Growth-focused portfolio with high exposure to US equities and low diversification

Report created on Jul 20, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily concentrated in U.S. equities, with a third of its allocation in each of three major ETFs: Vanguard Total Stock Market Index Fund ETF Shares, SPDR S&P 500 ETF Trust, and Vanguard S&P 500 ETF. This composition underscores a strong focus on the American stock market, mirroring the performance of the broad market and the S&P 500 specifically. Such a structure, while streamlined, offers limited diversification across asset classes and geographies, concentrating risk within the U.S. equity market.

Growth Info

Historically, this portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 14.19%, with a maximum drawdown of -34.21%. These figures suggest robust growth potential tempered by significant volatility, as evidenced by the steep drawdown. The days contributing most to returns are relatively few, indicating that performance peaks are concentrated in specific periods. This pattern underscores the importance of staying invested through market cycles to capture key growth spurts.

Projection Info

Utilizing a Monte Carlo simulation, which projects future performance based on historical data, suggests a wide range of potential outcomes. With the majority of simulations showing positive returns, there's a strong likelihood of future growth. However, it's crucial to remember that such projections are speculative, relying on past trends that may not predict future movements accurately. This uncertainty highlights the need for diversification and risk management in planning for the future.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is entirely in stocks, with no presence in other asset classes like bonds or real estate. This singular focus on equities enhances growth potential but also increases susceptibility to market volatility. Diversifying across different asset classes can provide a buffer against stock market fluctuations, potentially smoothing out returns over time.

Sectors Info

  • Technology
    33%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

Sector allocation within this portfolio is broadly aligned with major market indices, emphasizing technology, financial services, and consumer cyclicals. This sectoral distribution reflects a growth-oriented strategy, as these areas often lead market advances. However, the heavy tilt towards technology could expose the portfolio to sector-specific risks, such as regulatory changes or shifts in consumer preferences.

Regions Info

  • North America
    100%

Geographic exposure is exclusively North American, missing out on potential opportunities and diversification benefits from developed and emerging markets elsewhere. This concentration not only limits exposure to global growth drivers but also heightens vulnerability to U.S.-specific economic downturns or policy changes.

Market capitalization Info

  • Mega-cap
    45%
  • Large-cap
    33%
  • Mid-cap
    18%
  • Small-cap
    3%
  • Micro-cap
    1%

The focus on mega and big cap stocks suggests a preference for established, large-scale companies, likely chosen for their stability and potential for steady growth. While this can be a prudent strategy, the limited exposure to medium, small, and micro-cap stocks may restrict the portfolio's ability to capture the higher growth rates these smaller companies can offer.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    SPDR S&P 500 ETF Trust
    Vanguard S&P 500 ETF
    High correlation

The high correlation among the portfolio's assets, all tracking major U.S. stock indices, indicates redundancy and a missed opportunity for diversification. This concentration in similar assets can amplify risks during market downturns, as all positions are likely to move in tandem. Diversifying across less correlated assets could enhance the portfolio's resilience against market volatility.

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's efficiency could be improved by addressing its highly correlated assets, which offer limited diversification benefits. By reallocating towards a more diverse set of investments, it's possible to maintain, or even reduce, the current level of risk while potentially increasing expected returns. This approach aligns with the Efficient Frontier concept, aiming to optimize the risk-return profile within the portfolio.

Dividends Info

  • SPDR S&P 500 ETF Trust 0.90%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.10%

The portfolio's dividend yield averages 1.10%, contributing to total returns. While dividends provide a steady income stream and can offer some downside protection in volatile markets, the primary focus here seems to be on capital appreciation. Investors should consider their income needs and whether a higher yielding or more diversified income approach could be beneficial.

Ongoing product costs Info

  • SPDR S&P 500 ETF Trust 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.05%

With an average total expense ratio (TER) of 0.05%, the portfolio benefits from low costs, which can significantly improve net returns over the long term. Keeping costs low is a critical component of investment success, especially in a strategy focused on index funds where minimizing expenses can enhance competitive performance against the benchmarks.

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