A growth-focused portfolio with high U.S. concentration and low diversification

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Growth Investors

This portfolio suits an investor with a high risk tolerance seeking aggressive growth. It is ideal for those with a long-term investment horizon, willing to endure short-term volatility for potential high returns. The focus on large-cap U.S. equities aligns with investors who believe in the strength of the U.S. market but may not suit those seeking diversified global exposure or stable income. This investor is likely focused on capital appreciation over income generation.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    50.00%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    25.00%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    25.00%

The portfolio is heavily concentrated in three ETFs: Vanguard S&P 500 ETF (50%), Schwab U.S. Large-Cap Growth ETF (25%), and Vanguard Total Stock Market Index Fund ETF Shares (25%). This composition emphasizes large-cap U.S. equities, providing exposure to a broad market index and large-cap growth stocks. While this setup aligns with a growth strategy, it lacks diversification across asset classes and geographic regions. To enhance diversification, consider incorporating other asset classes like bonds or international equities, which could potentially reduce risk and improve returns.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 13.92%. This indicates strong growth over time, outperforming many traditional benchmarks. However, the maximum drawdown of -33.79% highlights significant volatility during market downturns. While past performance is not indicative of future results, the historical data suggests a high-risk, high-reward profile. To mitigate potential losses, consider strategies like diversification or tactical asset allocation adjustments.

Projection Info

Forward projections using Monte Carlo simulations suggest robust potential outcomes, with a median return of 479.4% and an annualized return of 15.02%. The simulations, based on historical data, provide a range of possible future scenarios but do not guarantee results. Despite the overall positive outlook, the high concentration in U.S. equities could expose the portfolio to specific market risks. To enhance future performance, consider diversifying into different asset classes or regions to balance risk and return.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is entirely composed of stocks, with no allocation to other asset classes like bonds or real estate. This 100% stock allocation aligns with a growth-oriented strategy but increases exposure to market volatility. Diversification across asset classes can help manage risk and provide more stable returns. Consider adding bonds or alternative investments to reduce volatility and enhance portfolio resilience during market fluctuations.

Sectors Info

  • Technology
    35%
  • Financials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Telecommunications
    10%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

The portfolio's sector allocation is heavily skewed towards technology (35%), followed by financial services (12%) and consumer cyclicals (11%). This tech-heavy concentration can lead to higher volatility, especially during interest rate hikes or tech sector downturns. While the sector allocation aligns with growth trends, it may benefit from a more balanced approach. Consider diversifying into underrepresented sectors like utilities or real estate to enhance stability and reduce sector-specific risks.

Regions Info

  • North America
    100%
  • Europe Developed
    0%
  • Asia Developed
    0%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Africa/Middle East
    0%

Geographically, the portfolio is entirely focused on North America, providing no exposure to international markets. This lack of geographic diversification increases vulnerability to U.S.-specific economic and political risks. By incorporating international equities, especially from emerging markets, the portfolio can benefit from global growth opportunities and reduce reliance on North American markets. Consider adding international ETFs to achieve a more balanced geographic allocation.

Market capitalization Info

  • Mega-cap
    50%
  • Large-cap
    31%
  • Mid-cap
    17%
  • Small-cap
    2%
  • Micro-cap
    1%

The portfolio is predominantly invested in mega-cap (50%) and big-cap (31%) stocks, with limited exposure to medium (17%), small (2%), and micro-cap (1%) stocks. This concentration in larger companies provides stability but may limit potential growth from smaller, more dynamic firms. To enhance growth potential and diversification, consider increasing exposure to small and micro-cap stocks, which can offer higher returns albeit with increased risk.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Schwab U.S. Large-Cap Growth ETF
    Vanguard S&P 500 ETF
    High correlation

The portfolio's assets are highly correlated, meaning they tend to move in the same direction. This correlation limits diversification benefits, as the portfolio may not be well-protected during market downturns. To improve diversification and risk management, consider adding assets with lower correlations to the existing holdings. This could involve incorporating different asset classes or international equities to achieve a more balanced risk profile.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Weighted yield (per year) 1.15%

The portfolio's dividend yield is relatively low at 1.15%, reflecting its growth-oriented focus. While dividends are not a primary goal for growth investors, they can provide a steady income stream and help cushion against market volatility. To enhance income potential, consider adding higher-yielding assets or dividend-focused funds. This could improve overall returns and provide additional stability in the portfolio.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio's costs are impressively low, with a Total Expense Ratio (TER) of 0.03%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Low costs are a significant advantage, allowing more of the portfolio's gains to be retained. While the current cost structure is optimal, regularly reviewing fees and expenses is a good practice to ensure continued cost-effectiveness and maximize returns.

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.

The portfolio could be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. However, the current asset correlations limit diversification benefits, suggesting that optimization efforts should focus on reducing overlap. By diversifying into less correlated assets, the portfolio can achieve a more efficient risk-return balance. Consider reallocating funds to underrepresented asset classes or regions to enhance overall efficiency and reduce concentration risk.

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