A growth-focused portfolio with a heavy tilt towards US large-cap stocks and low diversification
Report created on Aug 19, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 60.00% -
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 20.00% -
SC Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 20.00%
This portfolio is highly concentrated in US equities, with a significant 60% allocation to the Vanguard S&P 500 ETF, and the remaining 40% split evenly between the Schwab U.S. Dividend Equity ETF and the Schwab U.S. Large-Cap Growth ETF. This composition underscores a growth-oriented strategy, albeit with a low level of diversification across asset classes and geographies. The heavy reliance on large-cap stocks, particularly in the technology sector, suggests an aggressive pursuit of capital appreciation but raises concerns about vulnerability to sector-specific downturns.
Growth
The portfolio has exhibited a strong Compound Annual Growth Rate (CAGR) of 15.93%, with a maximum drawdown of -33.40%. This performance, while impressive, comes with the caveat that it is concentrated in a few sectors and large-cap stocks, which can be volatile. The days contributing to 90% of returns being limited to 36 suggests significant returns are concentrated in short, sporadic bursts, indicative of high volatility and risk.
Projection
Monte Carlo simulations project a wide range of outcomes, with the median scenario suggesting a 703.3% increase. However, the reliance on historical data in these projections means they cannot guarantee future performance. The high correlation between assets, as noted, may limit the portfolio's ability to mitigate risk through diversification. The simulations underscore the potential for substantial growth but also highlight the risk inherent in a portfolio with limited diversification.
Asset classes
- Stocks 100%
The portfolio's allocation is entirely in stocks, with no exposure to other asset classes like bonds or real estate. This singular focus on equities, while beneficial in bull markets, exposes the portfolio to greater volatility and risk during market downturns. A more diversified asset class mix could provide a buffer against stock market fluctuations and contribute to a more stable long-term growth trajectory.
Sectors
- Technology 32%
- Financials 11%
- Consumer Discretionary 11%
- Health Care 10%
- Telecommunications 9%
- Industrials 8%
- Consumer Staples 8%
- Energy 6%
- Basic Materials 2%
- Utilities 2%
- Real Estate 1%
The portfolio's sector allocation is heavily weighted towards technology, followed by financial services and consumer cyclicals. This concentration in sectors that are sensitive to economic cycles and interest rate changes can lead to significant fluctuations in portfolio value. Diversifying across a broader range of sectors could help mitigate these risks and smooth out returns over time.
Regions
- North America 99%
With 99% of assets allocated to North America, the portfolio's geographic exposure is narrowly focused, missing out on potential growth opportunities in emerging and developed markets outside the US. This geographic concentration increases susceptibility to regional economic downturns and political instability. Expanding into international markets could enhance returns and reduce risk through global diversification.
Market capitalization
- Mega-cap 41%
- Large-cap 37%
- Mid-cap 20%
- Small-cap 2%
The portfolio's market capitalization breakdown, with a significant tilt towards mega and big-cap stocks, aligns with its growth profile but limits exposure to the potentially higher growth opportunities found in smaller companies. Including medium, small, or micro-cap stocks could increase diversification and potentially enhance returns, albeit with added volatility.
Redundant positions
-
High correlationVanguard S&P 500 ETFSchwab U.S. Large-Cap Growth ETF
The high correlation between the Vanguard S&P 500 ETF and the Schwab U.S. Large-Cap Growth ETF indicates overlapping holdings that do not contribute to diversification. This redundancy can amplify losses during market downturns affecting the large-cap sector. Reducing overlap by reallocating assets could improve the portfolio's risk-adjusted returns.
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.
Optimizing this portfolio involves addressing the high correlation between holdings and the lack of diversification across asset classes and geographies. By reallocating funds to reduce overlap and introducing investments in other asset classes and international markets, the portfolio could achieve a more favorable risk-return profile. This approach aligns with the Efficient Frontier concept, striving for an optimal balance between risk and return.
Dividends
- Schwab U.S. Dividend Equity ETF 3.80%
- Schwab U.S. Large-Cap Growth ETF 0.40%
- Vanguard S&P 500 ETF 1.20%
- Weighted yield (per year) 1.56%
The portfolio's dividend yield, driven primarily by the Schwab U.S. Dividend Equity ETF, contributes to its total return. However, the overall yield is moderate, reflecting the growth orientation of the portfolio. For investors seeking income, increasing exposure to higher-yielding assets could enhance cash flow without significantly compromising growth potential.
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 low total expense ratios (TER) across its holdings, averaging 0.04%. This cost efficiency supports long-term growth by minimizing the drag on returns. Maintaining a focus on low-cost investments is a sound strategy for enhancing net performance over time.
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