A growth-focused portfolio with high concentration in S&P 500 ETFs and low diversification

Report created on Jul 19, 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 is almost entirely invested in two S&P 500 ETFs, with 99.90% in the Vanguard S&P 500 ETF and a minimal 0.10% in the SPDR® Portfolio S&P 500 ETF. This composition suggests an extreme concentration in large-cap U.S. equities, mirroring the performance of the S&P 500 index. While such a strategy simplifies the investment approach, it exposes the portfolio to significant market-specific risks, limiting diversification benefits.

Growth Info

Historically, this portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 14.45%, with a maximum drawdown of -33.98%. These figures indicate robust growth but also highlight periods of significant volatility and potential loss. The days contributing to 90% of returns are notably few, underscoring the portfolio's vulnerability to market swings and the importance of timing in investments.

Projection Info

Monte Carlo simulations, running 1,000 scenarios, suggest a wide range of outcomes for this portfolio, from a 5th percentile ending value showing an 87.1% increase to a 67th percentile at 704.8%. While most simulations forecast positive returns, this projection underscores the inherent uncertainties in relying solely on historical data to predict future performance.

Asset classes Info

  • Stocks
    100%

The portfolio's asset allocation is entirely in stocks, with no representation from other asset classes such as bonds or real estate. This allocation aligns with its growth profile but eschews the risk mitigation benefits of broader diversification. A more varied asset class mix could provide a buffer against stock market downturns.

Sectors Info

  • Technology
    33%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    10%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

Sector distribution closely follows the S&P 500's composition, with significant weightings in Technology, Financial Services, and Consumer Cyclicals. This sector concentration reflects the current market leadership but could lead to heightened volatility during sector-specific downturns. Diversifying across a broader range of sectors might reduce risk.

Regions Info

  • North America
    99%

Geographic exposure is almost entirely North American (99%), with no investments in developed European or Asian markets, nor in emerging markets. This geographic concentration enhances exposure to U.S. economic conditions, while limiting potential gains from global diversification.

Market capitalization Info

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

The portfolio is heavily weighted towards mega (47%) and big (35%) cap stocks, with some exposure to medium (18%) and minimal to small (1%) cap stocks. This market cap distribution is typical for an S&P 500-focused strategy, favoring stability and liquidity over the potentially higher growth of smaller companies.

Redundant positions Info

  • SPDR® Portfolio S&P 500 ETF
    Vanguard S&P 500 ETF
    High correlation

The high correlation between the two ETFs in this portfolio underscores a significant redundancy, offering no diversification benefit. This redundancy amplifies risk, as both ETFs will react similarly to market movements, negating the potential for risk reduction through asset diversification.

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.

Optimization efforts should first address the high correlation and redundancy between the two ETFs, as they bring no diversification benefits. Considering the portfolio's growth orientation, reallocating towards a broader mix of asset classes and geographic regions could enhance diversification without significantly deviating from the growth objective.

Dividends Info

  • SPDR® Portfolio S&P 500 ETF 1.20%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.20%

The portfolio's dividend yield stands at 1.20%, reflecting the yield of its constituent ETFs. While dividends contribute to total return, the portfolio's growth orientation means that dividends are a secondary consideration to capital appreciation.

Ongoing product costs Info

  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.03%

The total expense ratio (TER) of 0.03% is impressively low, minimizing the drag on returns due to costs. This efficiency is a positive aspect of the portfolio, supporting better long-term performance by reducing the impact of fees.

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