A portfolio that mistakes diversification for putting all eggs in two similar baskets
Report created on Sep 5, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 50.00% -
VU Vanguard Growth Index Fund ETF Shares
VUG - US9229087369 50.00%
This portfolio is like ordering two different flavors of vanilla ice cream and calling it a diverse dessert menu. With 50% in Vanguard Total Stock Market Index Fund ETF Shares and the other half in Vanguard Growth Index Fund ETF Shares, it’s as diversified as a diet consisting solely of potatoes and potato chips. Both funds are heavily skewed towards growth, especially in the tech sector, making this portfolio more of a one-trick pony than a well-rounded racehorse.
Growth
Historically, this portfolio has been riding the tech wave with a CAGR of 16.55%, which is like being on a speedboat in calm waters. But remember, past performance is the financial equivalent of rearview mirror driving. With a max drawdown of -33.26%, it’s clear that when the market sneezes, this portfolio catches a cold. Those 35 days that drove 90% of returns? That’s not investing; that’s playing the lottery with better odds.
Projection
The Monte Carlo simulation, with its fancy 1,000 different future scenarios, suggests a wild ride between a 149.3% and a 1,039.4% return in the 5th and 67th percentiles, respectively. This range is like predicting weather from sunshine to a hurricane. But simulations are educated guesses, not guarantees. Betting the farm on the upper end could leave you with a plot of virtual land in the metaverse instead of real wealth.
Asset classes
- Stocks 100%
Sticking 100% to stocks with zero cash or bonds is like playing poker all-in on every hand. Sure, the highs can be exhilarating, but the lows can knock you out of the game. This approach ignores the stabilizing effect of bonds or the flexibility cash provides, essentially putting your financial eggs in a basket that’s perched on a bull riding a unicycle.
Sectors
- Technology 42%
- Consumer Discretionary 12%
- Telecommunications 11%
- Financials 10%
- Health Care 8%
- Industrials 7%
- Consumer Staples 3%
- Real Estate 2%
- Energy 2%
- Basic Materials 1%
- Utilities 1%
With 42% in technology, it's clear this portfolio has a Silicon Valley-sized crush. The next sectors, consumer cyclicals and communication services, are essentially tech’s best friends. This concentration in fast-growing but volatile sectors is like having a diet solely of energy drinks and espresso shots: it might work for a sprint but isn’t sustainable for a marathon.
Regions
- North America 100%
The geographic allocation screams "America First," with a total neglect of the investment opportunities abroad. Ignoring developed Europe, emerging Asia, and Latin America is like refusing to eat any cuisine that isn’t American. Sure, burgers and fries are great, but have you tried sushi or pasta?
Market capitalization
- Mega-cap 53%
- Large-cap 27%
- Mid-cap 15%
- Small-cap 3%
- Micro-cap 1%
The mega and big-cap focus means you’re partying with the giants, which is fine until David (the market downturn) shows up with his slingshot. Small and micro caps are practically an afterthought, like remembering you have a salad in the fridge after you’ve already ordered a pizza. This tilt limits exposure to high-growth potential found in smaller companies.
Redundant positions
-
High correlationVanguard Total Stock Market Index Fund ETF SharesVanguard Growth Index Fund ETF Shares
The high correlation between the two ETFs is like buying two different brands of the same flavored toothpaste and expecting a different taste. It’s a redundancy that adds no value, only illusionary diversification. In a downturn, both will likely plummet together, leaving you with a portfolio that’s as diversified as a monochrome rainbow.
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.
Before you even think about optimizing, let's address the elephant in the room: your portfolio is more duplicated than a plagiarized term paper. Removing overlapping assets is Investing 101. Right now, your definition of efficiency is as off-mark as using a Ferrari for grocery runs.
Dividends
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Vanguard Growth Index Fund ETF Shares 0.40%
- Weighted yield (per year) 0.80%
With an overall yield of 0.80%, this portfolio isn’t winning any awards for income generation. It’s like having a job that covers your rent but leaves you couch-surfing for entertainment. Given the growth focus, low dividends aren’t surprising, but it means you’re banking solely on appreciation, which can be as volatile as a cat on a hot tin roof.
Ongoing product costs
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Growth Index Fund ETF Shares 0.04%
- Weighted costs total (per year) 0.04%
Finally, something positive! With total expense ratios (TER) hovering around 0.04%, at least you’re not hemorrhaging money on fees. It’s the one area where the portfolio doesn’t overindulge, like finding out your favorite snack is surprisingly low in calories. However, low costs can’t compensate for the lack of diversification and high risk.
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