A growth-focused portfolio with a single asset class and significant sector concentration
Report created on Sep 16, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
SP Invesco S&P 500® Momentum ETF
SPMO - US46138E3392 100.00%
The portfolio is entirely invested in the Invesco S&P 500® Momentum ETF, which tracks high-momentum stocks within the S&P 500. This composition reflects a concentrated strategy focusing on a single asset class—stocks. The diversification is low, as evidenced by the complete allocation to equities, specifically within the U.S. market. Such a concentration in one ETF, especially one that leans towards high-momentum stocks, indicates a growth-oriented approach but comes with increased volatility and sector-specific risks.
Growth
Historically, this portfolio has exhibited a Compound Annual Growth Rate (CAGR) of 22.53%, which is impressive. However, the maximum drawdown of -30.93% highlights the potential volatility and risk associated with a high-momentum strategy. The days contributing to 90% of returns being limited to 40 suggests that the portfolio's performance is highly dependent on short, significant bursts of positive returns, a characteristic of momentum investing strategies.
Projection
Monte Carlo simulations, which use historical data to forecast potential outcomes, show a wide range of possible future performances for this portfolio. With a median projected growth of 1,915.6% and all simulations resulting in 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 help illustrate potential volatility and the range of outcomes but should not be solely relied upon for investment decisions.
Asset classes
- Stocks 100%
The portfolio's asset allocation is entirely in stocks, specifically within a momentum ETF. This reflects a high-risk, high-reward strategy focused on growth. While stocks can offer significant returns, they also come with higher volatility compared to bonds or other asset classes. The lack of diversification across asset classes can increase the risk of large fluctuations in portfolio value, especially during market downturns.
Sectors
- Technology 24%
- Financials 19%
- Consumer Discretionary 15%
- Telecommunications 14%
- Industrials 9%
- Consumer Staples 9%
- Utilities 3%
- Health Care 2%
- Energy 2%
- Real Estate 1%
Sector allocation is heavily weighted towards Technology, Financial Services, and Consumer Cyclicals, making up over half of the portfolio. This concentration can lead to higher volatility, as these sectors are often more sensitive to economic cycles and market sentiment. While the focus on growth sectors has historically contributed to strong returns, it also exposes the portfolio to sector-specific downturns.
Regions
- North America 100%
The geographic allocation is entirely focused on North America, with no exposure to international markets. This concentration in the U.S. market limits global diversification and increases exposure to domestic economic fluctuations. While the U.S. market is a significant component of the global economy, international diversification could provide additional growth opportunities and risk mitigation.
Market capitalization
- Mega-cap 51%
- Large-cap 36%
- Mid-cap 13%
The portfolio's exposure is predominantly in mega and large-cap stocks, which tend to be more stable compared to smaller companies. This can be advantageous during volatile market periods. However, the limited exposure to mid and small-cap stocks may result in missed opportunities for higher growth, as these segments can outperform larger companies during certain market conditions.
Dividends
- Invesco S&P 500® Momentum ETF 0.50%
- Weighted yield (per year) 0.50%
The dividend yield of 0.50% is relatively low, which is typical for growth-focused investments that prioritize capital appreciation over income. For investors seeking regular income, this portfolio may not align with their needs. However, for those focused on long-term growth, reinvesting these dividends can contribute to compounding returns over time.
Ongoing product costs
- Invesco S&P 500® Momentum ETF 0.13%
- Weighted costs total (per year) 0.13%
With a total expense ratio (TER) of 0.13%, the portfolio is cost-efficient, especially considering the potential for high returns. Lower costs can significantly impact long-term performance, as they reduce the drag on investment returns. This efficiency is a positive aspect of the portfolio, enabling more of the investment's return to be retained by the investor.
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