A balanced portfolio with strong U.S. focus and low-cost index funds

Report created on Mar 28, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists of two index funds: Fidelity Total Market Index Fund at 80% and Fidelity Total International Index Fund Institutional Premium Class at 20%. This composition reflects a strong preference for domestic equities with a moderate international diversification. Compared to a typical balanced benchmark, this portfolio leans more heavily towards equities, which may offer higher growth potential but also increased volatility. The allocation is simple yet effective, allowing for broad market exposure with minimal management required. Consider this structure's alignment with your risk tolerance and financial goals to ensure it supports your investment strategy.

Growth Info

With a Compound Annual Growth Rate (CAGR) of 13.08%, the portfolio has delivered strong historic performance, outperforming many traditional balanced portfolios. The max drawdown of -34.73% indicates significant volatility, typical for equity-heavy portfolios. This performance is supported by the U.S. market's robust growth over the past decade. Keep in mind that past performance is not indicative of future results, and market conditions can change. Regularly review performance in the context of your financial goals to ensure continued alignment with your risk tolerance.

Projection Info

Monte Carlo simulations, which use historical data to predict future potential outcomes, indicate a 12.14% annualized return with a high probability of positive returns. However, the 5th percentile shows a potential downside of just 39.3% of the initial investment, highlighting the inherent risks of equity-focused portfolios. While these projections provide a range of possible outcomes, they rely on past data and cannot account for future market changes. Use these insights to evaluate your portfolio's alignment with your risk appetite and financial objectives, and adjust as needed.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, offering no exposure to bonds or other asset classes. This allocation maximizes growth potential but increases risk due to lack of diversification across asset classes. A typical balanced portfolio might include bonds to dampen volatility and provide steady income. Consider diversifying into other asset classes if your risk tolerance allows, to better manage potential downturns and align with a balanced investment strategy.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    10%
  • Telecommunications
    9%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

The portfolio's sector allocation is tech-heavy, with 27% in Technology, followed by Financial Services and Consumer Cyclical sectors. This concentration aligns with current market trends but may increase volatility, especially during economic shifts or interest rate changes. A well-diversified sector allocation can help mitigate sector-specific risks and take advantage of various economic cycles. Regularly review sector performance and consider rebalancing if necessary to maintain a diversified approach.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Japan
    3%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

With 81% of the portfolio in North America, there is a strong domestic focus. While this has historically benefited from U.S. market strength, it limits exposure to global growth opportunities. The remaining 19% is spread across developed and emerging markets, offering some international diversification. Consider increasing exposure to international markets, especially emerging economies, to capture potential growth and reduce reliance on U.S. market performance.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    31%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio's market capitalization is dominated by mega-cap stocks at 42%, followed by large and medium caps. This allocation provides stability and growth potential but may limit exposure to smaller, potentially higher-growth companies. Small and micro-cap stocks, though riskier, can offer significant upside. Evaluate your comfort with market cap exposure and consider adjusting to include a broader range of company sizes, balancing growth potential with 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.

The portfolio can be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio with the existing assets. This involves adjusting the allocation between the two funds to potentially enhance returns or reduce risk. However, the current allocation already aligns closely with efficient practices, benefiting from broad market exposure and low costs. Regularly review the portfolio's performance and risk profile to ensure it remains optimized for your investment objectives.

Dividends Info

  • Fidelity Total Market Index Fund 1.20%
  • Weighted yield (per year) 0.96%

With a total yield of 0.96%, dividends provide a modest income stream, supplementing capital gains. While not a primary focus, dividends can offer stability during market downturns. For investors seeking income, consider increasing exposure to dividend-focused funds or stocks. However, ensure this aligns with your overall strategy, as higher dividend yields can sometimes indicate lower growth potential.

Ongoing product costs Info

  • Fidelity Total Market Index Fund 0.02%
  • Weighted costs total (per year) 0.02%

The portfolio benefits from impressively low costs, with a Total Expense Ratio (TER) of 0.02%. Low costs enhance long-term returns by minimizing the drag on performance, allowing more of your investment to compound over time. This cost efficiency is a significant advantage, aligning well with best practices for maximizing net returns. Continue monitoring expenses to maintain this cost-effective approach, ensuring your investments remain aligned with your financial goals.

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