Growth-focused portfolio with high exposure to US equities and low diversification

Report created on May 22, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily weighted towards US equities, with a 70% allocation in a broad market ETF, 20% in a large-cap growth ETF, and the remaining 10% in a small-cap value ETF. The concentration in US stocks offers significant growth potential but also exposes the portfolio to domestic market volatility. The low diversification score indicates a concentrated risk profile, which is further emphasized by the portfolio's growth orientation. This composition suggests a strategy focused on capital appreciation, leveraging the scale and innovation within the US market.

Growth Info

The portfolio has demonstrated a strong historical performance, with a Compound Annual Growth Rate (CAGR) of 16.37%. However, it's important to note the maximum drawdown of -35.48%, which highlights the portfolio's vulnerability during market downturns. The days contributing to 90% of returns being so few suggests that a handful of exceptionally good trading days significantly impact overall performance. This volatility underscores the growth-focused, higher-risk nature of the portfolio.

Projection Info

Monte Carlo simulations, which use historical data to project a range of possible future outcomes, show a wide variance in potential portfolio values. With a median projected increase of 695.9% and 984 out of 1,000 simulations yielding positive returns, the forward-looking scenario is optimistic. However, the broad range of outcomes, from the 5th percentile at a 54.8% increase to the 67th percentile at over a 1,099.3% increase, underscores the inherent uncertainty and risk in the portfolio's strategy.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, reflecting a high-risk, high-reward investment strategy. This singular focus on equities, without the balance of bonds or other asset classes, maximizes potential for growth but also increases susceptibility to market fluctuations. Diversification across different asset classes could provide a buffer against volatility and reduce overall portfolio risk.

Sectors Info

  • Technology
    31%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

The sectoral allocation reveals a significant tilt towards technology, financial services, and consumer cyclicals, which are sectors known for their growth potential. However, this concentration also increases the portfolio's sensitivity to sector-specific risks. The underrepresentation of traditionally defensive sectors like utilities and consumer defensive further accentuates the portfolio's aggressive growth stance.

Regions Info

  • North America
    99%

With 99% of assets allocated to North America, the portfolio's geographic exposure is extremely concentrated. This focus on the US market may limit exposure to potential growth opportunities in international markets and increases susceptibility to regional economic shifts. Broadening geographic diversification could mitigate some risk and tap into growth outside the US.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    25%
  • Mid-cap
    16%
  • Small-cap
    10%
  • Micro-cap
    6%

The market capitalization breakdown shows a balanced exposure across mega, big, and medium-sized companies, with a smaller allocation towards small and micro-cap stocks. This distribution supports a growth strategy while offering some level of risk mitigation through diversification across company sizes. However, the emphasis on larger companies reflects the portfolio's bias towards more established, less volatile stocks.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The high correlation between the Vanguard Total Stock Market Index Fund ETF Shares and the Schwab U.S. Large-Cap Growth ETF indicates overlapping holdings that contribute to redundancy rather than diversification. This redundancy not only limits the portfolio's diversification benefits but also concentrates risk. Reducing overlap by reallocating assets could enhance portfolio efficiency and diversification.

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.

The portfolio's current allocation shows room for optimization, particularly in reducing asset overlap and enhancing diversification. Leveraging the Efficient Frontier could identify an allocation that offers a better risk-return tradeoff, potentially improving returns while managing risk more effectively. This optimization process should prioritize broadening diversification across asset classes, sectors, and geographies.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.80%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.17%

The portfolio's overall dividend yield of 1.17% contributes to its total return, with the small-cap value ETF offering the highest yield. While dividends are not the primary focus of this growth-oriented portfolio, they provide a source of passive income and can offer some cushion during market downturns. Balancing growth and income-generating assets could provide a more holistic approach to achieving financial goals.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.05%

The portfolio benefits from low overall costs, with a total expense ratio (TER) of 0.05%. This cost efficiency is crucial for long-term growth, as lower costs directly translate to higher net returns. The focus on low-cost ETFs is a strategic choice that supports the portfolio's growth objectives by minimizing drag on performance.

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