A focused S&P 500 ETF portfolio with strong historical performance but limited diversification
Report created on Jan 22, 2025Risk profile
4/7
Diversification profile
2/5
Positions
-
SX iShares Core S&P 500 UCITS ETF USD (Acc)
SXR8 - IE00B5BMR087 100.00%
This portfolio is entirely invested in the iShares Core S&P 500 UCITS ETF, indicating a concentrated focus on U.S. large-cap equities. While this ETF provides broad exposure to the largest companies in the U.S., the lack of diversification across different asset classes and regions increases risk. A more diversified portfolio might include bonds or international equities to balance potential volatility. By expanding the asset base, you can better manage risks and potentially smooth returns over time.
Growth
Historically, the portfolio has performed well, achieving a CAGR of 14.43%. This indicates robust growth, significantly outpacing inflation and many fixed-income investments. However, it's important to note the max drawdown of -33.78%, highlighting potential volatility. Comparing this with broader market benchmarks can provide context, but remember that past performance doesn't guarantee future results. Diversifying could help mitigate such drawdowns in the future.
Projection
Monte Carlo simulations, which use historical data to project future performance, suggest a positive outlook with a median return of 555.2%. While promising, these projections are not guarantees and should be viewed cautiously. They highlight potential outcomes but cannot account for unforeseen market shifts. To enhance predictability, consider introducing more varied asset classes, which could provide a buffer against unexpected market changes.
Asset classes
- Stocks 100%
The portfolio's allocation is entirely in stocks, specifically U.S. large-cap equities. This focus can lead to high growth potential but also increases susceptibility to market fluctuations. Compared to a diversified benchmark, this lack of asset class variety could be seen as a risk. Introducing bonds or alternative investments might lower volatility and provide more consistent returns, aligning better with a balanced risk profile.
Sectors
- Technology 33%
- Financials 13%
- Consumer Discretionary 11%
- Health Care 10%
- Telecommunications 9%
- Industrials 7%
- Consumer Staples 5%
- Energy 3%
- Utilities 3%
- Real Estate 2%
- Basic Materials 2%
The portfolio is heavily weighted towards technology, comprising 33% of the allocation. While this sector has driven significant growth recently, it can also be volatile, especially during economic downturns or interest rate hikes. Balancing sector exposure by including more defensive sectors like utilities or consumer staples could provide stability, aligning the portfolio more closely with typical benchmark sector allocations.
Regions
- North America 99%
- Europe Developed 1%
With 99% exposure to North America, the portfolio lacks geographic diversification. This concentration increases vulnerability to regional economic downturns. A more globally diversified portfolio could mitigate this risk by including equities from Europe, Asia, and emerging markets. Such diversification can help capture growth opportunities in different economic cycles and reduce reliance on the U.S. market alone.
Market capitalization
- Mega-cap 46%
- Large-cap 35%
- Mid-cap 18%
- Small-cap 1%
The portfolio is predominantly invested in mega and large-cap stocks, which are typically more stable and less volatile than smaller companies. This focus aligns with a balanced risk profile, providing growth opportunities with reduced risk. However, including more mid and small-cap stocks could enhance growth potential, as these companies often have more room to grow, albeit with higher risk.
Ongoing product costs
- iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
- Weighted costs total (per year) 0.12%
The portfolio's cost is impressively low, with a Total Expense Ratio (TER) of 0.12%. This efficiency supports better long-term performance by minimizing the drag on returns. Keeping costs low is a significant advantage, allowing more of your money to work for you. However, always consider whether cost savings justify limited diversification, as broader exposure might incur slightly higher fees.
What next?
Create your own report?
Join our community!
The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.
Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.
Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.
Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.
By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.
Instrument logos provided by Elbstream.
Help us improve Insightfolio
Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey