Growth-oriented portfolio with a singular focus on the Vanguard S&P 500 ETF
Report created on May 28, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 100.00%
The portfolio is entirely invested in the Vanguard S&P 500 ETF, indicating a clear focus on growth through exposure to the top companies in the U.S. stock market. This approach simplifies the investment strategy but also concentrates risk, as the portfolio's performance is tied to the fortunes of the S&P 500 index. While this ETF is known for its low costs and broad market exposure, the lack of diversification across different asset classes or geographic regions could increase volatility.
Growth
Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 13.81%, with a maximum drawdown of -34.01%. These figures highlight the potential for high returns but also significant risk, as evidenced by the substantial drawdown. The days contributing to 90% of returns being limited to 29 indicates that a small number of very good days drive much of the performance, a characteristic feature of equity investments, particularly in a concentrated portfolio like this one.
Projection
Monte Carlo simulations, using historical data to project future outcomes, suggest a wide range of potential future values for this portfolio. With 994 out of 1,000 simulations showing positive returns, the analysis indicates a strong likelihood of future growth. However, the significant spread between the 5th and 67th percentiles underscores the high level of risk and uncertainty inherent in relying solely on past performance to predict future results.
Asset classes
- Stocks 100%
The portfolio's allocation is 100% in stocks, specifically through the Vanguard S&P 500 ETF. This singular focus on equities offers no buffer against market volatility through diversification into other asset classes such as bonds or real estate. While stocks have historically provided higher returns over the long term, they also come with higher volatility, which could be unsettling for some investors during market downturns.
Sectors
- Technology 32%
- Financials 14%
- Health Care 11%
- Consumer Discretionary 10%
- Telecommunications 9%
- Industrials 8%
- Consumer Staples 6%
- Energy 3%
- Utilities 3%
- Real Estate 2%
- Basic Materials 2%
Sector allocation within the ETF mirrors the S&P 500, with significant exposure to technology, financial services, and healthcare. This sector distribution reflects the current composition of the American economy and its leading industries. However, heavy weighting towards technology (32%) could expose the portfolio to sector-specific risks, such as regulatory changes or shifts in consumer preferences.
Regions
- North America 99%
The geographic exposure is almost entirely North American (99%), reflecting the ETF's focus on U.S. companies. This concentration in a single region can amplify risks related to the domestic economy, such as fiscal policy changes or economic downturns. Diversification across different geographies could mitigate some of these risks by spreading exposure across various economic cycles and opportunities.
Market capitalization
- Mega-cap 47%
- Large-cap 34%
- Mid-cap 18%
- Small-cap 1%
The market capitalization breakdown shows a strong bias towards mega (47%) and big (34%) cap stocks, which is typical for an S&P 500-based strategy. While these companies are often more stable and less volatile than their smaller counterparts, the portfolio may miss out on the potentially higher growth rates offered by mid and small-cap stocks.
Dividends
- Vanguard S&P 500 ETF 1.30%
- Weighted yield (per year) 1.30%
The dividend yield of 1.30% contributes to the portfolio's total returns, offering a modest income stream in addition to potential capital gains. While not the primary focus of a growth-oriented strategy, dividends can provide a source of steady returns, especially during market volatility or downturns.
Ongoing product costs
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.03%
With a total expense ratio (TER) of 0.03%, the portfolio benefits from extremely low costs, which is a significant advantage for long-term growth. Lower costs mean more of the investment's return is kept by the investor, compounding over time to significantly enhance portfolio value.
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