A concentrated us equity portfolio with strong growth tilt and impressively low ongoing costs
Report created on Sep 9, 2024Risk profile
4/7
Diversification profile
2/5
Positions
-
4U UBS (Irl) ETF plc - S&P 500 ESG UCITS ETF USD A Acc
4UBQ - IE00BHXMHL11 50.00% -
SX iShares MSCI USA Small Cap ESG Enhanced ETF USD Acc EUR
SXRG - IE00B3VWM098 50.00%
This portfolio is very simple and punchy: two equity ETFs at 50% each, both focused on the same broad market but different company sizes. One half is large US companies screened with an ESG tilt, the other half is US small caps with an ESG tilt. Compared with a typical “balanced” benchmark that mixes stocks and bonds, this setup is much more growth‑oriented and less cushioned in downturns. The clean 50/50 split between large and small is easy to monitor, but leaves no room for stabilizing assets. If more resilience is desired, gradually adding one or two lower‑risk components could smooth the ride without overcomplicating things.
Growth
Historically, this mix has delivered a very strong compound annual growth rate (CAGR) of 14.72%. CAGR is just the average yearly growth rate, like the average speed of a car over a long trip. A €10,000 starting amount would hypothetically have grown to around €39,000 over ten years at that rate, before taxes or fees. The maximum drawdown of about –26.7% shows that while it falls less than full‑equity crash levels, it can still be emotionally tough. The fact that 90% of returns came in just 23 days underlines how missing a few strong days could really hurt results, so staying invested through volatility has historically been crucial.
Projection
The Monte Carlo analysis, which runs 1,000 random “what if” paths based on historical behavior, shows a wide range of possible outcomes. Monte Carlo is like simulating many alternate market histories to see how often things go well or badly. Here, 998 of 1,000 paths ended positive, with an average annualized return of 16.07%, and the 5th percentile ending at 125.1% (a bit more than doubling). That’s encouraging, but it still depends on the past looking somewhat like the future, which is never guaranteed. Using these simulations as a rough map, not a promise, this portfolio seems positioned for strong growth but still vulnerable to meaningful market swings.
Asset classes
- Stocks 100%
All invested assets are in stocks: 100% equity, 0% bonds or cash. For a “balanced” profile, that’s much more aggressive than the usual mix, which often includes a significant slice of bonds or other stabilizing assets. Being fully in stocks maximizes long‑term growth potential but also ties the portfolio directly to equity market ups and downs. This all‑equity stance is well‑aligned with a growth mindset but less so with capital preservation. If steadier performance is a goal, gradually folding in some defensive asset types over time could bring the overall risk closer to what many balanced investors might expect, without abandoning the growth focus.
Sectors
- Technology 28%
- Financials 14%
- Industrials 13%
- Health Care 12%
- Telecommunications 8%
- Consumer Discretionary 8%
- Real Estate 4%
- Consumer Staples 4%
- Energy 4%
- Basic Materials 3%
- Utilities 2%
Sector exposure is fairly broad, with notable weights in technology (28%), financials, industrials, and healthcare, plus smaller slices across most other sectors. This pattern is actually quite close to common US equity benchmarks, which is a good sign of healthy diversification within the stock sleeve. Tech‑heavy allocations can shine during innovation‑driven booms but may wobble when interest rates rise or growth expectations cool. The presence of financials, industrials, and defensive areas like consumer staples and utilities helps balance that out somewhat. Keeping an eye on whether any single theme starts to dominate too much over time can help avoid accidental over‑bets on one economic story.
Regions
- North America 99%
- Europe Developed 1%
Geographically, the portfolio is almost pure North America at 99%, with just 1% in developed Europe and essentially zero elsewhere. This tight US focus has been a tailwind over the last decade, as US markets have outperformed many regions. It also reflects a clear, simple story that’s easy to understand and track. However, it leaves the portfolio highly dependent on one economy, one currency, and one policy environment. Relative to global equity benchmarks, exposure outside North America is very low. If broader diversification is a goal, gradually adding a global or non‑US component could reduce the risk of being overly tied to a single market’s fate.
Market capitalization
- Small-cap 33%
- Mega-cap 24%
- Large-cap 17%
- Mid-cap 15%
- Micro-cap 11%
Market‑cap exposure is nicely spread: about a third in small caps, plus meaningful slices in mega, big, medium, and even micro companies. That’s a stronger tilt to smaller firms than most mainstream benchmarks, which tend to be dominated by mega and large caps. Smaller companies can offer higher growth potential but also higher volatility and more sensitivity to economic cycles. This size distribution supports long‑term growth and entrepreneurial dynamism, but it can amplify ups and downs, especially in recessions or credit stress. If the ride feels too bumpy in future, dialing back the small and micro‑cap share and leaning more on larger companies would typically make the experience smoother.
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.
Efficient Frontier analysis suggests that, using only these existing building blocks, a more “efficient” mix is possible. The Efficient Frontier is the set of portfolios that offer the best trade‑off between risk (volatility) and expected return. Here, a configuration exists with the same risk level but a slightly higher expected return of around 16.12%, and the mathematically optimal point also sits at that return with a volatility of 15.69%. Efficiency in this context just means better risk‑return ratio, not necessarily better diversification or goal alignment. If you’re happy with the current simplicity, there’s no pressure to fine‑tune, but small allocation shifts might squeeze out a bit more potential.
Ongoing product costs
- UBS (Irl) ETF plc - S&P 500 ESG UCITS ETF USD A Acc 0.12%
- iShares MSCI USA Small Cap ESG Enhanced ETF USD Acc EUR 0.43%
- Weighted costs total (per year) 0.28%
The ongoing costs are impressively low, with a combined total expense ratio (TER) of about 0.28%. TER is just the yearly fee taken by the funds to run them; paying less means you keep more of any growth over time. Over long horizons, even a small fee difference can compound into a significant amount. Compared with active funds or more complex products, this fee level is very competitive and strongly supports better long‑term performance. There’s no urgent need to tweak on cost grounds alone. Any future changes should focus mainly on improving diversification or aligning risk with comfort, rather than chasing tiny fee differences.
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