Growth-focused portfolio with high concentration in US equities and low diversification

Report created on Jul 21, 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 highly concentrated, with 70% allocated to the Vanguard S&P 500 ETF and 30% to the Vanguard Total Stock Market Index Fund ETF Shares. This composition indicates a strong focus on U.S. equities, encompassing the broad market but with significant overlap between the two funds. Both funds are known for their low costs, contributing to the portfolio's overall efficiency. However, the diversification is notably low, with all investments in a single asset class (stocks) and predominantly in one geographic region (North America).

Growth Info

Historically, this portfolio has shown a Compound Annual Growth Rate (CAGR) of 14.41%, with a maximum drawdown of -34.27%. These figures suggest a strong performance, albeit with significant volatility, as evidenced by the substantial drawdown. The days contributing most to returns are relatively few, indicating that a handful of strong market days drive much of the portfolio's performance. This pattern is typical for growth-oriented portfolios heavily invested in equities.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows a wide range of potential future values. The 50th percentile outcome suggests a more than fivefold increase, while the 5th and 67th percentiles indicate lower and higher bounds, respectively. It's important to note that these simulations are based on past performance, which is not a reliable indicator of future results. The high percentage of simulations with positive returns underscores the growth potential but also highlights the inherent uncertainties in market-based investments.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is entirely in stocks, with no presence in other asset classes like bonds or real estate. This singular focus on equities enhances growth potential but also increases volatility and risk, especially in market downturns. Diversifying across different asset classes can reduce risk by spreading exposure to different market dynamics.

Sectors Info

  • Technology
    32%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

Sector allocation is heavily weighted towards technology, financial services, and consumer cyclicals, which are sectors known for their growth potential. However, this concentration also exposes the portfolio to sector-specific risks. For instance, technology stocks can be highly volatile, especially during market corrections or in response to regulatory changes.

Regions Info

  • North America
    100%

The geographic allocation is entirely focused on North America, primarily the United States. This concentration benefits from the U.S. market's historical strength but lacks exposure to international markets, which can offer diversification benefits and growth opportunities in emerging economies.

Market capitalization Info

  • Mega-cap
    45%
  • Large-cap
    33%
  • Mid-cap
    18%
  • Small-cap
    3%
  • Micro-cap
    1%

The market capitalization breakdown shows a preference for mega and big-cap stocks, which are typically more stable than their smaller counterparts but may offer lower growth potential. The minimal exposure to small and micro-cap stocks reduces the portfolio's risk but also its potential for high returns from these more volatile segments.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The high correlation between the Vanguard S&P 500 ETF and the Vanguard Total Stock Market Index Fund ETF Shares indicates redundancy, limiting diversification benefits. Both funds cover large segments of the U.S. stock market, with significant overlap in holdings. Reducing correlated assets can enhance portfolio efficiency by reducing unnecessary exposure to similar risks.

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 its two main components. By diversifying into different asset classes or geographic regions, the portfolio can achieve a more efficient risk-return profile. The potential for a slightly higher expected return with the same level of risk suggests room for improvement in diversification without sacrificing growth objectives.

Dividends Info

  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.20%

With a dividend yield of 1.20% for both ETFs, the portfolio provides a modest income stream in addition to potential capital gains. While not the primary focus for growth-oriented investors, dividends can offer a buffer during market downturns and contribute to total return over time.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from exceptionally low costs, with a total expense ratio (TER) of 0.03% for both ETFs. This efficiency is crucial for long-term growth, as lower costs directly translate to higher net returns. Keeping investment costs minimal is a best practice for all investors, regardless of strategy.

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