Growth-focused portfolio with heavy US large-cap and dividend emphasis
Report created on Jun 10, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 61.24% -
SC Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 27.76% -
SP Invesco S&P 500® Momentum ETF
SPMO - US46138E3392 11.00%
This portfolio is heavily weighted towards US equities, with a notable emphasis on dividend-paying and large-cap growth stocks. The Schwab U.S. Dividend Equity ETF, making up over 60% of the portfolio, indicates a strong preference for steady income through dividends. The remaining allocation is split between the Schwab U.S. Large-Cap Growth ETF and the Invesco S&P 500® Momentum ETF, highlighting a significant tilt towards growth and momentum strategies within the US market. This composition suggests an approach that seeks to balance income generation with capital appreciation, albeit with a concentrated exposure to US equities and a limited diversification across asset classes and geography.
Growth
With a historical Compound Annual Growth Rate (CAGR) of 17.36% and a maximum drawdown of -32.43%, the portfolio has demonstrated strong performance, albeit with considerable volatility. The days contributing to 90% of returns being few in number suggest that the portfolio's performance has been heavily reliant on relatively short, sharp gains. This pattern is typical of growth-oriented portfolios, especially those concentrated in sectors like technology, which can experience rapid price movements. Investors should be aware that past performance is not indicative of future results, particularly in a volatile market environment.
Projection
Monte Carlo simulations, using historical data to project future outcomes, show a wide range of potential performances for this portfolio, with a median projected increase of 1,017.4%. While the simulations indicate a high likelihood of positive returns (999 out of 1,000 simulations), it's important to remember that these projections are inherently uncertain and rely on past market behaviors, which may not predict future movements accurately. This tool is useful for assessing potential risk and return but should not be the sole basis for investment decisions.
Asset classes
- Stocks 100%
The portfolio is entirely allocated to stocks, with no exposure to other asset classes such as bonds or real estate. This allocation supports the portfolio's growth-oriented strategy but comes with higher volatility and risk, especially in market downturns. Diversifying across different asset classes can help mitigate risk and reduce volatility without necessarily compromising long-term returns. Investors might consider introducing bonds or real estate investments to achieve a more balanced risk-return profile.
Sectors
- Technology 23%
- Consumer Staples 14%
- Energy 12%
- Health Care 11%
- Consumer Discretionary 11%
- Financials 10%
- Industrials 9%
- Telecommunications 8%
- Basic Materials 1%
Sector allocation is relatively diversified within the US equity market, with technology, consumer defensive, and energy sectors leading the portfolio. This distribution aligns with the growth and income generation goals, as these sectors can offer both capital appreciation and stable dividends. However, the heavy weighting in technology, a sector known for its volatility, could increase the portfolio's sensitivity to market swings. Balancing sector exposures can help manage risk while still capturing growth opportunities.
Regions
- North America 100%
The portfolio's geographic allocation is exclusively focused on North America, specifically the US market. This concentration enhances exposure to the US economy's growth potential but also increases vulnerability to its market-specific risks. Diversifying geographically can spread risk and tap into growth opportunities in other regions, potentially smoothing out returns over time. Considering developed markets in Europe or emerging markets could provide valuable diversification benefits.
Market capitalization
- Large-cap 43%
- Mega-cap 26%
- Mid-cap 26%
- Small-cap 4%
- Micro-cap 1%
The mix of big, mega, and medium market capitalization stocks suggests a balanced approach to size diversification within the US equity space. This blend can offer a mix of stability, growth potential, and agility, with large-cap stocks typically providing steadiness and medium-cap stocks offering growth opportunities. However, the minimal exposure to small and micro-cap stocks limits the portfolio's potential to benefit from the high growth rates these smaller companies can achieve.
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.
Considering the portfolio's current allocation and risk-return profile, there may be room for optimization towards the Efficient Frontier, where the portfolio could achieve the best possible return for a given level of risk. This optimization could involve diversifying more broadly across asset classes and geographies or adjusting sector and market cap exposures. The goal would be to maintain or improve the portfolio's growth potential while managing risk more effectively.
Dividends
- Schwab U.S. Dividend Equity ETF 3.90%
- Schwab U.S. Large-Cap Growth ETF 0.40%
- Invesco S&P 500® Momentum ETF 0.50%
- Weighted yield (per year) 2.55%
The dividend yields from the ETFs, particularly the Schwab U.S. Dividend Equity ETF, contribute significantly to the portfolio's income generation, with an overall yield of 2.55%. This focus on dividends can provide a steady income stream and potential for reinvestment, enhancing long-term compounding effects. However, relying heavily on dividend-paying stocks may limit exposure to non-dividend-paying growth stocks, which could offer higher capital appreciation potential.
Ongoing product costs
- Schwab U.S. Dividend Equity ETF 0.06%
- Schwab U.S. Large-Cap Growth ETF 0.04%
- Invesco S&P 500® Momentum ETF 0.13%
- Weighted costs total (per year) 0.06%
The portfolio's total expense ratio (TER) of 0.06% is impressively low, minimizing the drag on returns due to costs. Keeping investment costs low is crucial for enhancing long-term returns, as even small differences in fees can compound into significant impacts over time. This cost efficiency is a strong aspect of the portfolio, supporting better net performance.
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