Growth-focused portfolio with strong reliance on US large-cap stocks and low diversification
Report created on Jul 23, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
SW Schwab S&P 500 Index Fund
SWPPX - US8085098551 60.00% -
SW SCHWAB U.S. LARGE-CAP GROWTH INDEX FUND
SWLGX - US80850L7183 40.00%
This portfolio is heavily concentrated in two funds, both of which invest in U.S. large-cap stocks, with a 60% allocation to a broad market index fund and a 40% allocation to a large-cap growth fund. This composition reflects a clear growth orientation but exhibits low diversification, both in terms of asset classes and geographic exposure. The entire portfolio is allocated to stocks, with no positions in bonds, real estate, or alternative assets, and it is entirely focused on North American markets.
Growth
Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 16.53%, which is impressive. However, it has also experienced a significant maximum drawdown of -32.82%, indicating high volatility and potential risk for investors. The concentration on high-growth sectors like technology, which makes up 39% of the portfolio, has likely contributed to both the high returns and the volatility.
Projection
Monte Carlo simulations, based on 1,000 iterations, suggest a wide range of potential outcomes for this portfolio. The median projection shows a substantial increase, with the 50th percentile at a 710.2% gain, indicating strong growth potential. However, the significant spread between the 5th and 67th percentiles highlights the high level of uncertainty and risk associated with this growth-focused strategy.
Asset classes
- Stocks 100%
The portfolio’s allocation is entirely in stocks, lacking exposure to other asset classes like bonds, commodities, or real estate. This singular focus enhances growth potential but also increases volatility and risk, especially during market downturns. Diversifying across different asset classes can help mitigate these risks and provide more stable returns over time.
Sectors
- Technology 39%
- Consumer Discretionary 12%
- Telecommunications 11%
- Financials 11%
- Health Care 8%
- Industrials 6%
- Consumer Staples 5%
- Energy 2%
- Utilities 2%
- Real Estate 1%
- Basic Materials 1%
Sector allocation is heavily weighted towards technology, consumer cyclical, and communication services, which are known for their growth potential but also for their volatility. Financial services and healthcare are also significant, adding some balance. However, the underrepresentation of traditionally defensive sectors like utilities and consumer defensive suggests a higher risk profile.
Regions
- North America 100%
Geographic exposure is entirely concentrated in North America, with no investments in international markets. This geographic concentration can limit diversification benefits and expose the portfolio to region-specific risks. Expanding into international markets could provide a buffer against domestic market volatility and offer access to growth opportunities abroad.
Market capitalization
- Mega-cap 54%
- Large-cap 30%
- Mid-cap 15%
- Small-cap 1%
The portfolio's market capitalization breakdown shows a strong preference for mega and big-cap stocks, which constitute 84% of the allocation. While these companies are typically more stable than their smaller counterparts, the minimal exposure to medium, small, and micro-cap stocks limits potential for outsized growth from emerging companies and sectors.
Redundant positions
-
High correlationSCHWAB U.S. LARGE-CAP GROWTH INDEX FUNDSchwab S&P 500 Index Fund
The high correlation between the two funds in the portfolio indicates redundancy, reducing the effectiveness of diversification. Both funds focus on U.S. large-cap stocks, with significant overlap in holdings. Diversifying into assets with lower correlation can reduce portfolio volatility and improve 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 its components to enhance diversification. Removing overlapping assets and introducing investments in different asset classes or geographic regions could improve the portfolio's risk-return profile. The current focus on U.S. large-cap stocks, while growth-oriented, leaves room for diversification into international markets, smaller companies, or alternative investments.
Dividends
- SCHWAB U.S. LARGE-CAP GROWTH INDEX FUND 0.50%
- Schwab S&P 500 Index Fund 1.10%
- Weighted yield (per year) 0.86%
The portfolio's dividend yield is modest, with a total yield of 0.86%. While not the focus of a growth-oriented strategy, dividends contribute to total return and can provide a steady income stream, which can be particularly valuable during market downturns or for investors seeking income.
Ongoing product costs
- SCHWAB U.S. LARGE-CAP GROWTH INDEX FUND 0.04%
- Schwab S&P 500 Index Fund 0.02%
- Weighted costs total (per year) 0.03%
The portfolio benefits from low total expense ratios (TER) of 0.03%, which is favorable for long-term growth as lower costs directly translate to higher net returns. Keeping investment costs low is a crucial aspect of maximizing returns, especially in a growth-focused strategy where every percentage point counts.
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