Balanced portfolio with a strong focus on US equities and dividend income

Report created on Dec 31, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is predominantly composed of funds and ETFs, with a significant portion allocated to US equities. The Fidelity Nasdaq Composite Index Fund holds the largest share at over 20%, followed by the T. Rowe Price Retirement 2030 Fund and Schwab U.S. Dividend Equity ETF. This composition indicates a focus on growth and income, aligning with a balanced risk profile. Compared to typical balanced portfolios, this one shows a higher concentration in US equities, which can lead to higher returns but also increased risk.

Growth Info

The portfolio has demonstrated a strong historic performance with a Compound Annual Growth Rate (CAGR) of 15.08%. This growth rate exceeds many benchmark averages, indicating effective asset selection. However, the portfolio also experienced a maximum drawdown of -23.75%, highlighting potential volatility. While past performance can provide insights, it's not a guarantee of future results. Maintaining a diversified approach can help mitigate risks associated with such drawdowns.

Projection Info

The forward projection using Monte Carlo simulations suggests robust potential outcomes, with a median growth of 540.86%. Monte Carlo simulations use historical data to predict future performance by running numerous scenarios. While 999 out of 1,000 simulations resulted in positive returns, it's essential to remember that these projections are not absolute predictions. They provide a range of possibilities, emphasizing the importance of maintaining a flexible investment strategy.

Asset classes Info

  • Stocks
    80%
  • No data
    2%

The portfolio is heavily weighted towards stocks, accounting for nearly 80% of the total allocation. This focus on equities suggests a preference for growth over stability. While equities can offer higher returns, they also come with increased volatility. To enhance diversification, consider incorporating other asset classes such as bonds or alternative investments, which can provide stability and reduce overall portfolio risk.

Sectors Info

  • Technology
    23%
  • Financials
    9%
  • Health Care
    9%
  • Telecommunications
    7%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Real Estate
    6%
  • Consumer Discretionary
    5%
  • Energy
    4%
  • Consumer Discretionary
    3%
  • Utilities
    2%
  • Basic Materials
    1%

The sector allocation is notably concentrated in technology, comprising over 23% of the portfolio. While this sector has driven significant growth in recent years, it also tends to be more volatile, especially during economic shifts or interest rate changes. Balancing this concentration with exposure to other sectors like healthcare or consumer staples could help reduce risk and enhance stability.

Regions Info

  • North America
    80%
  • Europe Developed
    1%

Geographic exposure is predominantly in North America, accounting for over 80% of the portfolio. This concentration can limit diversification benefits and expose the portfolio to regional economic shifts. Consider increasing exposure to international markets to capture growth opportunities and mitigate regional risks. Diversifying geographically can provide a hedge against potential downturns in the US market.

Redundant positions Info

  • FIDELITY ZERO TOTAL MARKET INDEX FUND
    Fidelity 500 Index Fund
    High correlation

The portfolio includes highly correlated assets, such as the Fidelity 500 Index Fund and the Fidelity Zero Total Market Index Fund. High correlation means these assets tend to move in the same direction, which can limit diversification benefits. Reducing overlap by replacing one of these funds with an asset that behaves differently can enhance portfolio resilience and reduce risk during market downturns.

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 can benefit from optimization using the Efficient Frontier, which helps find the best possible risk-return ratio. This involves adjusting current asset allocations to achieve maximum returns for a given level of risk. By focusing on assets that contribute positively to diversification and removing highly correlated ones, the portfolio can potentially achieve better efficiency without sacrificing return potential.

Dividends Info

  • AGNC Investment Corp 14.30%
  • FIDELITY NASDAQ COMPOSITE INDEX FUND FIDELITY NASDAQ COMPOSITE INDEX FUND 0.60%
  • Fidelity 500 Index Fund 1.20%
  • FIDELITY ZERO TOTAL MARKET INDEX FUND 1.20%
  • JPMorgan Equity Premium Income ETF 6.60%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • T. Rowe Price Retirement 2030 Fund 3.40%
  • Weighted yield (per year) 3.27%

The portfolio offers a respectable dividend yield of 3.27%, with AGNC Investment Corp contributing significantly at 14.3%. Dividends can provide a steady income stream, which is beneficial for income-focused investors or those nearing retirement. Balancing high-yield assets with growth-oriented investments can ensure both income and capital appreciation, catering to a wide range of financial goals.

Ongoing product costs Info

  • FIDELITY NASDAQ COMPOSITE INDEX FUND FIDELITY NASDAQ COMPOSITE INDEX FUND 0.29%
  • Fidelity 500 Index Fund 0.02%
  • JPMorgan Equity Premium Income ETF 0.35%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • T. Rowe Price Retirement 2030 Fund 0.58%
  • Weighted costs total (per year) 0.23%

The portfolio's total expense ratio (TER) is 0.23%, which is relatively low and supports better long-term performance by minimizing costs. Lower fees mean more returns stay in the portfolio, compounding over time. Continuously monitoring and comparing fund expenses can help maintain cost efficiency. Consider replacing high-fee assets with lower-cost alternatives to further enhance net returns.

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