A balanced portfolio with strong U.S. focus and moderate risk exposure

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor seeking moderate growth with a balanced risk tolerance and a medium to long-term investment horizon. It provides a mix of equity growth and bond stability, making it ideal for individuals looking to build wealth steadily while managing volatility. The strong U.S. focus appeals to those confident in the U.S. market but open to exploring international diversification. This investor values broad diversification and is comfortable with occasional market fluctuations to achieve their financial goals.

Positions

  • FIDELITY ZERO TOTAL MARKET INDEX FUND
    FZROX
    64.00%
  • FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS
    FXNAX - US3161463563
    20.00%
  • FIDELITY ZERO INTERNATIONAL INDEX FUND
    FZILX
    16.00%

The portfolio consists of three main funds, with the Fidelity Zero Total Market Index Fund holding the majority at 64%. The Fidelity U.S. Bond Index Fund takes up 20%, while the Fidelity Zero International Index Fund covers 16%. This structure leans heavily towards equities, with an 80% allocation, and bonds at 20%, which aligns with a balanced risk profile. The diversification score of 4 out of 5 suggests a well-diversified portfolio, but the heavy U.S. equity focus might limit global exposure. Consider evaluating if this concentration aligns with your long-term goals and risk tolerance.

Growth Info

Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 10.27%, which is commendable for balanced portfolios. However, a maximum drawdown of -28.18% indicates potential vulnerability during market downturns. This performance, compared to benchmarks, reflects solid growth yet highlights the importance of being prepared for volatility. To mitigate such drawdowns, consider incorporating assets with lower correlation to equities, such as alternative investments or international bonds, to smooth returns over time.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, shows an annualized return of 7.87% across 1,000 simulations. This suggests a reasonable potential for growth, but it's important to note that 9% of simulations resulted in negative returns. This highlights the uncertainty and variability of future market conditions. While these projections offer insight, remember that past performance is not indicative of future results. Regularly reviewing and adjusting your portfolio based on changing market conditions can help optimize returns.

Asset classes Info

  • Stocks
    80%
  • Bonds
    20%
  • Cash
    0%
  • Other
    0%
  • Not Classified
    0%

The portfolio's asset allocation is 80% stocks and 20% bonds, with no allocation to cash or other asset classes. This is typical for a balanced portfolio, providing growth potential while offering some income and stability from bonds. Compared to benchmarks, this allocation aligns well with moderate risk tolerance. However, consider whether additional asset classes, such as real estate or commodities, could further enhance diversification and provide a hedge against inflation or market volatility.

Sectors Info

  • Technology
    22%
  • Financials
    13%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Industrials
    8%
  • Telecommunications
    7%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation shows a significant concentration in technology at 22%, followed by financial services at 13% and consumer cyclical at 9%. This mirrors common benchmarks, indicating a well-rounded sector exposure. However, the tech-heavy nature may lead to higher volatility during periods of interest rate changes or tech sector downturns. To mitigate risk, consider diversifying further into sectors with lower correlations to tech, such as consumer defensive or utilities, which can provide stability during market fluctuations.

Regions Info

  • North America
    65%
  • Unknown
    20%
  • Europe Developed
    7%
  • Japan
    3%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

The portfolio's geographic exposure is predominantly in North America at 65%, with limited exposure to other regions. While this aligns with many U.S.-based benchmarks, it may reduce diversification benefits. A 20% allocation to "unknown" regions suggests potential gaps in geographic data. Consider increasing exposure to emerging markets or other underrepresented regions to enhance diversification and capture growth opportunities outside the U.S., which can reduce reliance on the U.S. market's performance.

Market capitalization Info

  • Mega-cap
    34%
  • Large-cap
    25%
  • Mid-cap
    15%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio is well-diversified across market capitalizations, with 34% in mega-cap, 25% in big-cap, and smaller allocations to medium and small-cap companies. This provides a mix of stability from larger companies and growth potential from smaller ones. However, the low exposure to small and micro-cap stocks might limit growth opportunities. Consider evaluating if a slight increase in small-cap exposure aligns with your risk tolerance, as these stocks can offer higher returns but also come with increased volatility.

Dividends Info

  • FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS 2.50%
  • FIDELITY ZERO INTERNATIONAL INDEX FUND 2.80%
  • FIDELITY ZERO TOTAL MARKET INDEX FUND 1.20%
  • Weighted yield (per year) 1.72%

The portfolio's total dividend yield is 1.72%, with the Fidelity U.S. Bond Index Fund contributing the highest yield at 2.50%. Dividends play a crucial role in providing steady income and compounding returns over time. For a balanced portfolio, this yield is reasonable, but if income is a priority, consider increasing exposure to dividend-focused funds or stocks. This can enhance the income stream while maintaining growth potential, especially in a low-interest-rate environment.

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.

The portfolio could potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio based on current assets. This involves adjusting allocations to achieve maximum expected returns for a given level of risk. While the current composition aligns with a balanced risk profile, exploring optimization opportunities could enhance returns without significantly increasing risk. This might involve reallocating between existing funds or adding new asset classes to better align with the Efficient Frontier.

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