Single ETF portfolio with strong growth focus and high concentration in technology
Report created on Mar 27, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VU Vanguard Growth Index Fund ETF Shares
VUG - US9229087369 100.00%
This portfolio is composed entirely of the Vanguard Growth Index Fund ETF Shares, creating a concentrated investment in growth-oriented equities. With 100% allocation to a single ETF, the portfolio lacks diversification across different asset classes, which could increase risk. A more diversified portfolio might include a mix of bonds, international equities, or alternative investments to spread risk and potentially enhance returns. Consider introducing additional asset classes to balance the portfolio's risk and return profile.
Growth
The portfolio has demonstrated robust historical performance, with a Compound Annual Growth Rate (CAGR) of 15.68%. This impressive growth rate indicates strong past returns, though the maximum drawdown of -35.63% reveals significant volatility during market downturns. Comparing this to a benchmark, such as the S&P 500, can provide context for performance expectations. While past performance is not a guarantee of future results, understanding these trends helps set realistic expectations for future returns.
Projection
Using a Monte Carlo simulation, which models potential future outcomes based on historical data, the portfolio's projected annualized return is 17.04%. However, it's important to note that simulations are based on historical data and assumptions that may not hold in the future. The wide range of potential outcomes, from a 5th percentile return of 95.8% to a 67th percentile return of 889.7%, highlights the uncertainty inherent in investing. Regularly reviewing and adjusting the portfolio can help align it with changing market conditions and personal goals.
Asset classes
- Stocks 100%
The portfolio is heavily weighted towards stocks, with no allocation to bonds or other asset classes. While this can lead to higher growth potential, it also increases exposure to market volatility. A more balanced allocation across asset classes could help mitigate risk and provide more stable returns over time. Diversifying into different asset classes might include fixed income or real assets, which can offer stability and income during market downturns.
Sectors
- Technology 50%
- Consumer Discretionary 15%
- Telecommunications 13%
- Financials 7%
- Health Care 7%
- Industrials 3%
- Consumer Staples 2%
- Real Estate 1%
- Basic Materials 1%
- Energy 1%
The portfolio is heavily concentrated in the technology sector, which makes up 50% of the holdings. This concentration can lead to higher volatility, especially during periods of regulatory changes or interest rate hikes that impact tech stocks. While technology has been a strong performer historically, diversifying into other sectors such as healthcare or industrials could reduce risk and enhance long-term returns. Consider evaluating sector trends to strategically adjust allocations.
Regions
- North America 100%
With 100% exposure to North America, the portfolio lacks geographic diversification. This concentration can increase vulnerability to regional economic downturns or policy changes. Diversifying into international markets, including emerging markets, can provide exposure to different economic cycles and growth opportunities. A more geographically diverse portfolio can enhance resilience against regional risks and tap into global growth potential.
Market capitalization
- Mega-cap 66%
- Large-cap 23%
- Mid-cap 11%
The portfolio is predominantly invested in large-cap stocks, with 66% in mega-cap and 23% in big-cap companies. While large-cap stocks often provide stability and consistent returns, they may offer less growth potential compared to small- or mid-cap stocks. Diversifying across different market capitalizations could enhance growth opportunities and reduce risk. Including mid-cap or small-cap stocks might capture growth in emerging sectors or companies.
Dividends
- Vanguard Growth Index Fund ETF Shares 0.40%
- Weighted yield (per year) 0.40%
The portfolio's dividend yield is relatively low at 0.40%, reflecting its focus on growth over income. While dividends can provide a steady income stream, growth-oriented portfolios often prioritize capital appreciation. Investors seeking income might consider adding dividend-focused investments to complement growth assets. Balancing growth and income can help meet both immediate and long-term financial goals.
Ongoing product costs
- Vanguard Growth Index Fund ETF Shares 0.04%
- Weighted costs total (per year) 0.04%
The portfolio benefits from low costs, with a total expense ratio (TER) of 0.04% for the Vanguard Growth Index Fund ETF Shares. Keeping costs low is crucial for enhancing long-term returns, as high fees can erode gains over time. This low-cost structure aligns well with best practices for cost-efficient investing. Continuously monitoring and comparing costs across investment options can ensure the portfolio remains cost-effective.
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