Balanced growth portfolio with a strong focus on US large-cap stocks and international diversification
Report created on Jun 8, 2025Risk profile
5/7
Diversification profile
4/5
Positions
-
SC Schwab U.S. Large-Cap ETF
SCHX - US8085242019 55.00% -
SC Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 30.00% -
VE Vanguard FTSE All-World ex-US Index Fund ETF Shares
VEU - US9220427754 15.00%
This portfolio predominantly comprises U.S. large-cap and large-cap growth ETFs, representing 85% of the total, alongside a 15% allocation to an international ETF. The heavy weighting towards large-cap equities, especially in the growth category, suggests a strategy aiming for capital appreciation with a considerable focus on the U.S. market. The inclusion of the international ETF provides some geographic diversification, though the exposure is significantly less than the domestic allocation.
Growth
Historically, the portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 14.62%, with a maximum drawdown of -33.55%. These figures indicate a strong performance, albeit with periods of significant volatility. The days contributing to 90% of returns being concentrated in just 32.0 days highlight the portfolio's susceptibility to short-term market movements, underscoring the importance of a long-term investment horizon to mitigate the impact of volatility.
Projection
Monte Carlo simulations, based on 1,000 iterations, project a wide range of outcomes, with the 50th percentile suggesting a potential 401.1% increase. While these simulations are useful for understanding possible future scenarios, it's crucial to remember that they rely on historical data and cannot predict future market conditions with certainty. Investors should use these projections as one of many tools in their decision-making process.
Asset classes
- Stocks 100%
The portfolio is entirely invested in stocks, with no allocation to cash or other asset classes. This singular focus on equities is consistent with a growth-oriented investment strategy but comes with higher volatility and risk. Diversifying across different asset classes could provide a buffer against stock market downturns and reduce overall portfolio volatility.
Sectors
- Technology 34%
- Financials 14%
- Consumer Discretionary 11%
- Telecommunications 10%
- Health Care 9%
- Industrials 8%
- Consumer Staples 5%
- Energy 3%
- Basic Materials 2%
- Utilities 2%
- Real Estate 2%
Sector allocation is heavily weighted towards technology, financial services, and consumer cyclicals, constituting 59% of the portfolio. This concentration in sectors that can be highly sensitive to economic cycles may increase the portfolio's risk profile. Diversifying across a broader range of sectors could help mitigate sector-specific risks and stabilize returns over time.
Regions
- North America 86%
- Europe Developed 6%
- Asia Emerging 2%
- Japan 2%
- Asia Developed 1%
- Australasia 1%
- Africa/Middle East 1%
The geographic allocation is heavily skewed towards North America (86%), with minimal exposure to other regions. This concentration enhances the portfolio's vulnerability to U.S. market fluctuations. Increasing exposure to developed and emerging markets outside the U.S. could enhance diversification benefits and potentially tap into growth opportunities in other economies.
Market capitalization
- Mega-cap 51%
- Large-cap 29%
- Mid-cap 17%
- Small-cap 2%
The portfolio's emphasis on mega and big-cap stocks (80% combined) aligns with its growth and stability objectives. However, the modest allocation to medium and small-cap stocks (19%) might limit opportunities for higher growth rates that smaller companies can offer. Considering a slight increase in exposure to smaller caps could introduce more growth potential, albeit with added volatility.
Redundant positions
-
High correlationSchwab U.S. Large-Cap ETFSchwab U.S. Large-Cap Growth ETF
The high correlation between the two largest holdings, both focused on U.S. large-cap stocks, limits the portfolio's diversification benefits. Reducing overlap by reallocating funds from one of these highly correlated ETFs into assets with lower correlation could enhance portfolio diversification and reduce risk.
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.
Optimizing the portfolio involves addressing the high correlation between the two largest U.S. large-cap holdings. By reallocating some of these funds into less correlated assets, the investor could achieve a more efficient risk-return profile. This step, along with considering a slight increase in international and small to medium-cap exposure, could further enhance diversification and potential returns.
Dividends
- Schwab U.S. Large-Cap Growth ETF 0.40%
- Schwab U.S. Large-Cap ETF 1.20%
- Vanguard FTSE All-World ex-US Index Fund ETF Shares 2.80%
- Weighted yield (per year) 1.20%
The portfolio yields an average dividend of 1.20%, with the international ETF contributing a higher yield. While dividends contribute to total returns, the portfolio's focus appears to be more on capital appreciation. Investors seeking income might consider increasing allocations to higher-yielding assets, balancing the growth and income objectives.
Ongoing product costs
- Schwab U.S. Large-Cap Growth ETF 0.04%
- Schwab U.S. Large-Cap ETF 0.03%
- Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
- Weighted costs total (per year) 0.04%
The portfolio's total expense ratio (TER) of 0.04% is impressively low, enhancing its attractiveness by minimizing costs that can erode long-term returns. Keeping investment costs low is a crucial component of successful long-term investing, and this portfolio aligns well with that principle.
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