A growth-focused portfolio with concentrated exposure to the US stock market

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 through concentrated exposure to the US stock market. Such an investor is likely aiming for substantial long-term capital appreciation and is comfortable with significant short-term volatility. The investment horizon is typically long-term, allowing time to ride out market fluctuations. This approach is ideal for individuals who prioritize growth over income and are willing to accept higher risk for the potential of greater returns.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    100.00%

This portfolio consists entirely of the Vanguard Total Stock Market Index Fund ETF Shares, representing 100% of the holdings. Such a composition indicates a singular focus on US equities, with no diversification into other asset classes like bonds or international stocks. While this approach allows for potential growth aligned with the US market, it also exposes the portfolio to higher risk, particularly if the US market underperforms. Diversification into other asset classes could mitigate some of this risk by providing a buffer against market volatility.

Growth Info

Historically, this portfolio has shown strong performance with a Compound Annual Growth Rate (CAGR) of 12.82%. This indicates that, on average, the portfolio has grown significantly each year. However, the maximum drawdown of -35.01% highlights the potential for substantial losses during downturns. Compared to benchmarks, this performance suggests robust growth but with notable volatility. Investors should weigh these factors, considering both the impressive gains and the potential for significant short-term losses.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, indicates a wide range of potential returns. With 1,000 simulations, the portfolio shows a 5th percentile return of 74.5% and a 50th percentile return of 385.5%. While 997 simulations resulted in positive returns, it's crucial to remember that past performance and simulations cannot guarantee future results. Investors should use these projections as a guide rather than a certainty, balancing optimism with caution.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio's allocation is entirely in stocks, with no diversification into other asset classes like bonds or real estate. This single asset class focus can lead to higher volatility and risk, especially during market downturns. While stocks offer significant growth potential, diversifying across asset classes typically helps reduce overall portfolio risk. Investors might consider adding other asset classes to enhance stability and potentially improve risk-adjusted returns.

Sectors Info

  • Technology
    30%
  • Financials
    14%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Telecommunications
    9%
  • Industrials
    9%
  • Consumer Staples
    6%
  • Energy
    3%
  • Real Estate
    3%
  • Utilities
    2%
  • Basic Materials
    2%

The portfolio has a notable concentration in the technology sector, comprising 30% of the allocation. While this aligns with the broader market trend of tech dominance, it also introduces sector-specific risks, such as increased volatility during interest rate hikes. Other sectors like financial services and healthcare also have significant allocations, providing some balance. However, the overall sector diversification is limited, suggesting a potential need for broader exposure to mitigate sector-specific risks.

Regions Info

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

With 100% of the portfolio invested in North American assets, geographic diversification is notably lacking. This concentration exposes the portfolio to regional risks, such as economic downturns or policy changes in the US. While the US market has historically performed well, diversifying into international markets could provide exposure to different economic cycles and growth opportunities, potentially reducing risk and enhancing long-term returns.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    30%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio's market capitalization distribution is heavily weighted towards mega-cap stocks, which make up 41% of the allocation. This focus on large, established companies offers stability and potential for steady growth. However, the limited exposure to small and micro-cap stocks, which together account for only 8%, may reduce opportunities for higher returns typically associated with smaller, more dynamic companies. Balancing market cap exposure could enhance growth potential and diversification.

Dividends Info

  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Weighted yield (per year) 1.40%

The portfolio's dividend yield stands at 1.40%, offering a modest income stream to investors. While dividends can provide a steady source of returns, the focus of this portfolio is primarily on growth rather than income. For investors seeking higher income, considering dividend-focused investments might be beneficial. However, for a growth-oriented investor, the current yield aligns with the portfolio's strategy of reinvesting gains for long-term capital appreciation.

Ongoing product costs Info

  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from impressively low costs, with a Total Expense Ratio (TER) of just 0.03%. Such low fees enhance long-term returns by reducing the drag on performance. This cost efficiency is a significant advantage, allowing more of the portfolio's gains to be reinvested. Investors should continue to monitor costs, ensuring they remain low, as even small changes in fees can have a substantial impact over time.

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