A concentrated growth-focused portfolio with significant exposure to the US market

Report created on Mar 10, 2025

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

This portfolio is entirely invested in the Vanguard S&P 500 UCITS Acc ETF, reflecting a singular focus on US large-cap stocks. While this provides exposure to a broad range of industries, the lack of diversification across different asset types or regions could increase susceptibility to market-specific risks. A more balanced mix of asset classes, such as bonds or international stocks, might enhance stability and reduce risk during market downturns. Although the current composition aligns with a growth-focused strategy, diversifying into other asset classes could offer a buffer against volatility.

Growth Info

The portfolio's historical performance is impressive, with a Compound Annual Growth Rate (CAGR) of 14.50%, significantly outpacing many benchmarks. However, it's worth noting the maximum drawdown of -34.06%, indicating substantial volatility during market downturns. This highlights the importance of understanding the risk associated with high-growth investments. While past performance is not indicative of future results, maintaining this level of return may require accepting similar levels of volatility. Consideration of risk tolerance is crucial when evaluating whether this performance aligns with long-term objectives.

Projection Info

Monte Carlo simulations provide a statistical method to project potential future outcomes, using historical data to estimate a range of possible returns. In this case, the simulations suggest a median growth of 544.5% over the investment period. While 997 out of 1,000 simulations predict positive returns, it's important to remember that these projections are based on historical data and do not guarantee future performance. The variability in outcomes underscores the need to regularly review and adjust the portfolio to align with changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%

With 100% allocation to stocks, this portfolio lacks diversification across asset classes, which can increase risk. Stocks are typically more volatile than other asset classes like bonds or real estate, which can provide more stable returns. By incorporating a mix of asset classes, investors can potentially reduce volatility and improve risk-adjusted returns. While a stock-heavy portfolio aligns with a growth strategy, introducing other asset types might offer a smoother ride through market turbulence and align better with a balanced investment approach.

Sectors Info

  • Technology
    32%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Telecommunications
    10%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    3%
  • Real Estate
    2%
  • Basic Materials
    2%

The portfolio is heavily weighted toward technology, which constitutes 32% of the allocation. This concentration can lead to higher volatility, especially during periods of market correction or interest rate hikes, which often impact tech stocks more significantly. While tech has driven substantial growth in recent years, over-reliance on a single sector may expose the portfolio to sector-specific risks. Diversifying into sectors like healthcare or consumer staples could provide stability and reduce the impact of any downturn in the tech industry.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

With 99% of the portfolio allocated to North America, there's a significant geographic concentration risk. While the US market has performed well historically, this focus may limit exposure to growth opportunities in other regions. Diversifying geographically can help mitigate risks associated with economic or political changes in a single region. Introducing investments in other developed or emerging markets could enhance diversification and provide access to different growth dynamics, potentially improving long-term returns.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    35%
  • Mid-cap
    18%
  • Small-cap
    1%

The portfolio is predominantly invested in mega and large-cap stocks, making up 82% of the allocation. These companies are generally more stable and less volatile than smaller firms, which aligns with a growth strategy seeking capital appreciation. However, the lack of significant exposure to small or mid-cap stocks might limit potential upside during periods of economic expansion when smaller companies often outperform. Including a mix of market capitalizations could provide a balance between growth potential and stability.

Ongoing product costs Info

  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.07%

The portfolio benefits from low costs, with a Total Expense Ratio (TER) of just 0.07%. This is a significant advantage, as lower fees can enhance net returns over time. High fees can erode returns, especially in the long term, making cost efficiency a critical factor in portfolio management. By maintaining low costs, the portfolio supports better performance, allowing more of the investment's growth to benefit the investor. This aspect is well-aligned with best practices in investment management.

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