Growth-focused portfolio with high exposure to US equities and technology sector
Report created on Jun 7, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 73.00% -
QQ Invesco NASDAQ 100 ETF
QQQM - US46138G6492 27.00%
The portfolio is heavily weighted towards two major ETFs: 73% in Vanguard S&P 500 ETF and 27% in Invesco NASDAQ 100 ETF. This composition indicates a strong focus on US equities, with a significant emphasis on large-cap stocks. The concentration in just two ETFs, both tracking major US indices, suggests a straightforward, growth-oriented strategy but with low diversification across asset classes and geographies. While this approach simplifies portfolio management, it also exposes the investor to sector-specific and market-wide risks without the buffer that diversification typically provides.
Growth
Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 14.97%, with a maximum drawdown of -27.13%. These figures highlight a robust performance, particularly in the context of its growth profile and the inherent volatility of the stock market. However, the days contributing to 90% of returns being so few indicate that much of the portfolio's gains are concentrated in short, significant bursts. This pattern underscores the importance of staying invested over the long term, as timing these bursts is notoriously difficult.
Projection
Monte Carlo simulations, which use historical data to project future portfolio outcomes, show a wide range of potential results. With the majority of simulations (993 out of 1,000) yielding positive returns, the outlook seems optimistic. However, it's crucial to remember that these projections are based on past performance, which is not a reliable indicator of future results. The simulations suggest resilience but also highlight the risk of significant variability in outcomes, emphasizing the need for a well-considered risk management strategy.
Asset classes
- Stocks 100%
The portfolio is entirely allocated to stocks, with no representation from other asset classes such as bonds or real estate. This allocation aligns with its growth-oriented strategy but comes with higher volatility and risk. Including different asset classes could enhance diversification, potentially reducing volatility without significantly compromising long-term returns. Diversification across asset classes is a fundamental principle of risk management, offering a buffer against market fluctuations.
Sectors
- Technology 37%
- Consumer Discretionary 11%
- Telecommunications 11%
- Financials 10%
- Health Care 9%
- Industrials 7%
- Consumer Staples 6%
- Energy 2%
- Utilities 2%
- Real Estate 2%
- Basic Materials 2%
With 37% allocated to technology, followed by consumer cyclicals and communication services, the portfolio is heavily tilted towards sectors that have shown significant growth in recent years. However, this concentration also increases susceptibility to sector-specific downturns. For instance, technology stocks can be particularly volatile in response to interest rate changes. Balancing sector exposure could mitigate risk while still capitalizing on growth opportunities in these high-performing areas.
Regions
- North America 99%
- Europe Developed 1%
The geographic allocation is almost entirely in North America (99%), with a minimal exposure to developed Europe. This concentration in the US market, while beneficial during periods of strong domestic performance, limits global diversification and exposure to potential growth in other regions. Increasing allocations to developed and emerging markets outside of the US could offer additional growth opportunities and risk mitigation through geographic diversification.
Market capitalization
- Mega-cap 49%
- Large-cap 34%
- Mid-cap 16%
- Small-cap 1%
The portfolio's market capitalization breakdown shows a strong preference for mega (49%) and big (34%) cap stocks, with medium and small caps representing a smaller portion. This skew towards larger companies is typical for portfolios aiming for growth with a moderate risk profile, as these companies often have more established business models and global reach. However, incorporating a greater mix of medium and small-cap stocks could introduce higher growth potential and diversification benefits.
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.
Given the portfolio's current assets, there's potential for optimization towards the Efficient Frontier, which represents the most efficient combination of assets for the best possible risk-return ratio. While the portfolio shows strong growth characteristics, diversifying more broadly across asset classes, sectors, and geographies could enhance its risk-adjusted returns. This doesn't necessarily mean compromising on growth but rather aiming for a more balanced approach to achieving it.
Dividends
- Invesco NASDAQ 100 ETF 0.60%
- Vanguard S&P 500 ETF 1.30%
- Weighted yield (per year) 1.11%
The dividend yields from the two ETFs contribute to the portfolio's total yield of 1.11%, adding a component of income to the growth-focused strategy. While dividends are a smaller part of total returns in such a portfolio, they can provide a steady income stream and help mitigate some volatility. Reinvesting these dividends can also compound growth over time, although it's worth considering higher-yielding investments for a more balanced approach to income and growth.
Ongoing product costs
- Invesco NASDAQ 100 ETF 0.15%
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.06%
The portfolio benefits from low total expense ratios (TER) of 0.06%, which is impressive and supports better long-term performance by minimizing the drag on returns. Keeping costs low is crucial for maximizing investment returns, especially in growth-oriented portfolios where the compound effect of fees can be significant over time. The choice of low-cost ETFs demonstrates a prudent approach to cost management, aligning with best practices for long-term investment success.
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