A highly diversified portfolio with a balanced risk profile and low-cost exposure to global equities

Report created on Jan 1, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of equity funds, with a significant 65% allocated to the Fidelity Total Market Index Fund. This is complemented by 20% in international equities and 10% in large-cap growth, while a modest 5% is in bonds. Compared to a typical balanced benchmark, this portfolio leans heavily toward equities, which can enhance growth potential but also increase volatility. Balancing these allocations with more fixed-income assets could provide greater stability, especially during market fluctuations.

Growth Info

Historically, this portfolio has performed well, achieving a strong Compound Annual Growth Rate (CAGR) of 13.17%. However, it experienced a maximum drawdown of -33.13%, indicating periods of significant loss. This highlights the volatility associated with a high equity allocation. Comparing this to a benchmark, the portfolio has outperformed in terms of growth but at the cost of higher risk. To mitigate future drawdowns, consider diversifying with less volatile assets.

Projection Info

Using Monte Carlo simulations, which predict future outcomes based on historical data, the portfolio shows promising potential. With a median projected return of 285.41% and 980 out of 1,000 simulations yielding positive returns, the outlook is optimistic. However, remember that these projections are based on past performance and assumptions, which may not hold true in future market conditions. It's wise to regularly review and adjust the portfolio in response to changing market dynamics.

Asset classes Info

  • Stocks
    95%
  • Bonds
    5%

The portfolio's allocation is heavily skewed towards stocks, comprising approximately 95% of the total assets, with bonds making up only 5%. This allocation can drive significant growth but may also result in higher volatility compared to a more balanced asset mix. For investors seeking reduced risk, increasing the bond allocation could provide a buffer against equity market downturns, leading to more stable returns over time.

Sectors Info

  • Technology
    28%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is diverse, with significant exposure to technology (28%), financial services (13.5%), and consumer cyclical (10.3%), among others. This distribution aligns well with common benchmarks, indicating a well-diversified approach across industries. However, the high concentration in technology could lead to increased volatility, particularly during periods of regulatory change or economic downturns. Consider rebalancing to reduce sector-specific risks.

Regions Info

  • North America
    76%
  • Europe Developed
    8%
  • No data
    5%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio is predominantly focused on North America, accounting for 76.16% of the allocation. This strong regional concentration could limit diversification benefits and expose the portfolio to region-specific risks. Expanding exposure to underrepresented regions like Asia and Europe could enhance diversification and capture growth opportunities in emerging markets. This strategy may also reduce dependence on the North American market.

Redundant positions Info

  • FIDELITY LARGE CAP GROWTH INDEX FUND INSTITUTIONAL PREMIUM CLASS
    Fidelity Total Market Index Fund
    High correlation

The portfolio contains highly correlated assets, particularly between the Fidelity Large Cap Growth Index Fund and the Fidelity Total Market Index Fund. High correlation means these assets tend to move together, which can reduce diversification benefits. To enhance risk management, consider replacing one of these funds with a less correlated asset. This could improve the portfolio's resilience during market downturns by spreading risk more effectively.

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.

Optimization using the Efficient Frontier suggests that current asset allocations could be fine-tuned to achieve a better risk-return balance. By adjusting the weights among existing assets, you can potentially enhance returns without increasing risk. This process involves analyzing the trade-off between risk and return to find the most efficient allocation. However, remember that this optimization is based solely on the current assets and doesn't consider external factors or new investments.

Dividends Info

  • Fidelity Total Market Index Fund 0.20%
  • FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS 3.10%
  • Weighted yield (per year) 0.28%

The portfolio's dividend yield is relatively low at 0.28%, primarily driven by the bond index fund's 3.1% yield. For investors who prioritize income generation, this yield might be insufficient. Increasing exposure to higher-yielding assets or funds could enhance income, providing a more balanced return profile. However, ensure these additions align with overall investment goals and risk tolerance to maintain portfolio balance.

Ongoing product costs Info

  • Fidelity Total Market Index Fund 0.02%
  • FIDELITY LARGE CAP GROWTH INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.04%
  • FIDELITY TOTAL INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.06%
  • FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.02%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from impressively low costs, with a total expense ratio (TER) of 0.03%. This cost efficiency supports better long-term performance, as lower fees mean more of the investment returns stay in your pocket. Maintaining a focus on low-cost funds is a smart strategy, but periodically reviewing fees can ensure continued cost-effectiveness as the portfolio evolves. Consider replacing any high-fee assets with lower-cost alternatives if necessary.

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