Growth-focused portfolio with strong tech exposure and low diversification
Report created on Jul 20, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 80.00% -
QQ Invesco NASDAQ 100 ETF
QQQM - US46138G6492 20.00%
This portfolio primarily consists of two ETFs: the Vanguard Total Stock Market Index Fund ETF Shares, making up 80% of the portfolio, and the Invesco NASDAQ 100 ETF, comprising the remaining 20%. This composition indicates a heavy tilt towards the stock market, with a particular focus on the technology sector, given its 35% allocation. The low diversity score reflects a concentrated risk, especially in the context of geographic and sector exposure. While this setup can offer substantial growth opportunities, it also carries a higher risk level, particularly for investors sensitive to market volatility in the tech sector.
Growth
Historically, the portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 15.04%, with a maximum drawdown of -27.25%. These figures suggest a robust performance, albeit with significant volatility, as indicated by the substantial drawdown. The days contributing to 90% of returns being concentrated in just 19.0 days highlight the portfolio's reliance on short, sharp gains, which can be a double-edged sword, depending on market conditions. This performance, while impressive, underscores the importance of risk tolerance and the potential for wide fluctuations in portfolio value.
Projection
Monte Carlo simulations, projecting future performance based on historical data, show a wide range of potential outcomes, from a 5th percentile growth of 108.5% to a 67th percentile growth of 905.4%. While 992 out of 1,000 simulations returned positive growth, indicating a high likelihood of future gains, investors should remember that these projections are not guarantees. They serve as a tool for understanding potential volatility and the range of outcomes based on historical trends, which may not always predict future performance accurately.
Asset classes
- Stocks 100%
The portfolio's asset allocation is entirely in stocks, with no diversification into other asset classes like bonds or real estate. This allocation aligns with a growth-focused strategy but comes with higher risk due to the lack of cushioning against stock market volatility. Diversifying across different asset classes can help mitigate risk and smooth out returns over time, especially during downturns in the stock market.
Sectors
- Technology 35%
- Financials 11%
- Consumer Discretionary 11%
- Telecommunications 11%
- Health Care 9%
- Industrials 8%
- Consumer Staples 6%
- Energy 3%
- Utilities 2%
- Real Estate 2%
- Basic Materials 2%
With a significant emphasis on technology (35%), followed by financial services, consumer cyclicals, and communication services (each at 11%), the sector allocation underscores a focus on growth-oriented industries. However, this concentration increases susceptibility to sector-specific risks. For instance, the tech sector can be highly volatile and is often more sensitive to interest rate changes. Balancing sector exposure can help protect against unforeseen downturns in any single sector.
Regions
- North America 99%
- Europe Developed 1%
The portfolio's geographic allocation is heavily skewed towards North America (99%), with minimal exposure to developed Europe (1%) and no presence in emerging markets or Asia. This concentration in the U.S. market can limit diversification benefits and exposure to global growth opportunities. Including a broader range of geographic regions could enhance the portfolio's risk-adjusted returns over time.
Market capitalization
- Mega-cap 44%
- Large-cap 31%
- Mid-cap 18%
- Small-cap 5%
- Micro-cap 2%
The market capitalization breakdown shows a preference for large companies (Mega 44%, Big 31%), with smaller allocations to medium, small, and micro-cap stocks. This bias towards larger companies may reduce volatility but can also limit potential for high growth rates that smaller companies might offer. A more balanced approach to market capitalization could provide a better risk-return profile.
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.
Regarding risk versus return optimization, the portfolio's current setup on the Efficient Frontier suggests it is positioned for high returns but at a higher risk level. For investors with a growth profile but concerned about volatility, tweaking the allocation to include assets with lower correlation or different asset classes could improve the risk-return ratio. This adjustment would aim to achieve a more efficient portfolio, balancing the desire for growth with a manageable level of risk.
Dividends
- Invesco NASDAQ 100 ETF 0.50%
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Weighted yield (per year) 1.06%
The portfolio's dividend yield stands at 1.06%, with the Vanguard ETF contributing a higher yield than the Invesco ETF. While dividends are not the primary focus of this growth-oriented portfolio, they can provide a steady income stream and contribute to total returns, especially in volatile or bear markets. Considering investments with a mix of growth and dividend-paying characteristics could enhance income without significantly compromising growth potential.
Ongoing product costs
- Invesco NASDAQ 100 ETF 0.15%
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Weighted costs total (per year) 0.05%
The portfolio's total expense ratio (TER) of 0.05% is impressively low, which is beneficial for long-term growth as it minimizes the drag on performance caused by fees. Keeping costs low is crucial in maximizing returns, especially in a growth-focused strategy where every percentage point of return counts.
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