Strongly factor tilted stock portfolio with heavy US exposure and efficient risk return profile
Report created on Aug 17, 2026Risk profile
5/7
Diversification profile
3/5
Positions
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VF Vanguard U.S. Momentum Factor
VFMO - US9219355081 80.00% -
VT Vanguard Total World Stock Index Fund ETF Shares
VT - US9220427424 20.00%
This portfolio is very simple: two stock ETFs, with 80% in a US momentum factor fund and 20% in a global index tracker. That means almost all behaviour is driven by the momentum ETF, with the world fund acting as a smaller diversifier. A concentrated structure like this is easy to monitor and understand, because there are only a couple of moving parts. The trade‑off is that any features of the main ETF – like factor tilts, regional focus, or style – really dominate. Here, the portfolio clearly prioritizes one factor strategy and uses the global index mainly as a supporting position rather than a core anchor.
Growth
Over the period from early 2018, $1,000 grew to about $3,185, a compound annual growth rate (CAGR) of 14.65%. CAGR is like average speed on a road trip: it smooths the bumps into one yearly growth number. This return was slightly behind the US market but clearly ahead of the global market, which shows that the strong US tilt helped versus the broader world. The deepest loss, or max drawdown, was about -36%, a bit worse than the benchmarks. That illustrates how factor‑heavy, growth‑oriented portfolios can fall faster during shocks even when long‑term returns are competitive.
Projection
The forward projection uses a Monte Carlo simulation, which essentially reruns many possible futures by shuffling and remixing past return patterns. It does not “predict” a single outcome; it shows a range of potential end values if the past were to repeat in different orders. Here, the median outcome grows $1,000 to around $2,755 after 15 years, with a wide possible range from roughly $973 to $7,648. That spread reflects the uncertainty built into stock‑only portfolios. As always, simulations lean heavily on historical behaviour, so they cannot account for structural shifts or events that never appeared in the past data.
Asset classes
- Stocks 100%
This portfolio is 100% in stocks, with no bonds, cash substitutes, or alternative assets. An all‑equity allocation usually means higher long‑term growth potential but also bigger short‑term swings, because there is nothing in the mix that typically moves very differently during market stress. Compared with broad multi‑asset benchmarks that combine stocks and bonds, this structure is intentionally more growth‑oriented and more volatile. The benefit is full participation in equity markets; the cost is riding through deeper drawdowns and a wider range of possible future outcomes, as seen in both the historical max drawdown and the Monte Carlo ranges.
Sectors
- Industrials 22%
- Technology 20%
- Health Care 20%
- Consumer Discretionary 9%
- Financials 8%
- Energy 7%
- Basic Materials 6%
- Telecommunications 4%
- Consumer Staples 3%
- Utilities 1%
Sector exposure is spread across a range of areas, with industrials, technology, and health care each around one‑fifth of the portfolio. That avoids a single ultra‑dominant sector, which helps reduce the risk that one industry’s issues dictate overall results. Compared with typical global indices, there is relatively more emphasis on economically sensitive sectors like industrials, and a bit less on more defensive ones such as utilities and staples. Portfolios with this kind of tilt can benefit more when economic activity is strong but may feel sharper swings during slowdowns or shifts in business confidence, given their reliance on cyclical parts of the market.
Regions
- North America 91%
- Europe Developed 4%
- Asia Developed 1%
- Japan 1%
- Latin America 1%
- Asia Emerging 1%
Geographically, about 91% of the portfolio is in North America, leaving only small slices in Europe, Japan, and emerging regions. This is a clear US‑heavy stance compared with global market composition, where the US is important but not this dominant. A strong home‑region focus can work well when that market outperforms, which has been true for much of the last decade. The flip side is that regional diversification is limited: economic, policy, or currency events affecting North America will strongly shape overall returns. The modest allocation to other regions offers some variety but does not materially change the core US‑centric profile.
Market capitalization
- Large-cap 27%
- Mid-cap 21%
- Small-cap 20%
- Micro-cap 18%
- Mega-cap 13%
Market capitalization is spread across the full spectrum: mega caps at 13%, large caps at 27%, and meaningful exposure to mid, small, and even micro caps. Having 18% in micro‑cap and 20% in small‑cap stocks is notably higher than typical broad market benchmarks. Smaller companies tend to be more volatile and more sensitive to liquidity and sentiment, but they also have more room to grow when conditions are favourable. This size mix helps explain why the portfolio’s volatility is relatively high: performance is not only driven by large, established firms but also by a sizable group of more agile, higher‑beta companies.
True holdings
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MU Micron Technology Inc 1.19%
Part of fund(s):- Vanguard Total World Stock Index Fund ETF Shares
- Vanguard U.S. Momentum Factor
-
KL KLA Corporation 0.99%
Part of fund(s):- Vanguard U.S. Momentum Factor
-
AM Applied Materials Inc 0.98%
Part of fund(s):- Vanguard U.S. Momentum Factor
-
AM Advanced Micro Devices Inc 0.92%
Part of fund(s):- Vanguard U.S. Momentum Factor
-
IN Intel Corporation 0.89%
Part of fund(s):- Vanguard U.S. Momentum Factor
-
GL Corning Incorporated 0.85%
Part of fund(s):- Vanguard U.S. Momentum Factor
-
LR Lam Research Corp 0.82%
Part of fund(s):- Vanguard U.S. Momentum Factor
-
NV NVIDIA Corporation 0.80%
Part of fund(s):- Vanguard Total World Stock Index Fund ETF Shares
-
WD Western Digital Corporation 0.78%
Part of fund(s):- Vanguard U.S. Momentum Factor
-
SN Sandisk Corp 0.78%
Part of fund(s):- Vanguard U.S. Momentum Factor
- Top 10 total 9.00%
Looking through the top holdings of the ETFs, the visible exposures lean heavily toward semiconductor and related technology hardware companies such as Micron, AMD, Intel, and NVIDIA. Each individual name is a small slice of the overall portfolio, but together they show a pattern: multiple positions tied to similar industry dynamics. Because the data only covers ETF top‑10 holdings, any overlap seen here is a lower bound. Hidden concentration can arise when the same popular names appear in both the momentum fund and the world index fund. That can subtly increase sensitivity to trends in a specific industry even when headline sector weights look diversified.
Factors
Factor exposure is where this portfolio really stands out. It has very high tilts toward size and momentum: size here means more emphasis on smaller companies, and momentum captures stocks with strong recent performance trends. Factor investing is like choosing specific “ingredients” – such as cheapness, quality, or trendiness – that research links to returns. A strong momentum tilt tends to do well in persistent uptrends but can be vulnerable when markets suddenly reverse. A high size tilt adds extra sensitivity to smaller stocks. With relatively low quality and yield exposure, the portfolio leans more toward growth‑and‑trend characteristics than steady, defensive ones.
Risk contribution
-
Vanguard U.S. Momentum Factor
Weight: 80.00% 85.0% -
Vanguard Total World Stock Index Fund ETF Shares
Weight: 20.00% 15.0%
Risk contribution shows how much each holding drives the portfolio’s overall ups and downs, which can differ from simple weights. Here, the US momentum ETF is 80% of the capital but contributes about 85% of the risk. That means this single fund dominates the portfolio’s volatility profile. The global index ETF, at 20% weight but only 15% of risk, plays a stabilizing secondary role. This pattern is common when one holding is more factor‑tilted or concentrated than a broad market fund. It underlines that, from a risk perspective, the portfolio behaves much more like the momentum ETF than like a blended mix.
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 risk vs. return chart shows this portfolio sitting on or very close to the efficient frontier. The efficient frontier is the curve of best possible return for each risk level, given the existing holdings. The current Sharpe ratio, at 0.55, is slightly lower than the optimal mix’s 0.68 but still solid relative to the minimum‑variance option at 0.65. Sharpe compares excess return over a risk‑free rate to volatility, like measuring how much “reward” you get per unit of “bumpiness.” Being near the frontier means, with these two ETFs, the current weights already deliver an efficient trade‑off between risk and expected return.
Dividends
- Vanguard U.S. Momentum Factor 0.60%
- Vanguard Total World Stock Index Fund ETF Shares 1.50%
- Weighted yield (per year) 0.78%
The portfolio’s overall dividend yield is about 0.78%, which is relatively low compared with many broad stock indices. That comes from blending a very low‑yielding momentum fund with a modest‑yield global index. Dividends are cash payments from companies and can be a meaningful part of total return over time, especially in more income‑oriented strategies. Here, the emphasis is clearly on price appreciation rather than income, which aligns with the factor and size tilts. In practice, most of the growth historically and in the projections is expected to come from changes in share prices rather than a steady stream of cash payouts.
Ongoing product costs
- Vanguard U.S. Momentum Factor 0.13%
- Vanguard Total World Stock Index Fund ETF Shares 0.07%
- Weighted costs total (per year) 0.12%
Costs are impressively low: the combined total expense ratio (TER) is about 0.12% per year. TER is the annual fee taken by funds to cover management and operations, and even small differences compound over long periods. This level is in line with or better than many index‑based strategies, especially given the specialised factor exposure. Low ongoing costs mean more of the portfolio’s gross return stays in the investor’s pocket, which quietly boosts long‑term outcomes. From a structural standpoint, the fee drag here is minimal, providing a strong foundation for compounding and supporting the efficient risk‑return profile shown in the optimization analysis.
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