A focused S&P 500 ETF portfolio with strong growth potential but limited diversification

Report created on Mar 13, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is solely composed of the Vanguard S&P 500 UCITS Acc ETF, representing a 100% allocation to U.S. large-cap stocks. This concentrated structure lacks diversification, exposing it to market-specific risks. In contrast, a more diversified portfolio might include a mix of asset classes like bonds or emerging markets equities. To enhance stability, consider introducing other asset types to balance risk and reward. This approach can help mitigate the impact of market volatility and align with a balanced risk profile.

Growth Info

Historically, the portfolio has achieved a strong Compound Annual Growth Rate (CAGR) of 13.40%, reflecting the robust performance of the U.S. market. However, its maximum drawdown of -33.68% highlights potential vulnerability during downturns. Compared to a diversified benchmark, this portfolio may experience more pronounced fluctuations. While past performance is not indicative of future results, maintaining awareness of market cycles can guide strategic adjustments to manage risk effectively.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a promising outlook with a median return of 446.9%. However, the 5th percentile indicates a potential downside of 81.4%, emphasizing the inherent uncertainty. The simulations show that 995 out of 1,000 scenarios resulted in positive returns, suggesting a high probability of gains. While these projections offer insights, they are not guarantees, and diversifying could further stabilize potential outcomes.

Asset classes Info

  • Stocks
    100%

With a 100% allocation to stocks, the portfolio lacks diversification across asset classes. This concentration in equities can lead to high volatility, particularly during market downturns. A balanced portfolio typically includes a mix of asset classes such as bonds or real estate to spread risk. Considering additional asset classes could offer more stability and align better with a balanced risk profile, enhancing the portfolio's resilience against market fluctuations.

Sectors Info

  • Technology
    32%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Telecommunications
    10%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    3%
  • Real Estate
    2%
  • Basic Materials
    2%

The portfolio's sector allocation is heavily tilted towards technology at 32%, followed by financial services and consumer cyclicals. Such concentration could lead to heightened volatility, especially if tech experiences a downturn. Compared to broader benchmarks, this sectoral bias may increase risk. A more balanced sector allocation could mitigate potential impacts from sector-specific downturns, aligning the portfolio more closely with a balanced investment strategy.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is overwhelmingly focused on North America, with 99% exposure, leaving it vulnerable to regional economic shifts. This lack of international diversification can limit growth opportunities and increase risk. Compared to global benchmarks, this concentration is significant. Introducing more geographic diversity, such as emerging markets or European equities, could provide a buffer against regional downturns and tap into broader growth prospects.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    35%
  • Mid-cap
    18%
  • Small-cap
    1%

The portfolio's market capitalization is predominantly in mega-cap stocks at 47%, followed by big and medium caps. This skew towards large companies can offer stability but may limit growth potential found in smaller companies. Compared to a more evenly distributed benchmark, this allocation could miss out on the dynamism of small-cap stocks. Balancing exposure across different market caps could enhance growth opportunities and provide a more diversified risk profile.

Ongoing product costs Info

  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.07%

With a Total Expense Ratio (TER) of 0.07%, the portfolio is cost-effective, supporting long-term performance. Low fees mean more of your returns stay in your pocket, compounding over time. Compared to higher-cost options, this is a significant advantage. Ensuring costs remain low while maintaining portfolio objectives is crucial. Regularly reviewing fee structures can help keep expenses in check, maximizing the impact of your investments over time.

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