A concentrated US equities portfolio with growth focus dividend exposure and elevated single stock risk

Report created on Nov 21, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily concentrated in U.S. equities with four ETFs and one single REIT stock. Equity ETFs together represent 95% of assets with a 30 30 30 split across dividend growth and broad market exposures and a small cap value tilt at 5% plus a 5% single stock holding. This matters because concentration increases exposure to a single market regime and overlapping ETFs can duplicate holdings, reducing diversification benefits. Recommendation: simplify overlapping exposures by consolidating similar large-cap growth and broad market ETFs into a single core holding and keep small positions to provide intentional diversification.

Growth Info

Historical performance shows strong nominal returns with a reported CAGR of 16.91% and a maximum drawdown of -35.28%. For example a hypothetical $10,000 invested and growing at a 16.91% compound annual growth rate (CAGR measures average annual growth) for ten years would grow substantially but would have experienced large interim losses. This pattern highlights that high long‑term returns can coexist with severe short‑term declines. Recommendation: expect volatility and plan for a multi‑year horizon or cash buffers to avoid forced selling during drawdowns. Historical figures are informative but not predictive of future returns.

Projection Info

A Monte Carlo simulation was run to show a range of possible outcomes using historical return patterns and randomness. Monte Carlo uses many simulated paths to estimate probabilities of different endings given current allocations; it is probabilistic not certain. Results show wide dispersion with a 5th percentile outcome at 42.8% and a median at 606%, indicating skew and the chance for both sizable gains and modest outcomes. Recommendation: use these projections as scenario planning rather than guarantees and stress test the plan against low‑return scenarios to ensure goals remain achievable.

Asset classes Info

  • Stocks
    100%

The asset class allocation is 100% equities and 0% fixed income or cash, meaning all return and risk comes from stocks. This increases expected long‑term returns but also amplifies short‑term volatility and sequence‑of‑returns risk. Diversification across asset classes typically smooths returns and reduces drawdown depth. Recommendation: consider adding fixed income or cash equivalents if the investment horizon or liquidity needs require lower volatility, or set clear tolerance limits for equity-only allocations as part of a disciplined rebalancing plan.

Sectors Info

  • Technology
    27%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Financials
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Energy
    8%
  • Consumer Staples
    8%
  • Real Estate
    6%
  • Basic Materials
    2%
  • Utilities
    1%

Sector exposure is dominated by technology at about 27% with moderate weights in healthcare consumer cyclicals and financials. Sector concentration matters because sectors respond differently to macro events; for example tech‑heavy portfolios can be more sensitive to interest rate moves and growth re‑rating. Having nine sectors represented is positive but the heavy tilt reduces true sector diversification. Recommendation: evaluate whether the tech tilt is intentional for growth or accidental through overlapping ETFs and rebalance toward target sector weights if the concentration exceeds the intended risk profile.

Regions Info

  • North America
    99%

Geographic exposure is overwhelmingly North America at 99% with near zero allocations elsewhere. Geographic concentration reduces diversification benefits that come from different economic cycles and currency exposures. While U.S. markets have delivered strong long‑term returns this bias increases vulnerability to U.S. specific shocks and policy changes. Recommendation: consider modest allocations to developed international or emerging markets to capture different growth drivers and reduce reliance on a single economic region, unless the goal is explicit U.S. market outperformance.

Market capitalization Info

  • Large-cap
    39%
  • Mega-cap
    31%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    4%

Market capitalization tilt shows a blend with Mega and Big caps making up 70% and mid small and micro caps representing the remainder. Large caps generally provide stability and liquidity while small caps can offer higher growth potential but more volatility. The presence of a small cap value ETF provides some diversification across style and size but at only 5% it is small relative to the large‑cap bias. Recommendation: if small cap exposure is desired for return enhancement, consider increasing it gradually and monitor liquidity and tracking differences between size buckets.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

There is a highly correlated pair between the large‑cap growth ETF and the broad total‑market ETF demonstrating overlapping holdings; correlation measures how assets move together and high correlation reduces diversification. When assets are highly correlated they may all decline simultaneously during market stress, limiting the benefit of holding multiple funds. Recommendation: remove or reduce overlapping funds and replace them with complementary exposures that have lower historical correlation to improve diversification and reduce redundant fees and tracking overlap.

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.

Optimization advice focuses on improving the portfolio’s position on the Efficient Frontier which means achieving the best expected return for a given level of risk using only the current asset set. The Efficient Frontier is a concept that maps optimal risk‑return tradeoffs based on historical return and volatility inputs, but it relies on past data and assumes return distributions remain similar. Recommendation: start optimization by removing overlapping highly correlated ETFs then rebalance weights among remaining assets; remember efficiency is about improving the risk‑return ratio not necessarily adding more holdings.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Schwab U.S. Dividend Equity ETF 2.80%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • VICI Properties Inc 6.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.10%
  • Weighted yield (per year) 1.65%

The portfolio’s blended yield is about 1.65% with a mix of low yield growth ETFs and higher yield items like the REIT at 6.2% and the dividend ETF near 2.8%. Dividend yield contributes to total return and can provide income and downside cushioning, but yield concentration in a single REIT adds sector and single‑issuer risk. Recommendation: balance income needs against concentration risk by diversifying high‑yield holdings across multiple issuers or funds and decide whether income is a core objective or a secondary benefit of equity growth.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.05%

Overall costs are impressively low with ETF expense ratios mostly at or below 0.25% and a blended total expense ratio around 0.05%. TER (Total Expense Ratio) is the annual cost of holding funds and lower costs compound into materially better net returns over time, especially with long horizons. Recommendation: keep the core in low‑cost ETF wrappers and watch for trading fees or bid‑ask spreads when rebalancing; even low ongoing costs can be eroded by frequent turnover or expensive single stock transactions.

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