A concentrated growth-focused portfolio with a strong emphasis on large-cap U.S. equities

Report created on Dec 20, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is evenly split between two ETFs focusing on large-cap U.S. equities, with 50% in Schwab U.S. Large-Cap Growth ETF and 50% in SPDR® Portfolio S&P 500 ETF. This composition leans heavily towards growth stocks, which can offer significant returns but also come with higher volatility. Compared to a typical balanced portfolio, this one lacks diversification across asset classes and regions. To mitigate potential risks, consider diversifying into other asset classes, such as bonds or international equities, to reduce exposure to U.S. market fluctuations.

Growth Info

Historically, this portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 15.8%, indicating strong performance over time. The maximum drawdown of -33.09% reflects potential volatility, a common trait in growth-focused portfolios. While past performance is not indicative of future results, it highlights the potential for significant gains and losses. To manage risk, consider maintaining a long-term perspective and being prepared for market downturns, as recovery may take time.

Projection Info

Using Monte Carlo simulations, this portfolio shows promising future potential, with a median expected return of 670.95%. These projections use historical data to estimate possible outcomes, but they are not guarantees. The high number of simulations with positive returns (995 out of 1,000) suggests a favorable outlook. However, remember that market conditions can change, and diversification remains a key strategy for managing uncertainty and enhancing stability.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, with over 99% allocation, and a negligible cash component. This heavy concentration in equities can drive growth but also increases exposure to market volatility. Compared to a diversified portfolio that might include bonds or real estate, this allocation is less balanced. Consider introducing other asset classes to cushion against equity market downturns and provide more stable returns over time.

Sectors Info

  • Technology
    41%
  • Consumer Discretionary
    13%
  • Telecommunications
    11%
  • Health Care
    10%
  • Financials
    10%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

Sector-wise, the portfolio is heavily weighted towards technology at 40.57%, followed by consumer cyclicals and communication services. This concentration can lead to higher volatility, especially when interest rates rise or tech stocks underperform. A more balanced sector allocation could help mitigate sector-specific risks. Consider diversifying into less represented sectors like utilities or real estate to enhance stability and reduce reliance on tech performance.

Regions Info

  • North America
    100%

Geographically, the portfolio is overwhelmingly focused on North America, with 99.62% exposure. This lack of international diversification could pose risks if the U.S. market underperforms. A well-diversified portfolio often includes significant exposure to international markets, which can provide growth opportunities and risk diversification. Consider adding international equities to balance geographic exposure and tap into global economic growth.

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.

The portfolio could potentially be optimized using the Efficient Frontier, focusing on achieving the best possible risk-return ratio with current assets. This involves adjusting the allocation between the two ETFs to find a more efficient balance. However, remember that this optimization is based on historical data and current assets, and does not account for external diversification needs. Regular reviews and adjustments are recommended to maintain optimal performance.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SPDR® Portfolio S&P 500 ETF 0.90%
  • Weighted yield (per year) 0.65%

The portfolio's dividend yield stands at 0.65%, which is relatively low. Dividends can provide a steady income stream and contribute to total returns, especially during periods of market volatility. While growth stocks typically offer lower dividends, adding dividend-paying stocks or funds could enhance income and provide a buffer against market downturns. Consider balancing growth with income-generating assets to improve overall portfolio stability.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from impressively low costs, with a total expense ratio (TER) of just 0.03%. Low costs are a significant advantage, as they enhance net returns over time. Compared to higher-cost funds, this portfolio is well-positioned to maximize long-term gains. Continue to monitor fees and consider cost-efficient options when rebalancing or adding new assets to maintain this advantage and optimize returns.

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