A balanced portfolio with a strong focus on U.S. equities and moderate international exposure

Report created on Jan 20, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with 95% allocated to stocks and only 5% to bonds. The Fidelity 500 Index Fund dominates at 80%, providing substantial exposure to large-cap U.S. companies. This allocation aligns with a balanced risk profile, though it may lack diversification compared to a typical balanced benchmark, which often includes a higher bond component. To enhance diversification, consider slightly increasing the bond allocation or adding alternative asset classes that can provide stability during equity market downturns.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 12.39%, outperforming many benchmarks. However, it has also experienced a significant maximum drawdown of -32.71%, indicating substantial volatility. This performance underscores the importance of balancing growth with risk management. While past performance is not indicative of future results, maintaining a diversified asset mix can help mitigate potential drawdowns and smooth out returns over time.

Projection Info

The Monte Carlo simulation predicts a wide range of potential outcomes, with an annualized return of 8.02% across 1,000 scenarios. This suggests a promising growth outlook, though it's crucial to remember that these projections are based on historical data and assumptions. The simulation's 5th percentile outcome of 13.2% indicates the portfolio's resilience in adverse conditions, but diversification remains key to managing risk. Regularly reviewing and adjusting allocations can help align the portfolio with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    95%
  • Bonds
    5%

The portfolio's allocation is concentrated in equities, with negligible exposure to bonds. While this equity focus can drive growth, it may also increase volatility. A more balanced allocation, including a higher proportion of bonds, could provide better risk-adjusted returns. Bonds often serve as a stabilizing force, offering income and reducing overall portfolio volatility. Consider evaluating the bond allocation to ensure it aligns with your risk tolerance and investment objectives.

Sectors Info

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

Sector-wise, the portfolio is heavily concentrated in technology, representing 28% of the total allocation. This tech-heavy tilt can lead to higher volatility, especially during market corrections or interest rate hikes. While technology has been a strong performer, diversifying across sectors like healthcare, financials, and consumer goods can reduce sector-specific risks. A more balanced sector allocation can enhance stability and capture opportunities across different economic cycles.

Regions Info

  • North America
    84%
  • Europe Developed
    10%
  • Japan
    3%
  • Australasia
    1%
  • Asia Developed
    1%

Geographically, the portfolio is predominantly focused on North America, with 84% exposure. This concentration may limit diversification benefits and increase vulnerability to regional economic downturns. Expanding exposure to other regions, such as emerging markets, could enhance diversification and tap into growth opportunities outside North America. While U.S. equities have performed well historically, global diversification can provide additional layers of protection and growth potential.

Market capitalization Info

  • Mega-cap
    45%
  • Large-cap
    33%
  • Mid-cap
    16%

The portfolio is well-diversified across market capitalizations, with a significant focus on mega and large-cap stocks, accounting for 78% of the allocation. This focus on larger companies generally provides stability and steady growth. However, incorporating more small and mid-cap stocks could enhance diversification and offer higher growth potential. These stocks often outperform in bullish markets, so consider a balanced approach to market capitalization to capture a broader range of opportunities.

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.

Based on the Efficient Frontier, the current portfolio could be optimized to achieve a better risk-return balance. Adjusting the allocation between existing assets might enhance efficiency, potentially improving returns without increasing risk. However, this optimization focuses solely on the current assets, so it's essential to consider whether these changes align with your broader investment goals and risk tolerance. Regular reviews can ensure the portfolio remains on the optimal path.

Dividends Info

  • FIDELITY INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.40%
  • FIDELITY TOTAL BOND FUND FIDELITY TOTAL BOND FUND 3.50%
  • Fidelity 500 Index Fund 1.20%
  • Weighted yield (per year) 1.20%

The portfolio's total dividend yield stands at 1.20%, with contributions from the Fidelity 500 Index Fund and the Fidelity Total Bond Fund. While dividends provide a steady income stream, they are relatively modest in this portfolio. For income-focused investors, increasing exposure to higher-yielding assets could enhance cash flow. However, it's essential to balance yield with growth potential to avoid compromising long-term capital appreciation.

Ongoing product costs Info

  • FIDELITY INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.04%
  • FIDELITY TOTAL BOND FUND FIDELITY TOTAL BOND FUND 0.44%
  • Fidelity 500 Index Fund 0.02%
  • Weighted costs total (per year) 0.04%

The portfolio benefits from impressively low costs, with a total expense ratio (TER) of just 0.04%. This cost efficiency is a strong contributor to long-term performance, as lower fees mean more of your investment returns stay in your pocket. Maintaining low costs should remain a priority, as it enhances compounding over time. Regularly reviewing expense ratios and considering cost-effective alternatives can help sustain this advantage.

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