Concentrated health tilt portfolio with solid growth profile and room to boost risk adjusted returns
Report created on Jul 22, 2024Risk profile
5/7
Diversification profile
3/5
Positions
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SC Schwab U.S. Broad Market ETF
SCHB - US8085241029 34.00% -
IH iShares U.S. Medical Devices ETF
IHI - US4642888105 33.00% -
NV Novo Nordisk A/S
NVO - US6701002056 33.00%
The portfolio is very focused, with just three holdings making up 100% of assets: a broad US stock ETF, a specialized US medical devices ETF, and a single large pharmaceutical stock. This means all exposure is in equities, split roughly one‑third each between broad market, sector‑specific, and single‑company risk. Structure like this can create strong upside if the focused areas do well but also bigger swings if they struggle. A general takeaway is that this setup leans more toward conviction than diversification, so it fits someone comfortable with clear, intentional tilts rather than a “set and forget” total‑market basket.
Growth
Historically, $1,000 grew to about $2,621 over ten years, for a 10.14% compound annual growth rate (CAGR). CAGR is like your average yearly “speed” over a decade, smoothing out bumps along the way. That’s a solid long‑term return, but it lagged both the US market and global market, which delivered higher CAGRs with slightly smaller drawdowns. The maximum drawdown of about -35% shows this portfolio can still fall sharply in bad markets. This history suggests the mix has provided decent growth, but the concentrated bets haven’t been rewarded as strongly as broad benchmarks so far, underscoring that focus doesn’t always translate into outperformance.
Asset classes
- Stocks 100%
All assets are in stocks, with 0% in bonds, cash, or alternatives. That pure‑equity structure is typical for growth‑oriented investors who prioritize long‑term appreciation over short‑term stability. Equities historically offer higher returns than bonds but also deeper and more frequent drawdowns. With no defensive assets to cushion falls, the portfolio’s ride will track stock market cycles closely. The positive side is full participation in equity upswings; the trade‑off is larger temporary losses when markets fall. The general takeaway: this setup best fits someone with a long horizon who doesn’t need to sell during downturns and can stomach volatility.
Sectors
- Health Care 69%
- Technology 11%
- Financials 4%
- Consumer Discretionary 3%
- Industrials 3%
- Telecommunications 3%
- Consumer Staples 2%
- Energy 1%
- Utilities 1%
- Real Estate 1%
- Basic Materials 1%
Sector exposure is heavily skewed, with about 69% in health care versus a much smaller allocation in areas like technology, financials, and consumer‑related industries. Compared with broad benchmarks, this is a strong overweight to a single economic area. Health‑heavy portfolios can behave differently from the overall market: they may hold up better in some recessions but can be hit when regulation, pricing pressure, or innovation cycles turn against the sector. On the plus side, the remaining third does provide exposure across many other sectors, which helps. Still, this is a deliberate sector tilt, so it’s worth confirming that level of health focus is intentional.
Regions
- North America 67%
- Europe Developed 33%
Geographically, exposure is split between North America (about two‑thirds) and developed Europe (about one‑third), with no allocation to emerging markets or other regions. That’s more international than many US‑based investors, who often lean even more to the domestic market, and it’s broadly in line with global equity weights. This is a nice alignment with global standards and supports diversification across different regulatory, economic, and currency environments. The lack of exposure to emerging economies means missing a potential growth engine but also avoiding some additional volatility. Overall, the geographic mix is a strength: reasonably global without being overly complex.
Market capitalization
- Large-cap 61%
- Mid-cap 19%
- Mega-cap 14%
- Small-cap 5%
- Micro-cap 2%
By market capitalization, the portfolio leans strongly toward larger companies: roughly three‑quarters in mega and large caps, with the rest spread across mid, small, and a small slice of micro‑caps. Larger companies tend to be more stable, easier to analyze, and more liquid, which can reduce company‑specific blow‑ups compared with tiny stocks. Smaller caps, though, can offer higher growth and higher volatility. This setup gives a mainly “blue‑chip” feel with a dash of smaller‑company potential. It’s a sensible blend for many growth investors, keeping overall risk more manageable while still leaving room for some extra upside from smaller names.
True holdings
-
-
AB Abbott Laboratories 5.60%
Part of fund(s):- iShares U.S. Medical Devices ETF
-
IS Intuitive Surgical Inc 5.19%
Part of fund(s):- iShares U.S. Medical Devices ETF
-
SY Stryker Corporation 3.50%
Part of fund(s):- iShares U.S. Medical Devices ETF
-
NV NVIDIA Corporation 2.28%
Part of fund(s):- Schwab U.S. Broad Market ETF
-
AA Apple Inc 1.97%
Part of fund(s):- Schwab U.S. Broad Market ETF
-
MS Microsoft Corporation 1.52%
Part of fund(s):- Schwab U.S. Broad Market ETF
-
BS Boston Scientific Corp 1.51%
Part of fund(s):- iShares U.S. Medical Devices ETF
-
MD Medtronic PLC 1.50%
Part of fund(s):- iShares U.S. Medical Devices ETF
-
EW Edwards Lifesciences Corp 1.48%
Part of fund(s):- iShares U.S. Medical Devices ETF
- Top 10 total 57.56%
Looking through the ETFs, a lot of risk clusters in a small set of names. Novo Nordisk is already a huge direct position at 33%, and the medical devices ETF adds heavy exposure to Abbott, Intuitive Surgical, Stryker, and other device makers. The broad market ETF layers in big tech like NVIDIA, Apple, and Microsoft, but at modest weights. Overlap data only covers ETF top‑10 holdings, so actual duplication is likely higher. Hidden concentration like this matters because a few companies can end up driving most of the portfolio’s ups and downs. The big message: position size, not just ticker count, is what really shapes risk.
Factors
Factor exposure shows a mild tilt away from value and a notable tilt toward low volatility, while size, momentum, quality, and yield are close to market‑like. Factors are like the underlying “traits” that drive how groups of stocks behave over time. A low‑volatility tilt means the holdings tend to be somewhat steadier than the broader market, at least historically, which can soften drawdowns but sometimes lags in fast, speculative rallies. The low value exposure suggests less emphasis on “cheap” stocks and more on growth or quality characteristics. Together, this points to a growth‑oriented style that still seeks a smoother ride than a typical aggressive growth portfolio.
Risk contribution
-
Novo Nordisk A/S
Weight: 33.00% 45.4% -
iShares U.S. Medical Devices ETF
Weight: 33.00% 27.8% -
Schwab U.S. Broad Market ETF
Weight: 34.00% 26.8%
Risk contribution highlights how much each holding actually drives volatility. Novo Nordisk, at 33% weight, contributes about 45% of total risk, meaning its ups and downs dominate portfolio behavior. The two ETFs each carry similar weights but lower risk contributions, reflecting their diversification across many stocks. This is a textbook example of a single name having an outsized influence relative to its allocation. If the goal is to reduce “single‑stock risk,” trimming or balancing that position while boosting diversified holdings is one common way to bring risk contribution more in line with portfolio weights, without necessarily reducing overall equity exposure.
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.
On the risk‑return chart, the current portfolio sits below the efficient frontier at its risk level. The efficient frontier is the curve showing the best expected return for each level of risk using just current holdings in different mixes. With a Sharpe ratio of 0.54, the portfolio’s risk‑adjusted return trails both the optimal portfolio (Sharpe 0.73) and the minimum‑variance mix (Sharpe 0.69). The key point: simply reweighting these three existing positions—no new funds needed—could either boost expected returns at similar risk or cut risk for similar returns. This is a strong signal that a small allocation tweak could meaningfully improve efficiency.
Dividends
- iShares U.S. Medical Devices ETF 0.40%
- Novo Nordisk A/S 4.60%
- Schwab U.S. Broad Market ETF 0.90%
- Weighted yield (per year) 1.96%
The overall dividend yield of about 1.96% combines a high payout from Novo Nordisk with relatively low yields from the ETFs. Yield is the annual cash income from dividends as a percentage of portfolio value. For a growth‑oriented setup, this is a respectable income stream without sacrificing too much reinvested growth potential. Dividends can help smooth returns over time and provide optional cash flow, especially if reinvested steadily. Still, most of the long‑term return here will likely come from price appreciation rather than income. This balance works well for investors who like some dividends but don’t need maximum current income.
Ongoing product costs
- iShares U.S. Medical Devices ETF 0.40%
- Schwab U.S. Broad Market ETF 0.03%
- Weighted costs total (per year) 0.14%
Total expense ratio (TER) across the ETFs comes in around 0.14%, which is impressively low. TER is the annual fee charged by funds, expressed as a percentage of assets, and it quietly chips away at returns over time. Keeping costs down is one of the few things investors can reliably control, and this portfolio does that well, especially with the broad market ETF at just 0.03%. Over decades, saving even a few tenths of a percent per year can mean thousands of extra dollars. From a fee standpoint, the setup is very efficient and clearly supports better long‑term performance.
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