Growth-focused portfolio with high concentration in US large-cap stocks and low diversification
Report created on Jul 9, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 50.00% -
SC Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 50.00%
This portfolio is highly concentrated, with 100% of its assets in U.S. stocks, split evenly between Schwab U.S. Dividend Equity ETF and Schwab U.S. Large-Cap Growth ETF. This allocation underscores a focus on growth through large-cap companies, complemented by a stream of dividends. However, it's worth noting that such a composition limits diversification across asset classes and geographies, concentrating risk in the performance of the U.S. market and its economic cycles.
Growth
Historically, this portfolio has shown a Compound Annual Growth Rate (CAGR) of 14.94%, with a significant max drawdown of -32.54%. These figures highlight the portfolio's growth potential, albeit with considerable volatility. The days contributing to 90% of returns being concentrated in a relatively small number of days suggest that timing the market plays a crucial role in achieving these returns, which can be risky for the uninitiated or those unable to maintain constant market vigilance.
Projection
Monte Carlo simulations, which project future performance based on historical data, suggest a wide range of outcomes for this portfolio. With the majority of simulations indicating positive returns and an annualized return across all simulations at 16.62%, there's potential for substantial growth. However, reliance on historical data has its limitations, as past performance is not always indicative of future results, especially in a rapidly changing economic environment.
Asset classes
- Stocks 100%
The portfolio's exclusive investment in stocks, without diversification into other asset classes like bonds or real estate, positions it for higher volatility and risk. While this can lead to higher returns, it also exposes investors to market downturns without the cushion typically provided by more conservative assets. Diversifying across asset classes can help manage risk and smooth out returns over time.
Sectors
- Technology 30%
- Health Care 12%
- Consumer Discretionary 11%
- Energy 11%
- Consumer Staples 10%
- Telecommunications 9%
- Financials 8%
- Industrials 7%
- Basic Materials 2%
Sector allocation shows a heavy emphasis on technology, healthcare, and consumer cyclicals, sectors known for their growth potential. However, this concentration can increase susceptibility to sector-specific downturns. For instance, technology stocks may be particularly volatile in response to changes in interest rates or regulatory environments. Broadening sector exposure could mitigate this risk and provide more stability.
Regions
- North America 100%
With 100% exposure to North America, the portfolio lacks international diversification. This geographic concentration in developed markets, particularly the U.S., can limit exposure to growth opportunities in emerging markets and increase vulnerability to domestic economic fluctuations. Expanding geographic exposure could offer access to a wider range of growth drivers and reduce country-specific risks.
Market capitalization
- Large-cap 40%
- Mega-cap 32%
- Mid-cap 23%
- Small-cap 4%
- Micro-cap 1%
The allocation across market capitalizations shows a preference for big and mega-cap stocks, which tend to be more stable and less volatile than smaller companies. However, this focus may limit potential high-growth opportunities that small and micro-cap stocks can offer. Including a broader range of market caps could enhance growth prospects and diversification.
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 Efficient Frontier, there may be opportunities to optimize the portfolio for a better risk-return ratio by adjusting the asset allocation. While the current focus on growth stocks has historically provided strong returns, there's potential to achieve a more efficient balance between risk and return by incorporating assets with different risk profiles and correlations.
Dividends
- Schwab U.S. Dividend Equity ETF 3.80%
- Schwab U.S. Large-Cap Growth ETF 0.40%
- Weighted yield (per year) 2.10%
The dividend yield contributes to the portfolio's total return, offering a 2.10% yield that provides a consistent income stream. This is particularly beneficial in volatile or down markets, as dividends can offer a return even when stock prices are falling. Balancing growth stocks with high-dividend-yielding stocks is a strategy that can provide both income and potential for capital appreciation.
Ongoing product costs
- Schwab U.S. Dividend Equity ETF 0.06%
- Schwab U.S. Large-Cap Growth ETF 0.04%
- Weighted costs total (per year) 0.05%
The portfolio benefits from low costs, with a total expense ratio (TER) of 0.05%, which is impressively low and supports better long-term performance by minimizing the drag on returns. Keeping costs low is crucial for enhancing net returns, especially in a growth-focused portfolio where every percentage point of return can compound significantly over time.
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