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Concentrated UK small cap stock portfolio with high volatility and strong historic but uneven performance

Report created on May 9, 2026

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is a focused basket of eight individual UK-listed stocks, with no funds or bonds and no cash buffer. The top three positions make up about 70% of the total weight, so the structure is clearly concentrated rather than spread thinly across many names. That kind of focus means each company’s story matters a lot more than in a broad index fund. When a portfolio is built from a handful of stocks, overall results tend to swing more sharply with company news, earnings surprises, and sector cycles. Here, stock-picking and timing have a big influence, and outcomes will naturally be more idiosyncratic than a market-tracking approach.

Growth Info

Over the last decade, £1,000 in this portfolio grew to about £3,085, a compound annual growth rate (CAGR) of 11.9%. CAGR is like the average speed on a long car journey, smoothing out all the ups and downs into one yearly number. This return lagged both the US market (15.8%) and the global market (13.3%), but still delivered solid growth in absolute terms. The price for that growth was a very deep max drawdown of almost -53%, roughly double the benchmark declines. It also needed just 23 very strong days to generate 90% of returns, highlighting how performance was driven by a few big moves rather than steady progress.

Projection Info

The Monte Carlo projection looks forward 15 years by simulating many possible future paths using the portfolio’s historical risk and return. Monte Carlo is basically a “what if” engine: it shakes the data thousands of times to see a wide spread of outcomes. The median result turns £1,000 into roughly £2,806, with a broad middle range from around £1,847 to £4,109. There’s a 76.9% chance of ending above the starting value, and an average simulated return of 8.3% per year. These numbers aren’t forecasts or promises; they simply show what could happen if the future rhymes with the past in terms of volatility and return pattern.

Asset classes Info

  • Stocks
    100%

All of the capital here is in stocks, with 0% in bonds, cash, or other asset classes. That’s why the portfolio is tagged “aggressive” on the risk scale: equities are historically the growth engine of portfolios, but they usually come with larger and more frequent swings. Many broad market benchmarks mix in government or corporate bonds to dampen volatility; this one runs fully “on equity.” The upside is full participation when share prices rise strongly. The downside is that there is no built-in shock absorber during equity market stress, so any downturn in shares flows straight through to the overall portfolio value.

Sectors Info

  • Industrials
    38%
  • Financials
    23%
  • Energy
    18%
  • Basic Materials
    10%
  • Health Care
    8%
  • Technology
    3%

Sector-wise, the portfolio leans heavily into industrials (38%), with meaningful exposure to financials (23%) and energy (18%), plus smaller allocations to basic materials, health care, and a touch of technology. Compared with a global equity benchmark, that’s a strong tilt away from large technology, consumer, and communication names, and much more weighted to economically sensitive, cyclical areas. Sectors like industrials and energy often benefit when business activity and commodity demand are strong but can suffer in recessions or when projects and capital spending get cut. This sector mix supports the “aggressive” label, as it tends to amplify economic ups and downs in portfolio performance.

Regions Info

  • Europe Developed
    69%
  • No data
    31%

Geographically, around 69% of the portfolio is classified as developed Europe, which here largely reflects UK listings, while 31% is tagged as “no data,” often due to gaps in the underlying country classification. Even with that missing slice, the pattern is clearly home-market focused rather than global. Compared with broad benchmarks, which spread across North America, Europe, and Asia, this means more exposure to a single economic and regulatory environment and to sterling. When one market dominates, local political decisions, interest rates, and currency moves can have an outsized impact on portfolio returns versus a more geographically balanced approach.

Market capitalization Info

  • Small-cap
    71%
  • Mid-cap
    27%
  • Micro-cap
    3%

Most holdings sit in the smaller end of the market-cap spectrum: about 71% small-cap, 27% mid-cap, and a small 3% micro-cap slice. Smaller companies often have more room to grow from a low base, but their share prices can be more volatile and sensitive to investor sentiment, financing conditions, and single events. Large caps, common in benchmark indices, usually provide more stability but less explosive upside. This strong small-cap tilt helps explain the portfolio’s higher risk score and deep drawdown history. It also means that liquidity – how easily shares can be bought or sold without big price moves – may be more limited than in blue-chip names.

Risk contribution Info

  • Costain Group PLC
    Weight: 29.11%
    44.8%
  • TP ICAP Group PLC
    Weight: 23.38%
    17.5%
  • Hunting PLC
    Weight: 17.66%
    16.4%
  • Capita PLC
    Weight: 8.71%
    9.4%
  • Oxford BioMedica PLC
    Weight: 7.96%
    5.5%
  • Top 5 risk contribution 93.6%

Risk contribution shows how much each stock drives the portfolio’s overall ups and downs, which can differ from its simple weight. Costain, at 29% of assets, contributes nearly 45% of total risk, meaning its daily moves dominate the experience. The top three holdings together generate almost 79% of portfolio volatility, even though they’re around 70% of the weight. In contrast, TP ICAP’s risk contribution is lower than its weight, reflecting relatively calmer behaviour. This pattern underlines that position size and volatility interact: a volatile holding in a big size can behave like a “volume knob” for the entire portfolio.

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 risk–return chart compares the current portfolio with an “efficient frontier” built only from these existing holdings. The current mix has an expected return of 12.97% with 25.7% volatility and a Sharpe ratio of 0.36, where Sharpe measures return per unit of risk above the risk-free rate. The maximum-Sharpe portfolio using the same stocks scores 0.98, and even the minimum-variance mix sits at 0.57. Being 12.8 percentage points below the frontier at the same risk level means the present weights aren’t using these eight stocks as efficiently as possible. In other words, different sizing of the same names could historically have delivered a smoother or better-compensated ride.

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