Growth-focused portfolio with high tech exposure and low diversification

Report created on Jun 8, 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 weighted towards technology, with a significant portion allocated to large-cap stocks through ETFs. The concentration in the Schwab U.S. Large-Cap Growth ETF, Vanguard Information Technology Index Fund ETF Shares, and Vanguard S&P 500 ETF represents a clear growth orientation. However, this focus results in low diversification across sectors and geographies, with all investments tied to North American markets. The heavy emphasis on technology and large-cap stocks could introduce sector-specific risks and volatility.

Growth Info

Historically, this portfolio has shown a Compound Annual Growth Rate (CAGR) of 17.56%, with a maximum drawdown of -32.57%. These figures suggest that while the portfolio has the potential for high returns, it also carries a significant level of risk, as evidenced by the substantial drawdown. The days contributing most to the returns are relatively few, indicating that performance is heavily reliant on specific periods of high returns. This pattern underscores the importance of timing in managing this portfolio.

Projection Info

Monte Carlo simulations, which use historical data to forecast future performance, suggest a wide range of outcomes for this portfolio. With the majority of simulations predicting positive returns, the median projection indicates substantial growth potential. However, the significant spread between the 5th and 67th percentiles highlights the uncertainty and risk associated with this portfolio. Investors should consider these projections as one of many tools, keeping in mind that past performance is not always indicative of future results.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, with no allocation to other asset classes like bonds or real estate. This single-asset class approach maximizes exposure to stock market growth but also increases susceptibility to market volatility. Diversifying across different asset classes can reduce risk and smooth out returns over time, especially during stock market downturns.

Sectors Info

  • Technology
    59%
  • Consumer Discretionary
    8%
  • Telecommunications
    8%
  • Financials
    7%
  • Health Care
    7%
  • Industrials
    4%
  • Consumer Staples
    3%
  • Energy
    1%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    1%

With 59% of the portfolio invested in technology, followed by smaller allocations to consumer cyclicals, communication services, and other sectors, the portfolio is highly concentrated. This sector allocation reflects a bet on the continued growth and dominance of tech companies. However, sector concentration can lead to increased volatility and risk, particularly if the tech sector faces a downturn.

Regions Info

  • North America
    100%

The portfolio's geographic allocation is exclusively focused on North America, missing out on potential opportunities and diversification benefits from developed and emerging markets elsewhere. This concentration increases exposure to region-specific economic and political risks. Diversifying geographically can help mitigate these risks and tap into growth in other parts of the world.

Market capitalization Info

  • Mega-cap
    55%
  • Large-cap
    27%
  • Mid-cap
    14%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's emphasis on mega and big-cap stocks (82% combined) aligns with its growth and large-cap focus. While these companies generally offer more stability and less volatility than smaller firms, they also might offer lower growth potential. Including a broader mix of market capitalizations could enhance diversification and potential for growth.

Redundant positions Info

  • Vanguard Information Technology Index Fund ETF Shares
    Schwab U.S. Large-Cap Growth ETF
    Vanguard S&P 500 ETF
    High correlation

The high correlation among the portfolio's assets, particularly between the technology-focused ETF and the large-cap growth and S&P 500 ETFs, limits diversification benefits. This correlation means that the portfolio's components tend to move in the same direction, increasing risk during market downturns. Reducing overlap and introducing less correlated assets could improve the portfolio's risk profile.

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.

Optimizing this portfolio involves addressing the high correlation among its assets to enhance diversification. This can be achieved by reducing overlap, especially in the technology sector, and incorporating assets with lower correlation to the current holdings. Adjusting the asset allocation could improve the risk-return profile, moving the portfolio closer to the Efficient Frontier, where it achieves the best possible balance of risk and return.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Information Technology Index Fund ETF Shares 0.50%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 0.70%

The portfolio's overall dividend yield of 0.70% contributes to its total return. While the yield is modest, it provides a stream of income, which can be particularly valuable during market downturns or for investors seeking income. However, the focus on growth over income means dividends are not the primary goal of this portfolio strategy.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.06%

With a total expense ratio (TER) of 0.06%, the portfolio benefits from low costs, which supports better long-term performance by minimizing the drag on returns. Keeping costs low is crucial in maximizing net returns, especially in growth-oriented strategies where every percentage point of return counts.

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