Growth-focused portfolio with heavy technology sector exposure and low diversification
Report created on Jun 25, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VG Vanguard Information Technology Index Fund ETF Shares
VGT - US92204A7028 34.00% -
VI Vanguard S&P Small-Cap 600 Value Index Fund ETF Shares
VIOV - US9219327783 33.00% -
VO Vanguard S&P 500 ETF
VOO - US9229083632 33.00%
This portfolio is highly concentrated, with a significant allocation towards technology through the Vanguard Information Technology Index Fund ETF Shares, and a balanced exposure to small-cap value and broad market indices. The substantial weight in technology (34%) paired with equal parts in small-cap value and S&P 500 ETFs indicates a growth-oriented strategy with a tilt towards higher volatility sectors. The low diversification score reflects this concentrated approach, focusing heavily on stocks with minimal cash holdings.
Growth
Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 15.52%, with a maximum drawdown of -35.10%. These figures suggest a strong growth trajectory, albeit with significant volatility, as evidenced by the steep drawdown. The days contributing to 90% of returns being limited to 32 highlights the portfolio's performance is driven by relatively few, high-impact trading days, a common characteristic of growth-focused investments.
Projection
Using Monte Carlo simulations, which forecast future performance based on historical data, the portfolio shows a wide range of outcomes. With a median projected increase of 585.4% and 986 out of 1,000 simulations predicting positive returns, the outlook appears optimistic. However, it's crucial to remember that such simulations assume historical market conditions will repeat, an assumption that may not hold true, especially in rapidly changing economic environments.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio's asset allocation is heavily skewed towards stocks (99%), with a minimal cash reserve (1%). This allocation underscores a high-risk, high-reward strategy, typical of growth-oriented portfolios. While such an approach can offer substantial returns, it also exposes investors to greater market volatility and risks, particularly during downturns.
Sectors
- Technology 48%
- Financials 11%
- Consumer Discretionary 9%
- Industrials 8%
- Health Care 6%
- Telecommunications 4%
- Real Estate 4%
- Consumer Staples 3%
- Basic Materials 3%
- Energy 2%
- Utilities 2%
Sector distribution reveals a heavy bias towards technology (48%), followed by financial services and consumer cyclicals. This sectoral focus enhances the portfolio's growth potential but also increases its vulnerability to sector-specific downturns. The underrepresentation of traditionally defensive sectors like utilities and consumer defensive could limit the portfolio's resilience in bear markets.
Regions
- North America 99%
Geographically, the portfolio is almost entirely invested in North American assets (99%), indicating a lack of international diversification. This concentration in a single region can amplify risks related to local economic and political developments, potentially underutilizing the stabilizing benefits of global diversification.
Market capitalization
- Mega-cap 33%
- Micro-cap 21%
- Large-cap 20%
- Small-cap 15%
- Mid-cap 10%
The market capitalization breakdown shows a balanced mix across mega, micro, big, small, and medium-sized companies. This diversification within the equity component could help mitigate some risks. However, the heavy emphasis on mega and micro-caps, with 33% and 21% respectively, leans the portfolio towards extremes of the market cap spectrum, introducing specific risks and opportunities associated with each.
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.
Although the current portfolio has performed well, optimization analysis suggests a potential for higher returns at the same risk level, with an optimal expected return of 22.22%. This indicates room for improvement in asset allocation to achieve a more efficient risk-return profile. Adjusting the portfolio towards this optimal configuration could enhance long-term performance without necessarily increasing risk.
Dividends
- Vanguard Information Technology Index Fund ETF Shares 0.50%
- Vanguard S&P Small-Cap 600 Value Index Fund ETF Shares 2.00%
- Vanguard S&P 500 ETF 1.20%
- Weighted yield (per year) 1.23%
The dividend yield across the portfolio averages 1.23%, with the highest yield coming from the small-cap value ETF. While dividends contribute to total returns, the portfolio's focus seems to be more on capital appreciation than income generation. This approach aligns with the growth investment strategy but may not suit those seeking regular income streams.
Ongoing product costs
- Vanguard Information Technology Index Fund ETF Shares 0.10%
- Vanguard S&P Small-Cap 600 Value Index Fund ETF Shares 0.15%
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.09%
The portfolio benefits from relatively low costs, with a total expense ratio (TER) of 0.09%. Low costs are crucial for long-term growth, as they directly enhance net returns. This efficient cost structure is a strong point, ensuring more of the portfolio's gross returns contribute to wealth accumulation.
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