A balanced portfolio with a strong domestic focus and low-cost index funds

Report created on Feb 2, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards the Fidelity 500 Index Fund, accounting for 65% of the total allocation. The rest is spread across international (20%), mid-cap (10%), and small-cap (5%) funds. This composition ensures a strong focus on large-cap U.S. equities, which aligns with the profile of many benchmark indices. The allocation to international and smaller-cap stocks adds a layer of diversification, albeit limited. The reliance on index funds helps keep costs low, which is beneficial for long-term growth.

Growth Info

Historically, the portfolio has achieved a robust Compound Annual Growth Rate (CAGR) of 13.52%. This impressive performance is supported by U.S. large-cap equities, which have performed well over the past decade. The maximum drawdown of -34.64% indicates the portfolio's vulnerability during market downturns, but it remains in line with typical equity market fluctuations. The portfolio's performance has been concentrated in a few key days, emphasizing the importance of staying invested to capture these gains.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, suggests a potential annualized return of 12.18% across 1,000 simulations. While 969 simulations showed positive returns, it's important to remember that past performance does not guarantee future results. The wide range of possible outcomes, from a 5th percentile return of 16.7% to a 67th percentile return of 435.9%, highlights the inherent uncertainty in investing. Staying informed and adaptable to changing market conditions is crucial.

Asset classes Info

  • Stocks
    100%

With 100% of the portfolio in stocks, there's a strong emphasis on equities, which can drive growth but also increase volatility. This allocation is typical for investors seeking capital appreciation. While this approach can yield high returns, it lacks the stability that bonds or other asset classes might offer. Diversifying into different asset classes could help mitigate risk, particularly during periods of market turbulence. However, the current allocation aligns with a higher risk tolerance and growth-oriented strategy.

Sectors Info

  • Technology
    26%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Industrials
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

The portfolio's sector allocation is well-diversified, with a notable 26% in technology, followed by financial services and consumer cyclical sectors. This mirrors common benchmarks, ensuring broad exposure across industries. The tech-heavy focus could lead to higher volatility, especially during interest rate changes, but it also positions the portfolio to benefit from tech sector growth. Balancing sector weights could enhance stability, though the current distribution aligns with modern market trends.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Japan
    3%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly North American, with 81% exposure, and limited international diversification. This reflects a strong home-country bias, typical for U.S.-based investors. While this has historically been advantageous, increasing exposure to emerging markets or other regions could enhance diversification and reduce reliance on U.S. market performance. The current geographic allocation may limit the portfolio's ability to capitalize on global growth opportunities.

Market capitalization Info

  • Mega-cap
    40%
  • Large-cap
    29%
  • Mid-cap
    23%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio's market capitalization distribution leans heavily towards mega-cap stocks, comprising 40% of the allocation. This focus provides stability and growth potential, as these companies often have strong market positions. However, the smaller allocation to small and micro-cap stocks suggests limited exposure to potentially higher growth opportunities. Balancing market capitalization exposure could improve diversification, though the current allocation aligns with a conservative growth strategy.

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 allocation could potentially be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. This involves adjusting the weights of existing assets to maximize returns for a given level of risk. While the portfolio is already well-diversified, exploring slight adjustments might enhance its efficiency. It's important to note that this optimization is based solely on current assets and does not account for external factors or new investments.

Dividends Info

  • FIDELITY SMALL CAP INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.10%
  • Fidelity 500 Index Fund 1.20%
  • Weighted yield (per year) 0.78%

With a total dividend yield of 0.78%, the portfolio provides modest income through dividends. The Fidelity 500 Index Fund contributes the most to this yield, offering 1.20%. While dividends can enhance total returns, this portfolio prioritizes capital appreciation over income generation. Investors seeking higher income might consider increasing exposure to dividend-focused funds or stocks. The current yield is suitable for those focused on long-term growth rather than immediate income.

Ongoing product costs Info

  • FIDELITY MID CAP INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.02%
  • FIDELITY SMALL CAP INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.02%
  • FIDELITY TOTAL INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.06%
  • Fidelity 500 Index Fund 0.02%
  • Weighted costs total (per year) 0.03%

The portfolio's total expense ratio (TER) is impressively low at 0.03%, thanks to the use of institutional premium class index funds. Low costs are a significant advantage, as they can improve net returns over time. This cost efficiency supports the portfolio's long-term growth potential by minimizing the drag on performance. Maintaining this low-cost structure is beneficial, but it's essential to periodically review expenses to ensure they remain competitive.

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