An in-depth look at a Vanguard S&P 500 ETF focused growth portfolio with minimal diversification

Report created on May 30, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is entirely invested in the Vanguard S&P 500 ETF, indicating a singular focus on large-cap U.S. equities. This composition provides exposure to the top 500 companies in the U.S., reflecting a broad market performance. However, the lack of asset class and geographic diversification presents increased volatility and risk, particularly from market-wide downturns. The concentration in one ETF, while cost-effective, limits opportunities for risk mitigation through diversification across different asset classes or regions.

Growth Info

The portfolio has shown a Compound Annual Growth Rate (CAGR) of 13.79%, with a maximum drawdown of -34.03%. These figures underscore the portfolio's ability to generate substantial returns, albeit with significant volatility. The days contributing most to returns highlight the market's unpredictable nature, emphasizing the importance of a long-term investment horizon to weather volatility. Comparing these metrics against benchmarks could provide further insight into performance relative to broader market trends.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, indicate a wide range of potential portfolio values, with a median increase of 474.4%. While these simulations suggest a high likelihood of positive returns, it's crucial to remember that such projections cannot guarantee future results. They serve as a tool for understanding potential volatility and the importance of risk tolerance in investment planning.

Asset classes Info

  • Stocks
    100%

The portfolio's exclusive investment in stocks, particularly within a single ETF, maximizes exposure to equity market growth but also to its downturns. Diversification across asset classes, such as bonds or real estate, could provide income and reduce volatility. This strategy is especially relevant for investors with a lower risk tolerance or those closer to needing their invested funds.

Sectors Info

  • 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 closely mirrors the S&P 500, with significant exposure to technology, financial services, and healthcare. This sectoral distribution reflects the current composition of the U.S. economy but also subjects the portfolio to sector-specific risks, such as regulatory changes or economic cycles. Balancing sector exposure can mitigate these risks and capitalize on growth opportunities across the economy.

Regions Info

  • North America
    99%

The portfolio's geographic concentration in North America, specifically the U.S., leverages the region's economic stability and growth potential. However, this focus may limit exposure to emerging markets and developed economies outside the U.S., potentially foregoing diversification benefits and growth opportunities in these regions. Incorporating global equities could enhance returns and reduce country-specific risks.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    34%
  • Mid-cap
    18%
  • Small-cap
    1%

With a focus on mega and large-cap companies, the portfolio is positioned to benefit from the stability and growth potential of established firms. However, the minimal exposure to small and mid-cap stocks may limit opportunities for higher growth rates these companies can offer. Diversifying across market capitalizations can introduce growth potential and reduce concentration risk.

Dividends Info

  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.30%

The portfolio's dividend yield of 1.30% contributes to its total returns, providing a steady income stream in addition to potential capital gains. While not the primary focus of a growth-oriented portfolio, dividends can offer a buffer during market volatility and compound returns over time. Reinvesting dividends can accelerate portfolio growth, leveraging the power of compounding.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from a low total expense ratio (TER) of 0.03%, maximizing net returns to the investor. Keeping costs low is crucial for long-term investment success, as fees can significantly erode returns over time. This cost efficiency is a strong aspect of the portfolio, supporting better performance relative to higher-cost investment options.

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