Growth-oriented portfolio with high concentration in US large-cap stocks and low diversification
Report created on Jul 24, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 90.00% -
SC Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 10.00%
This portfolio is heavily concentrated in the US equity market, with 90% in the Vanguard S&P 500 ETF and 10% in the Schwab U.S. Large-Cap Growth ETF. Both ETFs focus on large-cap stocks, leading to significant overlap and minimal diversification across asset classes or sectors. The portfolio's composition reflects a growth-oriented strategy but lacks exposure to international markets, smaller companies, and other asset classes like bonds or real estate.
Growth
Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 15.05%, with a maximum drawdown of -33.79%. This performance indicates strong growth potential but also underscores the risk of significant volatility, especially considering the concentration in large-cap stocks. The days contributing most to returns are relatively few, suggesting that timing the market plays a crucial role in achieving these returns.
Projection
Monte Carlo simulations, which project future outcomes based on historical data, suggest a wide range of potential portfolio values. The median outcome shows a 689.9% increase, but the range from the 5th to the 67th percentile varies significantly, indicating both the potential for high returns and substantial risk. It's important to note that these projections are based on past performance, which is not a reliable indicator of future results.
Asset classes
- Stocks 100%
The portfolio is entirely allocated to stocks, with no diversification into other asset classes such as bonds, commodities, or cash equivalents. This allocation aligns with a high-growth, high-risk strategy but may not be suitable for all investors, especially those with a lower risk tolerance or a shorter investment horizon. Diversifying across asset classes can help mitigate risk and smooth out returns over time.
Sectors
- Technology 35%
- Financials 13%
- Consumer Discretionary 11%
- Telecommunications 10%
- Health Care 9%
- Industrials 7%
- 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 that can offer significant growth but also come with higher volatility. The underrepresentation of sectors like utilities, real estate, and basic materials limits the portfolio's ability to hedge against market downturns through more stable, income-generating investments.
Regions
- North America 100%
The portfolio's geographic allocation is entirely focused on North America, specifically the US market. This concentration enhances exposure to US economic growth but also increases vulnerability to domestic market fluctuations and geopolitical events. Expanding geographic exposure could provide benefits through exposure to global growth trends and currency diversification.
Market capitalization
- Mega-cap 48%
- Large-cap 33%
- Mid-cap 17%
- Small-cap 1%
The market capitalization breakdown shows a heavy emphasis on mega and big-cap stocks, which tend to be more stable and have lower growth rates compared to medium, small, or micro-cap stocks. This focus may limit the portfolio's overall growth potential and ability to capitalize on the rapid expansion of smaller companies.
Redundant positions
-
High correlationVanguard S&P 500 ETFSchwab U.S. Large-Cap Growth ETF
The high correlation between the Vanguard S&P 500 ETF and the Schwab U.S. Large-Cap Growth ETF indicates a redundancy in the portfolio that does not contribute to diversification. Since both ETFs track large-cap US stocks, their performance is likely to move in tandem, especially during market downturns, thereby not providing the intended risk mitigation of a diversified portfolio.
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.
To optimize risk versus return, the portfolio should consider reducing overlap between the two ETFs and increasing diversification across asset classes, sectors, and geographies. Utilizing the Efficient Frontier concept could help identify an allocation that offers the best possible return for a given level of risk, potentially enhancing long-term outcomes.
Dividends
- Schwab U.S. Large-Cap Growth ETF 0.40%
- Vanguard S&P 500 ETF 1.20%
- Weighted yield (per year) 1.12%
The portfolio's dividend yield is relatively modest, with the total yield at 1.12%. While dividends are not the primary focus of a growth-oriented strategy, they can provide a steady income stream and contribute to total returns, especially in volatile or declining markets. The current allocation may miss out on opportunities for higher income from dividends.
Ongoing product costs
- Schwab U.S. Large-Cap Growth ETF 0.04%
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.03%
The portfolio benefits from low total expense ratios (TERs) for both ETFs, averaging 0.03%. Low costs are crucial for long-term investment performance, as they directly increase net returns. This aspect of the portfolio is well-optimized, minimizing the drag on performance that higher fees can cause.
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