A growth-focused portfolio with high US exposure and low international diversification

Report created on Jan 16, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards the Fidelity Zero Total Market Index Fund, comprising 70% of the holdings. This indicates a strong focus on US equities. The remaining allocations are spread across the Fidelity MSCI Real Estate Index ETF, Fidelity Zero International Index Fund, and Fidelity Zero Extended Market Index Fund, each at 10%. Compared to a typical growth portfolio, this composition is heavily concentrated in US markets, which aligns with a growth strategy but may limit exposure to international opportunities. To enhance diversification, consider adjusting allocations to include more international or alternative asset classes.

Growth Info

Historically, the portfolio has demonstrated a strong Compound Annual Growth Rate (CAGR) of 12.63%, which is impressive for a growth-focused allocation. However, it has also experienced a significant maximum drawdown of -36.24%, highlighting the inherent volatility. Comparing this performance to a benchmark, the high CAGR suggests effective growth potential, yet the drawdown indicates periods of substantial risk. It's vital to prepare for such market downturns and consider strategies to mitigate potential losses, such as diversifying further or including more defensive assets.

Projection Info

The Monte Carlo simulation projects a range of potential future outcomes based on historical data. With 1,000 simulations, the median return is 169.55%, while the 5th percentile shows a potential loss of -30.9%. This highlights the uncertainty and variability in future returns. Although 891 simulations resulted in positive returns, the projections underscore the importance of preparing for both positive and negative scenarios. Consider reviewing the portfolio periodically to adjust for changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    90%
  • Real Estate
    10%

The portfolio is primarily composed of stocks, accounting for nearly 90% of the allocation, with a notable 10% in real estate. This heavy stock allocation aligns with a growth strategy but may expose the portfolio to higher volatility. In comparison to a benchmark growth portfolio, the allocation is typical, yet the limited presence of other asset classes could restrict diversification benefits. To balance risk and return, consider incorporating bonds or alternative investments, which can provide stability and reduce overall portfolio volatility.

Sectors Info

  • Technology
    25%
  • Financials
    14%
  • Real Estate
    13%
  • Consumer Discretionary
    10%
  • Health Care
    10%
  • Industrials
    10%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%

The sector allocation is heavily skewed towards technology at 24.62%, followed by financial services and real estate. This concentration in technology is common in growth portfolios but can lead to increased volatility, especially during market corrections. The sector composition aligns closely with common growth benchmarks, indicating a well-diversified approach within equities. However, consider monitoring sector trends and adjusting allocations to avoid overexposure, particularly as economic cycles shift and impact sector performance differently.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Japan
    2%
  • Asia Emerging
    1%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio exhibits a strong geographic concentration in North America at over 90%, with minimal exposure to other regions. This lack of international diversification could limit growth opportunities and increase vulnerability to US market downturns. Compared to global benchmarks, this geographic allocation is heavily skewed. To enhance diversification and reduce risk, consider increasing exposure to international markets, which can offer growth potential and hedge against US-centric risks.

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 potentially be optimized along the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. This optimization does not necessarily imply diversification but focuses on maximizing returns for a given level of risk. Consider adjusting the current asset allocations to better align with the Efficient Frontier, which may involve reallocating funds among existing holdings to achieve a more optimal balance between risk and return.

Dividends Info

  • Fidelity® MSCI Real Estate Index ETF 2.70%
  • FIDELITY ZERO TOTAL MARKET INDEX FUND 1.10%
  • Weighted yield (per year) 1.04%

The portfolio's dividend yield is relatively low at 1.04%, typical for a growth-focused strategy prioritizing capital appreciation over income generation. The Fidelity MSCI Real Estate Index ETF contributes the highest yield at 2.7%. While dividends are not a primary focus, they can provide a steady income stream and cushion during market downturns. If income is a priority, consider adding higher-yielding assets or funds to balance growth with income.

Ongoing product costs Info

  • Fidelity® MSCI Real Estate Index ETF 0.08%
  • Weighted costs total (per year) 0.01%

The portfolio's costs are impressively low, with a Total Expense Ratio (TER) of 0.01%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Low costs are a significant advantage, allowing more of the investment's growth to benefit the investor. Maintaining this cost advantage is crucial, so periodically review the portfolio to ensure that all holdings remain cost-effective and consider replacing any higher-cost assets with similar, lower-cost alternatives.

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