A growth-focused portfolio with high exposure to US equities and minimal diversification
Report created on Aug 22, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 70.00% -
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 30.00%
This portfolio is heavily concentrated in US equities, split between the Vanguard S&P 500 ETF and the Vanguard Total Stock Market Index Fund ETF Shares, resulting in a 100% allocation to stocks. The significant overlap between these two ETFs, with the S&P 500 ETF making up 70% and the Total Stock Market ETF 30%, indicates a very focused strategy on large-cap US stocks. Such a composition aligns with growth-oriented goals but comes with low diversification across asset classes and sectors.
Growth
Historically, this portfolio has shown a Compound Annual Growth Rate (CAGR) of 15.57%, with a maximum drawdown of -34.30%. This performance reflects the inherent volatility and potential for significant returns within the US equity market. However, the days contributing to 90% of the returns are notably few, highlighting the portfolio's susceptibility to market timing and the importance of staying invested through market cycles for achieving these returns.
Projection
Monte Carlo simulations, using historical data to project future outcomes, suggest a wide range of potential portfolio values. With key percentiles indicating a 5th percentile growth of 140.5% and a median (50th percentile) growth of 607.8%, the projections underscore the portfolio's high growth potential. Yet, it's crucial to remember that such simulations are based on past trends, and future market conditions could diverge significantly.
Asset classes
- Stocks 100%
The portfolio's sole focus on stocks, without any allocation to bonds, real estate, or alternative investments, maximizes its growth potential but also increases its risk. Diversifying across different asset classes can reduce volatility and provide a buffer during stock market downturns, which might be a consideration for balancing growth objectives with risk management.
Sectors
- Technology 34%
- Financials 14%
- Consumer Discretionary 11%
- Telecommunications 10%
- Health Care 9%
- Industrials 8%
- Consumer Staples 5%
- Energy 3%
- Utilities 2%
- Real Estate 2%
- Basic Materials 2%
Sector allocation is heavily weighted towards technology, financial services, and consumer cyclicals, which are sectors known for their growth potential. However, this concentration also exposes the portfolio to sector-specific risks, such as regulatory changes or economic cycles affecting these industries more than others.
Regions
- North America 100%
Geographic exposure is entirely focused on North America, missing out on potential growth and diversification benefits from developed and emerging markets outside the US. While US equities have historically performed well, international diversification could reduce risk and tap into growth opportunities in other regions.
Market capitalization
- Mega-cap 45%
- Large-cap 33%
- Mid-cap 18%
- Small-cap 3%
- Micro-cap 1%
The portfolio's emphasis on mega and large-cap stocks contributes to its growth profile and reduces exposure to the higher volatility typically associated with smaller companies. However, including medium, small, and micro-cap stocks could enhance diversification and potentially increase returns, given the higher growth prospects of smaller companies.
Redundant positions
-
High correlationVanguard Total Stock Market Index Fund ETF SharesVanguard S&P 500 ETF
The high correlation between the Vanguard S&P 500 ETF and the Vanguard Total Stock Market Index Fund ETF Shares limits the portfolio's diversification benefits. Since these ETFs share a significant overlap in holdings, the portfolio essentially doubles down on the same assets, increasing its vulnerability to market swings affecting large-cap US stocks.
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.
The portfolio's current configuration, while growth-focused, could benefit from diversification beyond highly correlated US equity ETFs. An optimized portfolio with the same risk level could achieve an expected return of 15.73%, suggesting room for improvement in asset allocation to enhance returns without increasing risk unnecessarily.
Dividends
- Vanguard S&P 500 ETF 1.20%
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Weighted yield (per year) 1.20%
With a total dividend yield of 1.20%, the portfolio offers a modest income component. While dividends are not the primary focus of this growth-oriented strategy, they can provide a steady income stream and contribute to total returns, especially in volatile or down markets.
Ongoing product costs
- Vanguard S&P 500 ETF 0.03%
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Weighted costs total (per year) 0.03%
The portfolio benefits from exceptionally low costs, with a total expense ratio (TER) of 0.03%. Low costs are crucial for long-term investment success, as they directly enhance net returns. This aspect of the portfolio is well-optimized, supporting better performance over time.
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