Growth-focused portfolio with high exposure to top US stocks and low diversification
Report created on Jul 9, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
QQ Invesco NASDAQ 100 ETF
QQQM - US46138G6492 50.00% -
SP SPDR® Portfolio S&P 500 ETF
SPLG - US78464A8541 50.00%
This portfolio is evenly split between the Invesco NASDAQ 100 ETF and the SPDR® Portfolio S&P 500 ETF, making it heavily invested in the US stock market's top-performing companies. The 50/50 allocation between these two ETFs underscores a clear growth orientation, leveraging the NASDAQ's tech-heavy composition and the broader S&P 500 index. However, this approach results in low diversification across asset classes and sectors, concentrating risk in the performance of the US stock market and, particularly, in technology and large-cap stocks.
Growth
With a Compound Annual Growth Rate (CAGR) of 15.92% and a maximum drawdown of -29.55%, the portfolio has demonstrated strong growth potential, albeit with significant volatility. The days contributing to 90% of returns being limited to 19 indicates that the portfolio's performance is highly reliant on short-term gains, which can be both an opportunity and a risk. Comparing this performance to benchmarks, it's clear that the portfolio is designed for aggressive growth but may be susceptible to sharp downturns during market corrections.
Projection
Monte Carlo simulations, using 1,000 iterations, suggest a wide range of outcomes for this portfolio, from a 5th percentile at 112.4% to a 67th percentile at 960.4%, highlighting the high degree of uncertainty and risk associated with its growth-focused strategy. The simulations' annualized return of 17.30% further emphasizes the portfolio's potential for high returns, albeit with considerable risk. It's important to remember, however, that these projections are based on historical data and cannot guarantee future performance.
Asset classes
- Stocks 100%
The portfolio's 100% allocation to stocks, with no exposure to bonds, real estate, or alternative investments, maximizes growth potential but also increases risk, particularly in volatile markets. This asset class concentration lacks the buffer that fixed income or other non-correlated assets could provide during downturns. Diversifying across asset classes could help mitigate risk without necessarily compromising long-term growth objectives.
Sectors
- Technology 44%
- Telecommunications 13%
- Consumer Discretionary 12%
- Health Care 7%
- Financials 7%
- Industrials 6%
- Consumer Staples 5%
- Utilities 2%
- Energy 2%
- Basic Materials 2%
- Real Estate 1%
With 44% in technology and significant allocations to communication services and consumer cyclicals, the portfolio is heavily invested in sectors that have driven recent market growth. While this has likely contributed to its strong performance, it also increases vulnerability to sector-specific downturns. Diversifying more evenly across sectors could reduce risk and stabilize returns, especially in a changing economic landscape.
Regions
- North America 99%
- Europe Developed 1%
The geographic allocation is almost entirely in North America (99%), with minimal exposure to developed Europe and no presence in emerging markets or developed Asia. This concentration in the US market has probably been a source of strength but also limits global diversification benefits, potentially missing out on growth opportunities in other regions.
Market capitalization
- Mega-cap 51%
- Large-cap 34%
- Mid-cap 15%
The focus on mega (51%) and big (34%) cap stocks, with medium caps making up the remainder, aligns with the portfolio's growth and risk profile. While large-cap stocks tend to be more stable, the lack of small-cap exposure means missing out on the higher growth potential these companies can offer, albeit with added volatility.
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.
Considering the Efficient Frontier, this portfolio may not be fully optimized for the best possible risk-return ratio due to its limited diversification and high concentration in specific sectors and geographies. Adjusting the allocation to include a broader range of asset classes and sectors could move the portfolio closer to the Efficient Frontier, potentially offering better returns for the same level of risk.
Dividends
- Invesco NASDAQ 100 ETF 0.50%
- SPDR® Portfolio S&P 500 ETF 1.20%
- Weighted yield (per year) 0.85%
The portfolio's total dividend yield of 0.85% reflects a moderate income component, supplementing growth with a stream of passive income. Given the growth orientation, the yield is understandably lower than more income-focused portfolios. However, for investors seeking both growth and income, balancing higher-yielding assets with growth stocks could enhance overall returns.
Ongoing product costs
- Invesco NASDAQ 100 ETF 0.15%
- SPDR® Portfolio S&P 500 ETF 0.02%
- Weighted costs total (per year) 0.08%
The portfolio benefits from relatively low costs, with a total expense ratio (TER) of 0.08%. This efficiency supports better net returns over time, as lower costs translate directly into higher investment returns. Given the portfolio's straightforward structure, maintaining low costs while exploring opportunities for diversification could further enhance its attractiveness.
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