A broadly diversified stock heavy portfolio with tilted growth and dividend exposures
Report created on Aug 11, 2024Risk profile
4/7
Diversification profile
4/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 40.00% -
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 20.00% -
SC Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 20.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 20.00%
The portfolio is concentrated in four ETFs with 40% in a total US stock market ETF and three 20% positions split across dividend growth large cap growth and international equities. This creates a high equity weight about 99% equities and 1% cash versus a balanced benchmark that often includes meaningful fixed income. High equity tilts raise potential long term returns but also increase drawdown risk. Recommendation focus on reducing overlapping exposures between broad market and large cap growth funds and consider adding a modest fixed income sleeve to align risk with a balanced profile while preserving equity growth potential.
Growth
Using a hypothetical $10,000 invested ten years ago a CAGR of 14.36% would have grown that sum substantially illustrating strong historical performance. CAGR or Compound Annual Growth Rate measures average yearly growth like the steady speed of a car over a long trip. The portfolio also endured a maximum drawdown of −33.72% showing significant downside during stress. Compared with broad market benchmarks this performance looks favorable but past returns are not guarantees. Recommendation keep expectations realistic and prepare for volatility by setting time horizons and considering storm buffers such as cash or bonds.
Projection
The Monte Carlo simulation used here ran 1,000 hypothetical future paths based on the portfolio’s historical returns and volatilities to show a range of outcomes. Monte Carlo is a statistical method that builds many possible futures to estimate probabilities like rolling dice many times. Results show median growth and favorable positive outcome frequency yet the 5th percentile implies scenarios with little to no real gain. Simulations assume historical patterns persist which is uncertain. Recommendation use these outputs as a planning tool not a promise and stress test with different volatility and return assumptions before committing to changes.
Asset classes
- Stocks 99%
- Cash 1%
Asset class exposure is overwhelmingly equities at 99% with negligible cash and no bonds or alternatives. This concentration increases sensitivity to equity cycles and reduces typical diversification benefits that fixed income provides. Balanced portfolios commonly include bonds to dampen volatility and provide income and capital preservation. Recommendation consider introducing a bond allocation or other low correlation assets to lower portfolio volatility and improve drawdown resilience while keeping a clear target allocation that matches your risk tolerance and time horizon.
Sectors
- Technology 28%
- Financials 13%
- Consumer Discretionary 11%
- Health Care 11%
- Industrials 10%
- Telecommunications 9%
- Consumer Staples 7%
- Energy 6%
- Basic Materials 3%
- Utilities 2%
- Real Estate 2%
Sector exposure shows a tech tilt at 28% with meaningful weights in financials consumer cyclicals and healthcare and smaller positions in staples energy and materials. A tech heavy profile tends to boost returns in growth cycles but also raises volatility and sensitivity to interest rate shifts. This sector mix broadly mirrors large cap market biases which is positive for market-tracking aims but concentrates risk. Recommendation evaluate whether the tech tilt is intentional and if not rebalance toward more neutral sector weights or add defensive or countercyclical allocations to smooth returns across market regimes.
Regions
- North America 81%
- Europe Developed 8%
- Asia Emerging 3%
- Japan 3%
- Asia Developed 3%
- Australasia 1%
- Africa/Middle East 1%
Geographic allocation is heavily North America at 81% with modest developed Europe and limited emerging market exposure. Compared to many global benchmarks this is a pronounced US tilt which historically benefited performance but increases single country risk and currency concentration. Greater international exposure improves diversification across economic cycles and policy regimes. Recommendation modestly increase developed ex US and emerging market weights for diversification and to capture growth opportunities outside North America while monitoring currency and geopolitical considerations.
Market capitalization
- Mega-cap 38%
- Large-cap 35%
- Mid-cap 19%
- Small-cap 5%
- Micro-cap 1%
Market cap breakdown shows strong large cap emphasis with mega caps at 38% big caps 35% mid caps 19% and small plus micro making up the remainder. Large cap dominance typically offers lower volatility and strong liquidity but can cap upside relative to small cap growth over long stretches. Having diversified cap exposure is healthy but consider whether you want more small or mid cap to tilt for higher long term returns and diversification. Recommendation if growth is a priority add a measured small or mid cap sleeve while keeping position sizes prudent to control volatility.
Redundant positions
-
High correlationSchwab U.S. Large-Cap Growth ETFVanguard Total Stock Market Index Fund ETF Shares
The portfolio contains highly correlated holdings notably the large cap growth ETF and the total stock market ETF which move closely together. Correlation measures how assets move together between −1 and +1 with higher positive values indicating similar behavior; high correlation reduces diversification benefits especially during market downturns. Recommendation remove or reduce redundant holdings and replace weight with assets that have lower historical correlation such as bonds small cap or international emerging exposures to improve true risk reduction in stress events.
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.
Portfolio optimization via the Efficient Frontier can help find allocations that offer the best expected return for a given level of risk using only the current assets and their historical covariances. The Efficient Frontier is a curve showing portfolios that maximize return for each risk level much like choosing the fastest car for each fuel budget. Optimization works best after removing overlapping assets because redundant holdings distort inputs. Recommendation trim highly correlated positions then run optimization constrained by realistic return and risk estimates and remember results depend heavily on historical inputs and assumptions.
Dividends
- Schwab U.S. Dividend Equity ETF 2.80%
- Schwab U.S. Large-Cap Growth ETF 0.30%
- Vanguard Total Stock Market Index Fund ETF Shares 1.10%
- Vanguard Total International Stock Index Fund ETF Shares 2.70%
- Weighted yield (per year) 1.60%
The blended portfolio yield is about 1.6% with the dividend-focused ETF yielding 2.8% and international holdings near 2.7% while growth exposure yields little. Dividends add a steady income component and can cushion returns during flat markets as well as compound over time. For investors seeking income the dividend ETF provides value but for growth oriented investors dividends may be secondary to capital appreciation. Recommendation align dividend exposure with income needs and tax status and consider holding higher yielding funds in tax-advantaged accounts to improve after tax income efficiency.
Ongoing product costs
- Schwab U.S. Dividend Equity ETF 0.06%
- Schwab U.S. Large-Cap Growth ETF 0.04%
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.05%
- Weighted costs total (per year) 0.04%
Total expense ratio across the portfolio is very low about 0.04% which is an excellent outcome for long term investing. TER or Total Expense Ratio measures how much a fund charges annually similar to a running cost for using the fund and small differences compound over time. Low costs improve net returns and are especially important in passive index based strategies. Recommendation keep costs low by preferring low TER ETFs continue to monitor spreads and trading costs and avoid frequent turnover which can erode these cost advantages.
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