhance returns and reduce the impact of domestic market downturns.
Market capitalization
- Large-cap 38%
- Mega-cap 36%
- Mid-cap 22%
- Small-cap 3%
The emphasis on large and mega-cap stocks aligns with the portfolio's growth and stability objectives. These companies are often more resilient during market downturns than their smaller counterparts. However, incorporating a mix of medium, small, and micro-cap stocks could offer higher growth potential and diversification benefits.
Redundant positions
-
High correlationSchwab U.S. Large-Cap Growth ETFVanguard S&P 500 ETF
The high correlation between the Schwab U.S. Large-Cap Growth ETF and Vanguard S&P 500 ETF suggests redundancy, as they likely hold many of the same stocks. This redundancy does not contribute to diversification and exposes the portfolio to unnecessary concentrated risk. Identifying and eliminating overlapping holdings can enhance the portfolio's efficiency.
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.
The portfolio's current allocation emphasizes growth through a concentrated exposure to U.S. equities, which has historically provided solid returns. However, the presence of highly correlated assets suggests room for optimization. By reducing overlap and introducing assets with low correlation, the portfolio could achieve a better risk-return profile. This adjustment would move the portfolio closer to the Efficient Frontier, where each unit of risk taken is optimized for maximum return.
Dividends
- Schwab U.S. Dividend Equity ETF 4.00%
- Schwab U.S. Large-Cap Growth ETF 0.40%
- Vanguard S&P 500 ETF 1.30%
- Weighted yield (per year) 2.11%
The portfolio's dividend yield of 2.11% contributes to its total return, combining growth with income generation. The Schwab U.S. Dividend Equity ETF's higher yield is particularly notable. While dividends are an important aspect of total returns, the focus should also include growth potential and the sustainability of dividend payments.
Ongoing product costs
- Schwab U.S. Dividend Equity ETF 0.06%
- Schwab U.S. Large-Cap Growth ETF 0.04%
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.04%
The portfolio benefits from exceptionally low costs, with a total expense ratio (TER) of 0.04%. Low costs are crucial for long-term investment success, as they directly enhance net returns. This is a strong point of the portfolio, ensuring that more of the investment returns are retained by the investor.
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