A focused investment in the S&P 500 ETF showcasing strong historical performance and low diversification
Report created on Aug 2, 2025Risk profile
4/7
Diversification profile
2/5
Positions
-
SX iShares Core S&P 500 UCITS ETF USD (Acc)
SXR8 - IE00B5BMR087 100.00%
The portfolio is entirely allocated to the iShares Core S&P 500 UCITS ETF USD (Acc), which mirrors the performance of the S&P 500 Index. This composition offers a straightforward approach to tapping into the growth potential of the largest U.S. companies. However, the lack of diversification across different asset classes and regions could expose the portfolio to higher volatility and risks associated with the U.S. market. Diversification is a crucial aspect of managing investment risk, as it can help mitigate losses when one market segment underperforms.
Growth
Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 13.12%, with a maximum drawdown of -33.81%. This performance is reflective of the S&P 500's growth over the past years, showcasing significant returns despite periods of market volatility. The days that make up 90% of returns highlight the impact of short-term gains, underscoring the importance of staying invested through market fluctuations to capture potential growth.
Projection
The Monte Carlo simulation, based on 1,000 scenarios, suggests a wide range of potential outcomes with a median increase of 463.8% in portfolio value. This projection emphasizes the potential for substantial growth while also highlighting the inherent uncertainty in market movements. It's important to remember that these projections are based on historical data, which is not a guaranteed predictor of future performance.
Asset classes
- Stocks 100%
With 100% of the portfolio invested in stocks, specifically in a single ETF that tracks the S&P 500, the portfolio lacks diversification across different asset classes. While equities are known for offering higher potential returns, they also come with increased volatility. Diversifying across asset classes, including bonds or real estate, could provide a buffer against stock market downturns.
Sectors
- Technology 34%
- Financials 14%
- Consumer Discretionary 11%
- Telecommunications 10%
- Health Care 9%
- Industrials 8%
- Consumer Staples 5%
- Energy 3%
- Utilities 2%
- Real Estate 2%
- Basic Materials 2%
The sector allocation closely mirrors that of the S&P 500, with significant exposure to technology, financial services, and consumer cyclicals. This sector concentration reflects the current composition of the U.S. economy but also introduces sector-specific risks. For instance, a downturn in the technology sector could disproportionately impact the portfolio's performance.
Regions
- North America 99%
The geographic allocation is almost exclusively focused on North America, with a 99% investment in the U.S. market. This concentration enhances exposure to the U.S. economy's growth potential but also increases susceptibility to its market-specific risks. Expanding geographic diversification could mitigate these risks by capturing growth in other developed or emerging markets.
Market capitalization
- Mega-cap 47%
- Large-cap 35%
- Mid-cap 18%
- Small-cap 1%
The portfolio's market capitalization breakdown shows a heavy leaning towards mega and big-cap companies, which are typically more stable and less volatile than smaller companies. However, this focus may limit exposure to the higher growth potential often found in medium and small-cap companies.
Ongoing product costs
- iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
- Weighted costs total (per year) 0.12%
With a total expense ratio (TER) of 0.12%, the portfolio is efficiently managed in terms of costs. Keeping costs low is crucial for long-term investment success, as high fees can significantly erode returns over time. This low-cost approach aligns well with best practices in portfolio management.
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