A growth-focused portfolio with a heavy tilt towards the S&P 500 and limited global exposure
Report created on Aug 5, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 95.00% -
VT Vanguard Total World Stock Index Fund ETF Shares
VT - US9220427424 5.00%
This portfolio is heavily weighted towards the Vanguard S&P 500 ETF, constituting 95% of the total, with the remaining 5% in the Vanguard Total World Stock Index Fund ETF Shares. This composition indicates a strong emphasis on US equities, specifically those within the S&P 500, reflecting a growth-oriented strategy with minimal diversification across global markets. The portfolio's singular focus on stock ETFs underscores a high-risk, high-reward investment approach, albeit with low diversity across asset classes and geographic regions.
Growth
Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 14.33%, with a significant maximum drawdown of -34%. Notably, a small number of days (31.0) contributed to 90% of the returns, indicating that the portfolio's performance is heavily reliant on short, strong market rallies. This pattern suggests a potential for high volatility and underscores the importance of timing in investment decisions for this portfolio.
Projection
Monte Carlo simulations, using 1,000 iterations, project a wide range of outcomes for this portfolio, from a 5th percentile outcome of a 71.9% increase to a 67th percentile outcome of a 567.2% increase, with an annualized return across all simulations at 13.75%. While these projections offer a broad sense of potential future performance, they inherently rely on past data, which may not predict future market conditions accurately. Investors should consider this uncertainty when evaluating the portfolio's future prospects.
Asset classes
- Stocks 100%
The portfolio is exclusively invested in stocks, with no allocation to cash, bonds, or alternative investments. This allocation aligns with a growth-focused investment strategy but carries higher volatility and risk, particularly during market downturns. The absence of diversification across asset classes can exacerbate portfolio fluctuations and may not be suitable for investors with a low risk tolerance or those nearing their investment goals.
Sectors
- Technology 33%
- Financials 14%
- Consumer Discretionary 11%
- Health Care 10%
- Telecommunications 10%
- Industrials 8%
- Consumer Staples 6%
- Energy 3%
- Utilities 3%
- Real Estate 2%
- Basic Materials 2%
Sector allocation within the portfolio is predominantly in technology (33%), followed by financial services (14%) and consumer cyclicals (11%). This sector concentration, especially in technology, suggests a bias towards industries expected to drive growth. However, it also exposes the portfolio to sector-specific risks, such as regulatory changes or market sentiment shifts, which could significantly impact overall performance.
Regions
- North America 98%
- Europe Developed 1%
Geographic exposure is overwhelmingly concentrated in North America (98%), with negligible exposure to developed Europe (1%) and no presence in emerging markets or other developed regions. This geographic concentration benefits from the robust performance of the US market but limits potential gains from global diversification and exposure to emerging market growth.
Market capitalization
- Mega-cap 46%
- Large-cap 34%
- Mid-cap 18%
- Small-cap 1%
The portfolio's market capitalization exposure leans heavily towards mega (46%) and big (34%) cap stocks, with a smaller allocation to medium (18%) and minimal to small (1%) cap stocks. This bias towards larger companies may provide stability and lower volatility relative to smaller caps but could also limit the potential for outsized gains that smaller, high-growth companies might offer.
Redundant positions
-
High correlationVanguard S&P 500 ETFVanguard Total World Stock Index Fund ETF Shares
The high correlation between the Vanguard S&P 500 ETF and the Vanguard Total World Stock Index Fund ETF Shares indicates overlapping exposures, reducing the diversification benefits within the portfolio. This correlation suggests that the portfolio's assets move in tandem, potentially increasing risk during market downturns, as there's little to buffer against losses in the US equity market.
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.
To optimize risk vs. return, the portfolio could benefit from diversifying beyond highly correlated assets. While the current allocation favors growth through a significant stake in US equities, introducing assets with lower correlations could enhance returns while managing risk more effectively. This optimization should aim for a balance that aligns with the investor's risk tolerance and investment horizon, potentially incorporating assets that offer both growth and stability.
Dividends
- Vanguard S&P 500 ETF 1.20%
- Vanguard Total World Stock Index Fund ETF Shares 1.70%
- Weighted yield (per year) 1.22%
The portfolio's dividend yield stands at 1.22%, derived from the yields of the individual ETFs. While dividends contribute to the total return, the portfolio's primary focus appears to be on capital appreciation rather than income generation. Investors seeking regular income or a more balanced income-growth approach may need to adjust the portfolio's composition accordingly.
Ongoing product costs
- Vanguard S&P 500 ETF 0.03%
- Vanguard Total World Stock Index Fund ETF Shares 0.07%
- Weighted costs total (per year) 0.03%
The total Expense Ratio (TER) of the portfolio is remarkably low at 0.03%, reflecting the cost-efficiency of the chosen ETFs. This low cost structure is advantageous, maximizing the investor's potential returns by minimizing the drag on performance due to fees. In a long-term growth strategy, keeping costs low is crucial for compounding returns.
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