A conservative portfolio with strong liquidity and limited equity exposure

Report created on Dec 29, 2024

Risk profile Info

2/7
Conservative
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards the Fidelity® Government Money Market Fund, making up 66% of the total allocation, with the remaining 34% in the Fidelity 500 Index Fund. This composition reflects a conservative approach, prioritizing liquidity and capital preservation over growth. Compared to common benchmarks, which often include a mix of equities, bonds, and cash, this portfolio is less diversified. To enhance diversification, consider including a broader range of asset classes, such as bonds or international equities, which can help balance risk and potential returns.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 5.36%, with a maximum drawdown of -16.12%. This performance is relatively stable for a conservative portfolio, indicating resilience during market downturns. However, the concentrated allocation in a money market fund limits growth potential compared to more diversified portfolios. To potentially improve returns, consider gradually increasing exposure to equities or other growth-oriented investments, keeping in mind the portfolio's conservative risk profile.

Projection Info

The Monte Carlo simulation projects a wide range of potential outcomes, with a median (50th percentile) return of 172.87% over the investment horizon. While 971 out of 1,000 simulations resulted in positive returns, it's important to note that these projections are based on historical data and assumptions. The annualized return of 7.93% suggests potential for moderate growth. However, it's crucial to remember that past performance doesn't guarantee future results. Regularly review the portfolio to ensure it aligns with evolving financial goals and market conditions.

Asset classes Info

  • No data
    66%
  • Stocks
    34%

The portfolio consists primarily of cash and stock asset classes, with cash representing 66% and stocks 34%. This allocation is typical for a conservative investment strategy, emphasizing capital preservation and liquidity. However, the lack of exposure to other asset classes, such as bonds, may limit diversification benefits. To enhance risk management, consider adding fixed-income securities, which can provide stability and income, especially during periods of equity market volatility.

Sectors Info

  • No data
    66%
  • Technology
    11%
  • Financials
    4%
  • Health Care
    4%
  • Consumer Discretionary
    3%
  • Telecommunications
    3%
  • Industrials
    3%
  • Consumer Staples
    2%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

Sector allocation shows a strong concentration in technology, comprising 11.22% of the portfolio. Other sectors like financial services and healthcare have smaller allocations. This concentration can lead to higher volatility, especially if the tech sector experiences downturns. A more balanced sector allocation could reduce risk. Consider diversifying by increasing exposure to underrepresented sectors, such as consumer defensive or utilities, which tend to perform well during economic slowdowns.

Regions Info

  • No data
    66%
  • North America
    34%

The portfolio's geographic exposure is heavily skewed towards North America, comprising 33.79% of the allocation, with minimal exposure to other regions. This concentration can limit diversification and increase vulnerability to regional economic downturns. To improve geographic diversification, consider adding investments in other developed or emerging markets. This can help mitigate risks associated with regional economic fluctuations and capture growth opportunities globally.

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's current asset allocation could potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. Given the conservative nature, adjustments could involve slightly increasing equity exposure to enhance returns while maintaining acceptable risk levels. However, it's important to balance this with the investor's risk tolerance and financial goals. Optimization should focus on improving efficiency rather than drastically altering the conservative profile.

Dividends Info

  • Fidelity 500 Index Fund 1.20%
  • Fidelity® Government Money Market Fund 4.90%
  • Weighted yield (per year) 3.64%

The portfolio's dividend yield is 3.64%, with the Fidelity® Government Money Market Fund contributing 4.9% and the Fidelity 500 Index Fund 1.2%. This yield provides a steady income stream, which is appealing for conservative investors seeking regular cash flow. However, relying heavily on dividends from a money market fund may limit overall growth. Consider diversifying income sources by including dividend-paying equities or bonds, which can offer both income and potential capital appreciation.

Ongoing product costs Info

  • Fidelity 500 Index Fund 0.02%
  • Weighted costs total (per year) 0.01%

The portfolio benefits from impressively low costs, with the Fidelity 500 Index Fund having a Total Expense Ratio (TER) of 0.02% and the overall TER at 0.01%. Low costs are advantageous as they help maximize net returns over time. This cost efficiency is a strong point of the portfolio. To maintain this advantage, regularly review and compare fund expenses, ensuring that any additions or changes to the portfolio maintain a low-cost structure.

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