Growth-focused portfolio with high concentration in US large-cap stocks and low diversification
Report created on Aug 8, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VO Vanguard S&P 500 ETF
VOO - US9229083632 80.00% -
SC Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 20.00%
This portfolio is heavily concentrated in US large-cap stocks, with 80% in the Vanguard S&P 500 ETF and 20% in the Schwab U.S. Large-Cap Growth ETF. Its singular focus on equities, particularly within a similar market segment, indicates a strategy prioritizing growth. However, this concentration also exposes the portfolio to higher sector-specific and market-wide risks, as diversification across asset classes or geographies is minimal.
Growth
Historical performance showcases a Compound Annual Growth Rate (CAGR) of 15.29%, with a maximum drawdown of -33.68%. The days contributing most to returns highlight the portfolio's susceptibility to significant market movements. While past performance is impressive, it's crucial to remember that such returns come with considerable volatility and risk, which may not be suitable for all investors.
Projection
Monte Carlo simulations, with 1,000 iterations, suggest a wide range of potential outcomes, from a 123.3% increase in the portfolio's value at the 5th percentile to a 990.6% increase at the 67th percentile. These projections, based on historical data, underscore the potential for substantial growth but also significant volatility. It's important to note that these simulations are hypothetical and cannot predict future performance accurately.
Asset classes
- Stocks 100%
The portfolio's allocation is entirely in stocks, with no presence in other asset classes such as bonds or real estate. This allocation strategy maximizes growth potential but also increases volatility and risk. Diversifying into other asset classes could provide a buffer against stock market downturns and reduce overall portfolio volatility.
Sectors
- Technology 36%
- Financials 12%
- Consumer Discretionary 11%
- Telecommunications 10%
- Health Care 9%
- Industrials 7%
- Consumer Staples 5%
- Energy 3%
- Utilities 2%
- Real Estate 2%
- Basic Materials 2%
Sector allocation is heavily weighted towards technology (36%), followed by financial services and consumer cyclicals. This concentration in high-growth sectors can lead to higher volatility, especially during market corrections or when these sectors underperform. Diversifying across a broader range of sectors could mitigate some of this risk.
Regions
- North America 100%
Geographic exposure is entirely focused on North America, specifically the United States. This geographic concentration enhances exposure to US economic cycles and market conditions, lacking diversification benefits from international markets. Expanding into developed or emerging markets outside the US could offer additional growth opportunities and risk mitigation.
Market capitalization
- Mega-cap 50%
- Large-cap 32%
- Mid-cap 17%
- Small-cap 1%
The portfolio predominantly invests in mega (50%) and big (32%) cap stocks, with minimal exposure to medium, small, and micro-cap stocks. This focus on larger companies may provide stability but can also limit potential upside from smaller, faster-growing companies. Incorporating a broader range of market capitalizations could enhance returns and diversification.
Redundant positions
-
High correlationVanguard S&P 500 ETFSchwab U.S. Large-Cap Growth ETF
The high correlation between the Vanguard S&P 500 ETF and the Schwab U.S. Large-Cap Growth ETF limits diversification benefits, as both track large-cap US equities. Reducing overlap by diversifying into assets with lower correlation could enhance portfolio resilience against market volatility.
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.
Optimization efforts should focus on reducing the high correlation between holdings to improve diversification. While the Efficient Frontier suggests the current allocation is efficient in terms of risk-return trade-off, real-world application requires balancing other factors, including diversification across sectors, geographies, and asset classes.
Dividends
- Schwab U.S. Large-Cap Growth ETF 0.40%
- Vanguard S&P 500 ETF 1.20%
- Weighted yield (per year) 1.04%
The portfolio's dividend yield is 1.04%, with the Vanguard ETF contributing a higher yield than the Schwab ETF. While dividends contribute to total returns, the portfolio's growth orientation means dividends are a secondary consideration. Investors seeking income alongside growth might explore assets with higher dividend yields.
Ongoing product costs
- Schwab U.S. Large-Cap Growth ETF 0.04%
- Vanguard S&P 500 ETF 0.03%
- Weighted costs total (per year) 0.03%
The portfolio's total expense ratio (TER) is exceptionally low at 0.03%, which is advantageous for long-term growth by minimizing cost drag on returns. This efficient cost structure is a strong aspect of the portfolio, supporting better net performance over time.
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