A focused growth portfolio with exclusive investment in the Vanguard S&P 500 ETF
Report created on Jun 2, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 100.00%
The portfolio is entirely invested in the Vanguard S&P 500 ETF, reflecting a singular focus on large-cap U.S. equities. This ETF tracks the S&P 500 index, which is composed of 500 of the largest companies in the U.S. across various sectors. While this offers a broad exposure to the American economy, the portfolio's diversification is limited to one asset class and geographic region. The simplicity of this approach has its merits, particularly in terms of ease of management and understanding, but it also concentrates risk in the performance of the U.S. stock market.
Growth
Historically, the Vanguard S&P 500 ETF has delivered a Compound Annual Growth Rate (CAGR) of 13.87%, with a maximum drawdown of -34.01%. This performance snapshot indicates strong growth potential, balanced by significant volatility. The max drawdown figure, a measure of the largest single drop from peak to trough, underscores the risk inherent in a 100% equity portfolio. The days contributing most to returns highlight the unpredictable nature of equity investments, where a small number of days can disproportionately affect overall performance.
Projection
Forward projections using Monte Carlo simulations, which run a range of outcomes based on historical data, suggest a wide range of potential future performances. With 993 out of 1,000 simulations showing positive returns, the outlook seems optimistic. However, it's crucial to remember that these simulations are based on past market behavior, which is not a guaranteed indicator of future results. The projections provide a useful tool for understanding potential volatility and outcomes but should be viewed within the context of their limitations.
Asset classes
- Stocks 100%
The portfolio is entirely allocated to stocks, specifically through the Vanguard S&P 500 ETF. This concentration in one asset class exposes the portfolio to market-specific risks without the buffer that diversification across different asset classes can provide. In periods of stock market downturns, the portfolio may experience significant declines. Diversifying across asset classes, such as including bonds or real estate, could help mitigate some of this risk.
Sectors
- Technology 32%
- Financials 14%
- Health Care 11%
- Consumer Discretionary 10%
- Telecommunications 9%
- Industrials 8%
- Consumer Staples 6%
- Energy 3%
- Utilities 3%
- Real Estate 2%
- Basic Materials 2%
Sector allocation within the ETF mirrors the composition of the S&P 500, with significant weightings in technology, financial services, and healthcare. This sector distribution reflects the current U.S. economic landscape, where technology, in particular, plays a dominant role. However, the heavy concentration in technology also means that the portfolio's performance is particularly sensitive to the fortunes of this sector. Diversifying across a broader range of sectors could reduce this sensitivity.
Regions
- North America 99%
Geographic exposure is overwhelmingly concentrated in North America (99%), with no allocation to developed Europe or Asia. This concentration benefits from the robust performance of the U.S. market but also limits exposure to potential growth in other regions. Global diversification could provide a hedge against U.S.-specific economic downturns and offer access to growth opportunities in other parts of the world.
Market capitalization
- Mega-cap 47%
- Large-cap 34%
- Mid-cap 18%
- Small-cap 1%
The market capitalization breakdown shows a heavy tilt towards mega and big-cap stocks, which constitute 81% of the portfolio. This bias towards larger companies may offer stability and lower volatility compared to smaller cap stocks but might also limit growth potential. Incorporating a greater mix of medium and small-cap stocks could enhance growth prospects and diversification.
Dividends
- Vanguard S&P 500 ETF 1.30%
- Weighted yield (per year) 1.30%
The Vanguard S&P 500 ETF's dividend yield of 1.30% contributes to the portfolio's total return, offering a modest income stream in addition to potential capital gains. While not the primary focus for growth-oriented investors, dividends can provide a buffer during market downturns and contribute to compounding returns over time.
Ongoing product costs
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.03%
With a total expense ratio (TER) of 0.03%, the portfolio benefits from extremely low costs, maximizing the potential for net returns. Low costs are a critical factor in long-term investment success, particularly for index funds and ETFs that aim to replicate market performance. This cost efficiency is a significant strength of the portfolio.
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