A growth-oriented US-focused portfolio with high concentration in technology and large-cap stocks

Report created on Mar 7, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio composition is heavily skewed towards equities, with 97% in stock ETFs and only 3% in bonds. This structure reflects a strong preference for growth and a higher risk tolerance compared to a balanced portfolio. The Vanguard Total Stock Market Index Fund ETF Shares dominates the portfolio at 62%, providing broad market exposure, while the Vanguard Russell 1000 Growth Index Fund ETF Shares at 21% adds a growth tilt. This allocation aligns well with US market trends but could benefit from diversification into other asset classes to reduce risk.

Growth Info

The historical performance of the portfolio shows a robust CAGR of 13.90%, indicating strong growth over time. However, the max drawdown of -33.32% highlights significant volatility, which is typical for equity-heavy portfolios. Compared to benchmarks, this performance is impressive but comes with the caveat of higher risk. To mitigate future drawdowns, consider incorporating more defensive assets or diversifying geographically. Remember, past performance is not a guarantee of future results.

Projection Info

The forward projection using Monte Carlo simulations suggests a wide range of potential outcomes, with a median expected growth of 380.2%. This indicates a strong likelihood of continued growth, yet the 5th percentile outcome of 37.5% also underscores potential downside risk. Monte Carlo simulations use historical data to estimate future returns, but they cannot predict market changes or black swan events. Diversifying the portfolio can help manage these uncertainties and improve resilience.

Asset classes Info

  • Stocks
    97%
  • Bonds
    3%

The allocation across asset classes is predominantly stocks, with a small portion in bonds. This limited exposure to bonds may not provide enough cushion during market downturns. Compared to a typical balanced benchmark, which might have a higher bond allocation, this portfolio is more aggressive. To enhance diversification and risk management, consider increasing bond allocation or exploring alternative asset classes like real estate or commodities.

Sectors Info

  • Technology
    37%
  • Consumer Discretionary
    14%
  • Health Care
    10%
  • Financials
    10%
  • Telecommunications
    9%
  • Industrials
    6%
  • Consumer Staples
    4%
  • Energy
    2%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    1%

The portfolio has a significant concentration in the technology sector at 37%, which could lead to increased volatility, especially during periods of rising interest rates. Other sectors like consumer cyclicals and healthcare are also notable but less dominant. This sector concentration aligns with recent growth trends but may not be sustainable long-term. Diversifying into underrepresented sectors could help stabilize returns and reduce sector-specific risks.

Regions Info

  • North America
    97%

Geographic exposure is heavily focused on North America, with 97% of assets allocated there. This lack of international diversification could increase vulnerability to regional economic downturns. Compared to global benchmarks, which often include significant international exposure, this portfolio is less diversified geographically. Expanding into emerging markets or developed economies outside of North America could provide growth opportunities and reduce regional risk.

Market capitalization Info

  • Mega-cap
    45%
  • Large-cap
    28%
  • Mid-cap
    16%
  • Small-cap
    5%
  • Micro-cap
    2%

The portfolio leans towards larger companies, with 45% in mega-cap and 28% in big-cap stocks. This focus on large-cap stocks typically offers stability and reliable returns but may limit exposure to the higher growth potential of smaller companies. Including more mid-cap and small-cap stocks could enhance growth prospects and diversification. However, smaller companies can be more volatile, so balance is key to maintaining an appropriate risk level.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard Information Technology Index Fund ETF Shares
    Vanguard Russell 1000 Growth Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly among the Vanguard Total Stock Market Index Fund ETF Shares, Vanguard Information Technology Index Fund ETF Shares, and Vanguard Russell 1000 Growth Index Fund ETF Shares. High correlation means these assets tend to move together, which can limit diversification benefits. To improve portfolio resilience, consider reducing exposure to these overlapping assets and adding investments with lower correlation.

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 portfolio could be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. However, the high correlation between certain assets limits diversification benefits. Before optimizing, consider reducing overlap by replacing highly correlated assets with others that offer distinct risk-return profiles. This approach can enhance the portfolio's efficiency, ensuring it delivers the best possible returns for the level of risk taken.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Vanguard Consumer Discretionary Index Fund ETF Shares 0.60%
  • Vanguard Information Technology Index Fund ETF Shares 0.70%
  • Vanguard Health Care Index Fund ETF Shares 1.40%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 Value Index Fund ETF Shares 2.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.19%

The portfolio's overall dividend yield is 1.19%, which is relatively modest. Dividend income can provide a steady cash flow and reduce reliance on capital gains for returns. While growth-focused portfolios often have lower yields, incorporating higher-dividend-paying assets could enhance income generation. This approach might be particularly beneficial for investors seeking a balance between growth and income, adding stability to the portfolio.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard Consumer Discretionary Index Fund ETF Shares 0.10%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Health Care Index Fund ETF Shares 0.10%
  • Vanguard Russell 1000 Growth Index Fund ETF Shares 0.08%
  • Vanguard S&P 500 Value Index Fund ETF Shares 0.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, which is beneficial for long-term performance. Low costs mean more of your investment returns stay in your pocket, compounding over time. Vanguard's ETFs are known for their cost efficiency, aligning with best practices for minimizing costs. While the current costs are optimal, continue monitoring for any fee changes and consider cost-effective alternatives if necessary.

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