A focused growth portfolio with singular exposure to the S&P 500 ETF
Report created on Jun 9, 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 focused approach to growth by tracking the performance of the S&P 500 Index. Such a strategy simplifies investment decisions but results in low diversification outside the top companies in the U.S. While this ETF encompasses a broad spectrum of sectors, the lack of asset class and geographic diversification increases exposure to market volatility and sector-specific risks.
Growth
Historically, the Vanguard S&P 500 ETF has delivered a Compound Annual Growth Rate (CAGR) of 14.02%, with a maximum drawdown of -33.99%. These figures highlight the ETF's ability to generate strong returns, albeit with significant volatility. The days contributing to 90% of returns being limited to 29 suggests that a few critical periods have driven the bulk of the performance, underscoring the importance of staying invested through market cycles.
Projection
Monte Carlo simulations, which project future performance based on historical data, indicate a wide range of outcomes for this portfolio. The key percentiles show a potential for substantial growth, with the median outcome suggesting a nearly fivefold increase. However, it's crucial to remember that these projections are not guarantees and are subject to the limitations of historical data.
Asset classes
- Stocks 100%
The portfolio's allocation is exclusively in stocks, specifically within the U.S. equity market. This singular focus on equities, particularly within a single country, amplifies both potential returns and volatility. Diversification across different asset classes, such as bonds or real estate, could mitigate risk and reduce volatility without necessarily compromising long-term returns.
Sectors
- Technology 32%
- Financials 14%
- Health Care 11%
- Consumer Discretionary 10%
- Telecommunications 9%
- Industrials 8%
- Consumer Staples 6%
- Energy 3%
- Utilities 3%
- Real Estate 2%
- Basic Materials 2%
The sector allocation within the ETF mirrors the S&P 500's composition, with significant weightings in technology, financial services, and healthcare. This concentration in tech-heavy and cyclical sectors can lead to higher volatility, especially during market downturns or sector-specific shocks. Diversifying across a broader range of sectors or adding defensive assets might provide a buffer in turbulent times.
Regions
- North America 99%
The portfolio's geographic allocation is almost entirely focused on North America, with negligible exposure to international markets. This concentration benefits from the robust performance of U.S. equities but misses out on potential opportunities and diversification benefits offered by developed and emerging markets outside the U.S.
Market capitalization
- Mega-cap 47%
- Large-cap 34%
- Mid-cap 18%
- Small-cap 1%
The market capitalization breakdown shows a heavy tilt towards mega and large-cap stocks, which are generally less volatile than small and mid-cap stocks. This bias towards larger companies is consistent with the S&P 500's composition but limits exposure to the potentially higher growth opportunities available in smaller companies.
Dividends
- Vanguard S&P 500 ETF 1.30%
- Weighted yield (per year) 1.30%
The portfolio's dividend yield of 1.30% contributes to its total return, providing a steady income stream in addition to capital appreciation. While not the primary focus for growth-oriented investors, dividends can offer a buffer during market volatility and contribute to compounding returns over time.
Ongoing product costs
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.03%
With a Total Expense Ratio (TER) of just 0.03%, the portfolio benefits from extremely low costs, maximizing the potential for net returns. Low costs are crucial for long-term growth, as they allow a greater portion of investment returns to compound over time.
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