A balanced portfolio with a strong focus on US equities and moderate risk exposure

Report created on Dec 12, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio comprises two funds: the Fidelity 500 Index Fund at 80% and the Fidelity International Index Fund at 20%. This indicates a heavy reliance on US equities, given the significant allocation to the S&P 500. The international fund provides some global exposure, but the overall composition leans heavily towards domestic markets. This structure is typical for investors who prioritize stability and returns from well-established markets. To enhance diversification, consider adding more asset classes or increasing international exposure, which could mitigate risks associated with market-specific downturns.

Growth Info

Historically, this portfolio has demonstrated a compound annual growth rate (CAGR) of 13.05%, which is quite impressive. However, it has also faced a maximum drawdown of -33.62%, indicating significant volatility during market downturns. While past performance is not a guarantee of future results, understanding these metrics helps in assessing the portfolio's resilience. Investors should be prepared for potential fluctuations and consider strategies like dollar-cost averaging to mitigate risks during volatile periods.

Projection Info

The Monte Carlo analysis, which uses historical data to simulate future outcomes, suggests a wide range of potential returns. With a median projection of 267.79% and an annualized return of 11.23%, the portfolio shows promise. However, it's crucial to remember that these projections are not certainties and depend heavily on past data, which may not fully predict future market conditions. Regularly reviewing and adjusting the portfolio in response to changing economic environments is advisable to align with personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly invested in stocks, accounting for nearly 100% of its allocation. This concentration in a single asset class can lead to higher volatility and risk, particularly during market downturns. Diversifying across different asset classes, such as bonds or real estate, can help stabilize returns and reduce overall portfolio risk. Consider adding fixed-income securities to balance the equity exposure, which can provide a more stable income stream and potentially lower the portfolio's overall volatility.

Sectors Info

  • Technology
    28%
  • Financials
    14%
  • Health Care
    12%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The portfolio is diversified across various sectors, with technology (28.36%) and financial services (14.37%) being the most prominent. While this sectoral allocation benefits from growth in tech, it also exposes the portfolio to sector-specific risks. Balancing sector exposure ensures that downturns in one area do not disproportionately impact overall performance. Regularly reviewing sector allocations and adjusting them to align with market trends and economic forecasts can help maintain a balanced risk-return profile.

Regions Info

  • North America
    80%
  • Europe Developed
    13%
  • Japan
    4%
  • Australasia
    2%
  • Asia Developed
    1%

Geographically, the portfolio is heavily weighted towards North America at 79.65%, with limited exposure to other regions. This concentration can be a risk if the US market underperforms. Expanding geographic diversification could reduce this risk by tapping into growth opportunities in emerging markets or other developed regions. Consider increasing allocations to regions like Asia or Europe to capture potential growth and further diversify the portfolio's risk exposure.

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 can potentially be optimized using the Efficient Frontier, which involves adjusting asset allocations to achieve the best possible risk-return ratio. This optimization focuses on reallocating existing assets to maximize returns for a given level of risk. By analyzing the current asset mix and making strategic adjustments, investors can enhance portfolio efficiency. Regularly reassessing the portfolio in light of market changes and personal risk tolerance is essential for maintaining an optimal balance.

Dividends Info

  • FIDELITY INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.30%
  • Fidelity 500 Index Fund 1.20%
  • Weighted yield (per year) 1.02%

The portfolio's dividend yield is 1.02%, with the Fidelity 500 Index Fund contributing 1.2% and the international fund 0.3%. While dividends provide a steady income stream, this yield is relatively modest. Investors seeking higher income might consider adding dividend-focused funds or stocks. However, it's essential to balance the pursuit of income with growth potential, as higher dividend yields can sometimes indicate slower growth prospects. Review and adjust the portfolio to meet income needs while maintaining growth objectives.

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