Growth-focused portfolio with heavy reliance on US large-cap stocks and low diversification
Report created on Jul 18, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
SP SPDR® Portfolio S&P 500 ETF
SPLG - US78464A8541 34.00% -
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 33.00% -
SC Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 33.00%
This portfolio is heavily concentrated in U.S. large-cap stocks, with 100% of its assets allocated to the stock market. The three ETFs—SPDR® Portfolio S&P 500, Schwab U.S. Dividend Equity, and Schwab U.S. Large-Cap Growth—reflect a clear focus on growth-oriented, dividend-paying large-cap companies. The portfolio's diversification is low, with a significant tilt towards technology and other major sectors, lacking exposure to international markets, smaller companies, and other asset classes. This concentration enhances the portfolio's growth potential but also increases its risk profile.
Growth
Historically, the portfolio has shown a strong Compound Annual Growth Rate (CAGR) of 14.79%, albeit with a significant maximum drawdown of -32.98%. This performance indicates a high growth potential but comes with considerable volatility, as evidenced by the substantial drawdown. The days contributing to 90% of the returns being concentrated in just 33 days highlight the portfolio's reliance on short, sharp gains, which can be risky for investors not prepared for sudden market movements.
Projection
Monte Carlo simulations, which use historical data to project future outcomes, suggest a wide range of potential future performances for this portfolio, with a median increase of 558.7% and 992 out of 1,000 simulations showing positive returns. While these projections offer a promising outlook, it's crucial to remember that they are based on past data and cannot guarantee future results. The high variance in potential outcomes underscores the portfolio's risk level.
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 high growth but also high volatility. This approach suits investors with a higher risk tolerance but may not be appropriate for those seeking stability or income through diversification. Including different asset classes could reduce volatility and provide a more balanced risk-return profile.
Sectors
- Technology 31%
- Consumer Discretionary 11%
- Health Care 11%
- Financials 10%
- Telecommunications 9%
- Consumer Staples 9%
- Energy 8%
- Industrials 8%
- Basic Materials 2%
- Utilities 1%
- Real Estate 1%
The sector allocation heavily favors technology, followed by consumer cyclicals, healthcare, and financial services, mirroring the composition of many growth-oriented portfolios. While this sectoral focus aligns with the portfolio's growth objectives, it also exposes it to sector-specific risks, such as regulatory changes or economic downturns affecting these industries disproportionately. Diversifying across a broader range of sectors could mitigate some of these risks.
Regions
- North America 100%
With 100% of the portfolio's geographic exposure in North America, primarily the U.S., there's a significant home bias. This concentration in a single region neglects the potential benefits of global diversification, such as reduced volatility and exposure to growth in emerging markets. Expanding the geographic allocation could enhance the portfolio's risk-adjusted returns.
Market capitalization
- Large-cap 38%
- Mega-cap 37%
- Mid-cap 21%
- Small-cap 3%
The allocation to big (38%) and mega-cap (37%) stocks, with limited exposure to medium (21%) and small (3%) caps, underscores the portfolio's focus on established companies. While this can offer stability and potential for steady growth, it may limit opportunities for higher returns that smaller companies can provide. Increasing exposure to smaller caps could introduce more growth potential, albeit with increased risk.
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 current portfolio, while focused on growth, may not be optimized for the best possible risk-return ratio, as indicated by its low diversification score and high risk score. Using the Efficient Frontier model could identify opportunities to adjust asset allocations for improved risk-adjusted returns. However, this model relies on historical data, which may not always predict future performance accurately. It's worth exploring whether a more diversified asset mix could achieve similar growth objectives with reduced volatility.
Dividends
- Schwab U.S. Dividend Equity ETF 3.80%
- Schwab U.S. Large-Cap Growth ETF 0.40%
- SPDR® Portfolio S&P 500 ETF 1.20%
- Weighted yield (per year) 1.79%
The portfolio's dividend yield of 1.79%, driven by the Schwab U.S. Dividend Equity ETF's 3.80% yield, contributes to its total return. While the focus on dividend-yielding stocks supports income generation, it's essential to balance the search for yield with the pursuit of capital appreciation, especially in a growth-focused portfolio. Considering the portfolio's objectives, the current dividend strategy appears appropriate but should be regularly reviewed for alignment with overall goals.
Ongoing product costs
- Schwab U.S. Dividend Equity ETF 0.06%
- Schwab U.S. Large-Cap Growth ETF 0.04%
- SPDR® Portfolio S&P 500 ETF 0.02%
- Weighted costs total (per year) 0.04%
The portfolio benefits from low overall costs, with a total expense ratio (TER) of 0.04%. Low costs are crucial for long-term growth as they directly enhance net returns. This aspect of the portfolio is well-managed, demonstrating a cost-efficient approach to investing in growth stocks. Maintaining low investment costs will continue to be beneficial, especially in a low-diversity, high-growth strategy.
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