Growth-oriented portfolio with a strong focus on US large-cap equities and minimal diversification

Report created on May 23, 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 heavily weighted towards US equities, with a 70% allocation in the Vanguard S&P 500 ETF, 20% in the Schwab U.S. Large-Cap Growth ETF, and 10% in the Schwab U.S. Dividend Equity ETF. This composition suggests a strong focus on growth, primarily through exposure to large-cap stocks. The overlap between the Vanguard S&P 500 ETF and Schwab U.S. Large-Cap Growth ETF indicates a concentrated bet on the performance of large-cap US equities, which could amplify both gains and losses.

Growth Info

Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 14.14%, with a maximum drawdown of -33.52%. The days contributing to 90% of the returns were relatively few, highlighting the portfolio's vulnerability to significant market movements. This performance, while impressive, comes with high volatility, suggesting that the portfolio's growth has been accompanied by substantial risk.

Projection Info

Monte Carlo simulations project a wide range of potential outcomes, with a median annualized return of 15.38%. The simulations indicate a high likelihood of positive returns, but the wide spread between the 5th and 67th percentiles underscores the portfolio's risk. While these projections provide a useful forecast based on historical data, they are inherently uncertain and should not be the sole basis for investment decisions.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, with no allocation to other asset classes like bonds or real estate. This lack of diversification can increase the portfolio's risk, particularly during market downturns when equities tend to perform poorly. Diversifying across different asset classes can help mitigate this risk and smooth out returns over time.

Sectors Info

  • Technology
    33%
  • Financials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Telecommunications
    10%
  • Industrials
    7%
  • Consumer Staples
    7%
  • Energy
    4%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

The sectoral allocation is heavily skewed towards technology, financial services, and consumer cyclicals, which are sectors that can offer high growth but also come with high volatility. The concentration in these sectors increases the portfolio's sensitivity to sector-specific risks. Diversifying across a broader range of sectors could reduce this risk and potentially enhance returns.

Regions Info

  • North America
    100%

The portfolio's geographic allocation is entirely focused on North America, with no exposure to international markets. This geographic concentration could limit growth opportunities and increase vulnerability to US market fluctuations. Expanding into international markets could provide access to growth in other economies and further diversify the portfolio.

Market capitalization Info

  • Mega-cap
    46%
  • Large-cap
    34%
  • Mid-cap
    18%
  • Small-cap
    1%

The portfolio's market capitalization breakdown shows a strong preference for mega and big-cap stocks, which are generally considered to be less risky than smaller companies. However, this focus may limit potential returns from high-growth small and micro-cap stocks. Considering a more balanced market cap allocation could enhance growth prospects while managing risk.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard S&P 500 ETF
    High correlation

The high correlation between the Vanguard S&P 500 ETF and Schwab U.S. Large-Cap Growth ETF indicates redundancy, which diminishes the benefits of diversification. By allocating to less correlated assets, the portfolio could achieve a more effective diversification, potentially improving the risk-return profile.

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.

Optimizing the portfolio involves addressing the high correlation between assets to improve diversification. By diversifying across less correlated assets, sectors, and geographies, the portfolio could achieve a more favorable risk-return balance. This optimization process should consider the investor's risk tolerance and investment goals.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 4.00%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.39%

The portfolio's dividend yield of 1.39% contributes to its total return, with the Schwab U.S. Dividend Equity ETF offering a significant yield of 4.00%. While dividends provide a steady income stream, relying solely on dividend-yielding stocks may limit growth potential. Balancing high-dividend stocks with growth-oriented investments could enhance overall returns.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.04%

The portfolio benefits from low total expenses, with an average Total Expense Ratio (TER) of 0.04%. This cost efficiency supports long-term growth by minimizing the drag on returns. Maintaining a focus on low-cost investments is a sound strategy for enhancing net returns over time.

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