A focused growth portfolio with 100% allocation in the Vanguard S&P 500 ETF
Report created on Jun 8, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 100.00%
This portfolio is entirely invested in the Vanguard S&P 500 ETF, reflecting a strategy that prioritizes exposure to the largest U.S. companies across a broad range of sectors. While this provides a simple approach to investing, it inherently lacks diversification across asset classes and geographic regions. The portfolio's concentration in a single ETF, although diversified across sectors within the U.S. equity market, exposes it to market-wide fluctuations and sector-specific risks without the buffer more varied investments might offer.
Growth
Historically, the portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 13.94%, with a maximum drawdown of -34.01%. These figures suggest a strong performance trend, though the significant drawdown highlights potential volatility and risk. The portfolio's performance is heavily influenced by the overall market conditions affecting the S&P 500 index. It's crucial to understand that while past performance is encouraging, it does not guarantee future results, especially considering the market's cyclical nature and unforeseen economic events.
Projection
Monte Carlo simulations project a wide range of outcomes, with a median increase of 472.8% in portfolio value. This forward-looking tool uses historical data to estimate future performance, offering a probabilistic view of potential returns. However, it's important to note the limitations of this approach, as past performance is not a reliable indicator of future results. The simulations suggest optimism but should be interpreted with caution, considering the portfolio's lack of diversification.
Asset classes
- Stocks 100%
The portfolio's allocation is exclusively in stocks, specifically within the S&P 500, providing no asset class diversification. While stocks have historically offered higher returns compared to other asset classes, they also come with higher volatility. Diversifying across different asset classes, such as bonds or real estate, could potentially reduce risk and smooth out returns over time, especially during stock market downturns.
Sectors
- Technology 32%
- Financials 14%
- Health Care 11%
- Consumer Discretionary 10%
- Telecommunications 9%
- Industrials 8%
- Consumer Staples 6%
- Energy 3%
- Utilities 3%
- Real Estate 2%
- Basic Materials 2%
Sector allocation within the portfolio mirrors the S&P 500's composition, with significant exposure to technology, financial services, and healthcare. This sector distribution reflects the current economic landscape but also subjects the portfolio to sector-specific risks. For instance, a tech market correction could disproportionately affect the portfolio's performance. Diversifying across sectors outside the S&P 500 or considering sector-specific trends could mitigate some of this risk.
Regions
- North America 99%
Geographically, the portfolio is almost entirely focused on North America, with 99% of assets allocated in this region. This concentration in the U.S. market limits exposure to potential growth in other regions and increases susceptibility to U.S.-specific economic downturns. Expanding geographic diversification to include developed and emerging markets outside the U.S. could offer broader exposure to global economic growth and reduce region-specific risks.
Market capitalization
- Mega-cap 47%
- Large-cap 34%
- Mid-cap 18%
- Small-cap 1%
The portfolio's market capitalization breakdown shows a heavy tilt towards mega and big-cap stocks, which can offer stability and reliability. However, this focus may limit exposure to the potentially higher growth rates of medium and small-cap stocks. Including a broader range of market caps could enhance diversification and possibly increase the portfolio's growth potential over the long term.
Dividends
- Vanguard S&P 500 ETF 1.30%
- Weighted yield (per year) 1.30%
The portfolio's dividend yield of 1.30% contributes to its total return, providing a steady income stream in addition to potential capital gains. While not the primary focus for growth-oriented investors, dividends offer a form of passive income and can be a sign of a company's financial health. Reinvesting these dividends can compound growth over time, enhancing long-term returns.
Ongoing product costs
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.03%
With a total expense ratio (TER) of 0.03%, the portfolio benefits from very low costs, maximizing the potential for net returns. Low costs are crucial for long-term investment growth, as even small differences in fees can significantly impact total returns over decades. The Vanguard S&P 500 ETF's cost efficiency is a strong positive, allowing investors to keep more of their returns.
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