Growth-focused portfolio with high exposure to US equities and low diversification

Report created on Jul 19, 2025

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 heavily invested in the US stock market, with 100% of assets in equities, split between the Vanguard Total Stock Market Index Fund ETF Shares (66%) and the Vanguard S&P 500 ETF (34%). The emphasis on these two ETFs suggests a strategy focused on capturing the broad performance of the US equity market. However, this approach results in a low diversification score, as both ETFs have significant overlap in their holdings, particularly in large-cap stocks.

Growth Info

Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 14.05%, with a maximum drawdown of -34.66%. These figures indicate a relatively high return profile but also a significant risk of large losses in downturns. The performance is largely attributable to the strong returns of US equities over the review period. However, it's important to remember that past performance is not indicative of future results.

Projection Info

Monte Carlo simulations suggest a wide range of potential outcomes, with a median increase of 513.4% over the simulated period. While the high number of simulations with positive returns (994 out of 1,000) is encouraging, it's crucial to understand that these projections are based on historical data and assumptions that may not hold true in the future. Therefore, they should be viewed as one of many tools in decision-making.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is solely in stocks, lacking exposure to other asset classes like bonds or real estate, which could provide income and reduce volatility. This concentration in stocks, while beneficial in bull markets, may increase the portfolio's susceptibility to market downturns, highlighting a need for greater asset class diversification.

Sectors Info

  • Technology
    32%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    9%
  • Consumer Staples
    6%
  • Energy
    3%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    2%

Sector allocation is heavily weighted towards technology (32%), followed by financial services (14%) and consumer cyclicals (11%). This sector distribution reflects the composition of the broader US stock market but also exposes the portfolio to sector-specific risks, such as regulatory changes or economic cycles affecting technology and financial stocks more acutely.

Regions Info

  • North America
    100%

The portfolio's geographic allocation is entirely focused on North America, with no exposure to developed or emerging markets outside of this region. This geographic concentration increases vulnerability to region-specific economic downturns and misses potential growth opportunities in other global markets.

Market capitalization Info

  • Mega-cap
    43%
  • Large-cap
    32%
  • Mid-cap
    19%
  • Small-cap
    4%
  • Micro-cap
    1%

The market capitalization breakdown shows a strong preference for mega (43%) and big (32%) cap stocks, with lesser emphasis on medium (19%), small (4%), and micro (1%) cap stocks. This tilt towards larger companies may reduce volatility but can also limit growth potential from smaller, more dynamic companies.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

The high correlation between the Vanguard Total Stock Market Index Fund ETF Shares and the Vanguard S&P 500 ETF indicates a redundancy in the portfolio, as both funds track the US equity market closely. This redundancy does not contribute to diversification and may amplify risks during market downturns.

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 current portfolio's expected return could be improved from its current level to 14.40% with the same risk level by optimizing asset allocation. This optimization involves reducing the overlap between highly correlated assets, which currently limits diversification benefits and potentially increases risk unnecessarily.

Dividends Info

  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.20%

The dividend yield for both ETFs is 1.20%, contributing to the portfolio's total income. While not the primary focus of this growth-oriented portfolio, dividends can provide a steady income stream and help mitigate losses during market dips.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from low costs, with a Total Expense Ratio (TER) of 0.03% for both ETFs. Low costs are crucial for long-term investment success, as they directly enhance net returns by reducing the drag on performance.

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