Growth-oriented portfolio with a strong focus on US equities and low costs
Report created on Jul 19, 2025Risk profile
5/7
Diversification profile
3/5
Positions
-
SW Schwab S&P 500 Index Fund
SWPPX - US8085098551 90.00% -
SW SCHWAB INTERNATIONAL INDEX FUND SELECT SHARES
SWISX - US8085098304 10.00%
This portfolio is heavily weighted towards US equities, evidenced by a 90% allocation in the Schwab S&P 500 Index Fund, complemented by a 10% allocation in the Schwab International Index Fund Select Shares. Such a composition indicates a clear preference for growth through exposure to large-cap US stocks, albeit with a modest attempt at international diversification. The portfolio's singular focus on stock assets, with no allocation to bonds, cash, or alternative investments, underscores its aggressive growth orientation, potentially increasing volatility and risk.
Growth
With a Compound Annual Growth Rate (CAGR) of 13.71% and a maximum drawdown of -33.73%, the portfolio's historical performance showcases its volatility and growth potential. The days contributing most to returns highlight the impact of significant market movements on performance. This historical data, while indicative of past success, should be interpreted with caution as it does not guarantee future returns. Investors should remain aware of the inherent risks in a growth-focused strategy, particularly one so heavily reliant on the US market.
Projection
Monte Carlo simulations, using 1,000 iterations, project a wide range of outcomes with the median simulation suggesting a 286.3% return, highlighting the potential for substantial growth. However, the variation between the 5th and 67th percentiles underscores the uncertainty in these projections. While these simulations provide valuable insights into possible future scenarios, they are based on historical data and assumptions that may not accurately predict future market behavior. This underscores the importance of regularly reviewing and adjusting the portfolio as necessary.
Asset classes
- Stocks 100%
The portfolio's allocation is exclusively in stocks, eschewing bonds, cash, or other asset classes. This singular focus enhances growth potential but also increases risk, particularly in market downturns when diversification across different asset classes could mitigate losses. For investors with a growth profile, this approach may be appropriate, but it is important to balance growth objectives with risk management strategies to ensure the portfolio aligns with the investor's overall risk tolerance and investment horizon.
Sectors
- Technology 31%
- Financials 15%
- Consumer Discretionary 11%
- Health Care 10%
- Telecommunications 9%
- Industrials 9%
- Consumer Staples 6%
- Energy 3%
- Utilities 3%
- Real Estate 2%
- Basic Materials 2%
The sectoral allocation is led by Technology at 31%, followed by Financial Services and Consumer Cyclical sectors. This concentration in high-growth sectors can drive significant returns but also exposes the portfolio to sector-specific risks, such as regulatory changes or economic downturns that disproportionately affect these industries. Diversifying across a broader range of sectors could reduce volatility without significantly compromising growth potential.
Regions
- North America 90%
- Europe Developed 7%
- Japan 2%
- Australasia 1%
Geographic allocation heavily favors North America, with a 90% investment, and minimal exposure to international markets. This concentration benefits from the strong performance of US equities but limits global diversification, potentially missing out on growth opportunities in emerging markets and other developed economies. Broadening geographic exposure could enhance returns and reduce risk by capturing global economic growth trends.
Market capitalization
- Mega-cap 47%
- Large-cap 35%
- Mid-cap 17%
- Small-cap 1%
The portfolio's focus on Mega and Big cap stocks, comprising 82% of the allocation, aligns with its growth and stability objectives. However, the minimal exposure to Medium and Small cap stocks limits opportunities for higher returns that these segments can offer, albeit with increased volatility. Incrementally increasing exposure to smaller caps could enhance growth potential while introducing manageable risk.
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 portfolio's current allocation and performance, there's room for optimization towards the Efficient Frontier, where the risk-return trade-off is optimized. This could involve diversifying across more asset classes and geographies or rebalancing the sector and market cap exposure. Such adjustments would aim to maintain or enhance returns while reducing volatility, aligning the portfolio more closely with the investor's risk tolerance and investment goals.
Dividends
- SCHWAB INTERNATIONAL INDEX FUND SELECT SHARES 2.80%
- Schwab S&P 500 Index Fund 1.10%
- Weighted yield (per year) 1.27%
The portfolio generates a modest dividend yield, contributing to its total returns. While the focus is on growth, dividends provide a steady income stream, which can be reinvested to compound growth. Evaluating opportunities to enhance yield without significantly increasing risk could offer a balanced approach to growth and income.
Ongoing product costs
- SCHWAB INTERNATIONAL INDEX FUND SELECT SHARES 0.06%
- Schwab S&P 500 Index Fund 0.02%
- Weighted costs total (per year) 0.02%
The portfolio benefits from exceptionally low costs, with a Total Expense Ratio (TER) of 0.02%. This efficiency supports higher net returns over the long term, as lower costs directly translate to more money compounding for the investor. Maintaining a focus on low-cost investments is a prudent strategy that aligns with best practices for long-term wealth accumulation.
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