A growth-focused portfolio with high momentum and international diversification
Report created on Aug 8, 2025Risk profile
5/7
Diversification profile
4/5
Positions
-
SP Invesco S&P 500® Momentum ETF
SPMO - US46138E3392 70.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 30.00%
This portfolio primarily consists of two ETFs: the Invesco S&P 500® Momentum ETF with a 70% allocation, focusing on high-momentum stocks within the S&P 500, and the Vanguard Total International Stock Index Fund ETF Shares, making up the remaining 30%, providing broad international exposure. This structure suggests a deliberate strategy to balance high-growth potential with global diversification. The heavy tilt towards momentum stocks indicates a preference for riding trends in the U.S. market, while the international component introduces a layer of geographic diversification.
Growth
Historically, this portfolio has exhibited a Compound Annual Growth Rate (CAGR) of 18.63%, with a notable maximum drawdown of -31.48%. These figures suggest a high-growth trajectory, albeit with significant volatility, as evidenced by the substantial drawdown. The days contributing to 90% of returns being concentrated within a 36-day period further highlight the portfolio's reliance on short-term, high-impact gains. This performance profile aligns with the growth-oriented risk classification and underscores the inherent trade-offs between high returns and increased risk exposure.
Projection
The Monte Carlo simulation, projecting future performance based on historical data, anticipates a wide range of outcomes, with a median increase of 695.3%. While promising, it's crucial to remember that such simulations carry limitations, primarily that past performance is not indicative of future results. The high variance in projected outcomes, from the 5th to the 67th percentile, underscores the portfolio's volatility and the uncertainty inherent in stock investments, particularly those with a momentum focus.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio's asset allocation is heavily weighted towards stocks (99%), with a minimal cash reserve (1%). This allocation underscores a high-risk, high-reward strategy typical of growth-focused investors. The lack of diversification across different asset classes, such as bonds or real estate, means the portfolio may be more susceptible to market volatility. Investors might consider whether introducing additional asset classes could provide a buffer against stock market downturns while still pursuing growth objectives.
Sectors
- Technology 21%
- Financials 20%
- Consumer Discretionary 13%
- Telecommunications 12%
- Industrials 11%
- Consumer Staples 8%
- Health Care 4%
- Utilities 3%
- Energy 3%
- Basic Materials 2%
- Real Estate 2%
Sector allocation is diverse, with significant investments in technology (21%) and financial services (20%). This sectoral composition is reflective of the momentum strategy, capitalizing on sectors that often lead market rallies. However, the concentration in high-volatility sectors like technology could amplify the portfolio's risk during market corrections. Diversifying into more defensive sectors or balancing sector weights may help mitigate this risk.
Regions
- North America 72%
- Europe Developed 12%
- Asia Emerging 5%
- Japan 5%
- Asia Developed 3%
- Australasia 1%
- Africa/Middle East 1%
- Latin America 1%
Geographically, the portfolio is heavily weighted towards North America (72%), with the remainder spread across developed and emerging markets. This distribution suggests a strong home bias, potentially limiting exposure to global growth opportunities. While the international ETF helps diversify away from purely U.S.-centric risks, investors could consider increasing allocations to underrepresented regions to capture broader global growth trends and reduce geographic concentration risks.
Market capitalization
- Mega-cap 51%
- Large-cap 32%
- Mid-cap 14%
- Small-cap 1%
The market capitalization breakdown shows a preference for mega (51%) and big (32%) cap stocks, indicative of a conservative approach within the equity allocation, favoring stability and liquidity offered by large companies. However, the limited exposure to medium, small, and micro-cap stocks might restrict potential upsides from faster-growing firms. A slight rebalance towards smaller caps could enhance growth prospects, albeit at a higher risk.
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.
Regarding risk vs. return optimization, the current allocation suggests a well-considered balance between high-growth momentum stocks and international diversification. While the Efficient Frontier model could offer insights into potential adjustments for an optimal risk-return ratio, the portfolio already demonstrates a strategic approach to balancing growth potential against volatility. Regular reviews and adjustments in response to changing market conditions and personal financial goals are advisable to maintain this balance.
Dividends
- Invesco S&P 500® Momentum ETF 0.60%
- Vanguard Total International Stock Index Fund ETF Shares 2.80%
- Weighted yield (per year) 1.26%
The portfolio's dividend yield stands at 1.26%, with the international ETF contributing a higher yield (2.80%) compared to the momentum ETF (0.60%). While not the primary focus of a growth-oriented strategy, dividends contribute to total returns and provide a modest income stream. Investors might consider the role of dividends in their overall return expectations, especially in market phases where growth prospects are muted.
Ongoing product costs
- Invesco S&P 500® Momentum ETF 0.13%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.11%
With a total expense ratio (TER) of 0.11%, the portfolio benefits from low costs, enhancing long-term return potential. Low costs are particularly advantageous in growth strategies, where compounding plays a significant role over time. Investors should continue to monitor expense ratios and transaction costs, ensuring they remain competitive and do not erode returns.
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