A focused growth strategy with an all-in commitment to the Fidelity 500 Index Fund
Report created on Aug 11, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
FX Fidelity 500 Index Fund
FXAIX - US3159117502 100.00%
This portfolio is entirely invested in the Fidelity 500 Index Fund, which mirrors the performance of the S&P 500. This approach offers simplicity but comes with low diversification, as evidenced by the allocation to a single asset class and concentration in specific sectors like Technology and Financial Services. While this strategy simplifies investment decisions, it ties the portfolio's fate closely to the performance of the largest U.S. companies, making it less resilient to sector-specific downturns.
Growth
The portfolio's historic performance, with a Compound Annual Growth Rate (CAGR) of 14.71%, is impressive, indicating strong growth over the observed period. However, the maximum drawdown of -33.77% highlights potential volatility and the risk of significant short-term losses. It's essential to understand that such performance is closely tied to market cycles, and past success does not guarantee future results, especially in a portfolio with low diversification.
Projection
Monte Carlo simulations project a wide range of potential outcomes, with the 50th percentile suggesting a 536.4% increase. While these projections are based on historical data and offer a glimpse into possible futures, they come with limitations. Market conditions can change, and past performance is not always indicative of future results. Investors should use these simulations as one of many tools in their decision-making process.
Asset classes
- Stocks 100%
The portfolio's sole exposure to stocks, particularly those of large-cap companies, aligns with its growth profile but lacks in diversification across asset classes. This singular focus increases the portfolio's sensitivity to stock market fluctuations. Introducing other asset classes, such as bonds or real estate, could provide income and reduce volatility, complementing the growth-oriented nature of equity investments.
Sectors
- Technology 33%
- Financials 14%
- Consumer Discretionary 11%
- Health Care 10%
- Telecommunications 10%
- Industrials 8%
- Consumer Staples 6%
- Energy 3%
- Utilities 2%
- Real Estate 2%
- Basic Materials 2%
The sector allocation heavily favors Technology, Financial Services, and Consumer Cyclical sectors, reflecting the composition of the S&P 500. This concentration can amplify returns during bull markets, especially in tech, but also increases risk during sector-specific downturns. Diversifying across a broader range of sectors could mitigate this risk and smooth out returns over time.
Regions
- North America 99%
With 99% of assets in North America, the portfolio's geographic exposure is highly concentrated. This concentration benefits from the strong performance of the U.S. market but misses out on potential growth and diversification opportunities in developed and emerging markets outside of the U.S. Broadening geographic exposure could reduce risk and tap into growth in other economies.
Market capitalization
- Mega-cap 47%
- Large-cap 35%
- Mid-cap 18%
- Small-cap 1%
The portfolio's emphasis on mega and large-cap stocks is typical for an index tracking the S&P 500, offering stability and lower volatility compared to smaller caps. However, this focus may limit potential upside from the growth of smaller companies. Including a mix of medium and small-cap stocks could enhance growth prospects and diversification.
Dividends
- Fidelity 500 Index Fund 0.90%
- Weighted yield (per year) 0.90%
The dividend yield of 0.90% contributes to the portfolio's total return, providing a steady income stream in addition to capital appreciation. While not the primary focus of a growth-oriented strategy, dividends can offer a cushion during market dips and contribute to compounding returns over time.
Ongoing product costs
- Fidelity 500 Index Fund 0.02%
- Weighted costs total (per year) 0.02%
The portfolio's total expense ratio (TER) of 0.02% is impressively low, maximizing the potential for net returns. Keeping costs low is crucial for long-term investment success, as even small differences in fees can significantly impact compounded returns over time.
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