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A portfolio that mistook 'diversification' for 'putting all your eggs in two similar baskets'

Report created on Aug 10, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

It seems like someone took the concept of diversification and ran in the exact opposite direction. With 69% in a Vanguard S&P 500 Index ETF and the remaining 31% in an iShares Core Equity Portfolio, this portfolio screams "I love the thrill of the stock market but fear the commitment of truly diversifying." It's like deciding to diversify your diet by eating both vanilla *and* French vanilla ice cream. While technically diversified across companies, the heavy concentration in just two ETFs, both heavily skewed towards US equities, is akin to diversification theatre rather than a robust investment strategy.

Growth Info

If this portfolio were a car, it'd be one that boasts a top speed of 200 mph but only on straightaways, with a history of spinning out at the first sign of a turn. A CAGR of 16.08% looks fantastic on paper, but with a max drawdown of -28.09%, it's clear this ride has been anything but smooth. Those 21 days that made up 90% of returns? That's the financial equivalent of winning the lottery - great if it happens, but not something to bank on. It's like being proud of acing a test because you guessed all the answers correctly.

Projection Info

The Monte Carlo simulation, with its fancy 1,000 scenarios, might make you feel like you're peering into a crystal ball, but remember, it's more like a weather forecast for next year - based on patterns, not promises. Seeing numbers like a 657.6% median increase might have you dreaming of yacht parties, but it's crucial to remember the range of outcomes, from the 5th percentile at 138.3% to the 67th at 873.1%. It's a broad spectrum of possibilities, reminding us that the future is as predictable as a cat on a hot tin roof.

Asset classes Info

  • US Equity
    78%
  • Stocks
    8%
  • Other
    4%

This portfolio's asset class allocation is like deciding to diversify your wardrobe by only adding different shades of blue. With 78% in US Equity, it's clear where the comfort zone lies. The smattering of 'Equity' and 'Other' feels like an afterthought, and the absence of cash is like heading on a road trip with no spare tire. Diversification across asset classes isn't just about spreading risk; it's about preparing for different economic weathers. Right now, this portfolio is dressed for eternal summer.

Sectors Info

  • Technology
    30%
  • Financials
    16%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Health Care
    9%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The sector allocation here screams "tech bubble party, and everyone's invited." With 30% in Technology, it's clear there's a love affair with Silicon Valley. Financial Services and Consumer Cyclicals following behind indicate a penchant for high-growth, high-volatility areas. This sector spread is like building a sports team solely out of quarterbacks and wide receivers - sure, they can score, but good luck when defense is needed.

Regions Info

  • North America
    89%
  • Europe Developed
    6%
  • Japan
    2%
  • Asia Developed
    1%
  • Asia Emerging
    1%
  • Australasia
    1%

The geographic allocation is the investment equivalent of believing the world ends at the US border, with a whopping 89% in North America. It's like planning a world tour and only visiting Canada and the US because you heard Europe is just old buildings and Asia is too far. Even with globalization, this portfolio seems to have missed the memo that opportunities and risk mitigation lie beyond American shores.

Market capitalization Info

  • Mega-cap
    44%
  • Large-cap
    32%
  • Mid-cap
    17%
  • Small-cap
    2%

The market cap allocation is like having a friend group composed entirely of celebrities and their entourages. With 44% in mega-caps and 32% in big caps, it's clear this portfolio is star-struck. Medium caps get a look in, but small and micro-caps might as well be invisible. It's a high-profile, high-risk strategy that ignores the potential innovation and growth (and diversification benefits) of smaller companies.

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.

If this portfolio were plotted on the Efficient Frontier, it might look like it took a detour. The Efficient Frontier is all about getting the maximum return for every bit of risk you take on. This portfolio, however, seems to have mistaken "maximum return" for "maximum exposure to the US stock market." It's like trying to optimize a road trip by only using highways, ignoring that sometimes scenic routes (or international and diverse investments) offer better experiences and safer journeys.

Dividends Info

  • Vanguard S&P 500 Index ETF 0.70%
  • iShares Core Equity Portfolio 1.30%
  • Weighted yield (per year) 0.89%

With a total yield of 0.89%, this portfolio isn't winning any awards in the income department. It's like having a job that promises big bonuses but pays a base salary you can barely live on. Dividends can provide a cushion in rocky markets and a source of income that doesn't require selling assets. This portfolio, however, is like a daredevil riding without a helmet, banking on capital gains alone for growth and income.

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