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

Report created on Aug 16, 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 predominantly consists of US equity funds and a single stock, with a significant concentration in the S&P 500 and NASDAQ. Such a composition suggests a strong focus on growth, leveraging the historical performance of major US indices. However, the portfolio's diversification is low, with a heavy tilt towards technology and healthcare sectors, and almost exclusive exposure to North American markets. This approach maximizes potential returns from these sectors but also increases susceptibility to market volatility and sector-specific downturns.

Growth Info

Historically, the portfolio has exhibited a compelling Compound Annual Growth Rate (CAGR) of 17.91%, with a maximum drawdown of -32.66%. These figures indicate a high growth potential but come with significant risk, as evidenced by the steep drawdown. The days contributing to 90% of returns are notably few, highlighting the portfolio's reliance on short, strong market movements for gains. This performance pattern underscores the importance of timing in investments but also the risk of substantial losses during market corrections.

Projection Info

Monte Carlo simulations, based on historical data, project a wide range of outcomes, with a median increase of 758%. While these projections offer a positive outlook, they also reflect the inherent uncertainty in investing, particularly in a portfolio with high market concentration. It's crucial to understand that these simulations provide a spectrum of possibilities rather than guaranteed outcomes, emphasizing the need for risk management and diversification.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's asset allocation is almost entirely in stocks (99%), with a minimal cash reserve. This allocation underscores a growth-focused strategy but lacks diversification across asset classes, such as bonds or real estate, which could mitigate volatility. The heavy reliance on equities, particularly in a single region, increases the portfolio's sensitivity to market swings, underscoring the need for a more balanced asset mix to protect against downturns.

Sectors Info

  • Technology
    34%
  • Health Care
    13%
  • Financials
    12%
  • Telecommunications
    11%
  • Consumer Discretionary
    9%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    2%
  • Utilities
    2%
  • Consumer Discretionary
    2%
  • Real Estate
    2%
  • Basic Materials
    1%

The sectoral distribution is concentrated in technology and healthcare, reflecting a bet on high-growth areas. While these sectors have historically provided robust returns, their performance can be highly volatile. The portfolio's limited exposure to more defensive sectors like utilities and consumer staples, which tend to be more resilient during economic downturns, places it at a higher risk in market corrections.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

With 99% of investments in North America, the portfolio's geographic exposure is highly concentrated. This focus has likely contributed to the portfolio's strong performance, given the robust returns of US equities in recent years. However, it also exposes the portfolio to regional economic and political risks. Expanding into developed European and emerging markets could offer growth opportunities and reduce geographic risk.

Market capitalization Info

  • Mega-cap
    46%
  • Large-cap
    35%
  • Mid-cap
    16%
  • Small-cap
    2%
  • Micro-cap
    1%

The portfolio's emphasis on mega and big cap stocks (81% combined) aligns with its growth orientation and risk profile. These companies generally offer more stability than their smaller counterparts but can still be volatile. Including medium, small, or micro-cap stocks could enhance diversification and potentially tap into higher growth rates of smaller companies.

Redundant positions Info

  • Vanguard S&P 500 ETF
    FIDELITY NASDAQ COMPOSITE INDEX FUND FIDELITY NASDAQ COMPOSITE INDEX FUND
    DREYFUS S&P 500 INDEX FUND DREYFUS S&P 500 INDEX FUND
    Fidelity Total Market Index Fund
    High correlation

The high correlation among the portfolio's assets, particularly the index funds and ETFs, limits the benefits of diversification. In essence, these overlapping investments move in tandem during market fluctuations, amplifying the impact of sector-specific or market-wide downturns. Reducing redundancy by choosing assets with lower correlations could enhance portfolio resilience without significantly sacrificing growth potential.

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 could benefit from optimization to improve its risk-return profile. Currently, the high correlation among assets suggests redundancy rather than diversification. By reallocating funds to less correlated assets, the portfolio could achieve a more efficient frontier, enhancing returns for a given level of risk. Prioritizing this adjustment could significantly improve portfolio resilience and long-term growth potential.

Dividends Info

  • FIDELITY NASDAQ COMPOSITE INDEX FUND FIDELITY NASDAQ COMPOSITE INDEX FUND 0.50%
  • Fidelity Total Market Index Fund 1.00%
  • DREYFUS S&P 500 INDEX FUND DREYFUS S&P 500 INDEX FUND 0.90%
  • Pfizer Inc 5.10%
  • Invesco S&P 500® Momentum ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.05%

The portfolio's average dividend yield stands at 1.05%, with Pfizer Inc. being a notable contributor. While dividends provide a steady income stream and can offer some downside protection, the overall yield is relatively low, reflecting the portfolio's growth focus. Investors seeking income or more balance between growth and income might consider assets with higher dividend yields.

Ongoing product costs Info

  • FIDELITY NASDAQ COMPOSITE INDEX FUND FIDELITY NASDAQ COMPOSITE INDEX FUND 0.29%
  • Fidelity Total Market Index Fund 0.02%
  • DREYFUS S&P 500 INDEX FUND DREYFUS S&P 500 INDEX FUND 0.50%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.31%

The portfolio's total expense ratio (TER) averages 0.31%, which is reasonable for actively managed funds and ETFs. Keeping costs low is crucial for maximizing long-term returns, especially in a growth-oriented portfolio where high turnover can increase transaction costs. Continuously monitoring and minimizing expenses, where possible, remains an essential strategy for enhancing performance.

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