A cautious portfolio with a focus on US equities and moderate diversification

Report created on Jan 14, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio consists of a mix of equity and bond funds, with a significant allocation to the Fidelity 500 Index Fund, making up 46% of the total. The rest includes individual stocks like Pfizer and Alphabet, as well as other funds and ETFs. Such a composition leans heavily toward equities, common for portfolios seeking growth. For a cautious investor, this may indicate a slightly aggressive stance. Balancing equity exposure with more fixed-income assets could align better with a conservative risk profile.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 10.93%. This suggests a robust past performance, outperforming many traditional savings options. However, the max drawdown of -23.22% reveals vulnerability during downturns. Comparing this to a benchmark like the S&P 500, which has similar drawdown levels, indicates that the portfolio's performance aligns with market trends. While past performance is promising, it does not guarantee future results, so diversification remains key.

Projection Info

Forward projections using Monte Carlo simulations show a range of potential outcomes. With a 50th percentile end portfolio value at 314.33%, the simulations suggest a positive outlook. Monte Carlo analysis uses historical data to simulate future returns, offering a probabilistic view rather than a precise prediction. While the median projection is optimistic, it's essential to remember that these results rely on historical trends, which may not continue. Regularly reviewing and adjusting the portfolio can help navigate future uncertainties.

Asset classes Info

  • Stocks
    75%
  • Bonds
    20%

The portfolio's asset allocation is predominantly in stocks, accounting for over 75%, with bonds making up nearly 20%. This skew towards equities suggests a growth-oriented approach, which may not fully align with a cautious risk profile. Typically, a more balanced allocation would include a higher proportion of bonds to reduce volatility. Adjusting the asset mix to include more fixed-income securities could provide greater stability and income, aligning better with a conservative investment strategy.

Sectors Info

  • Health Care
    21%
  • Technology
    17%
  • Telecommunications
    10%
  • Financials
    7%
  • Consumer Discretionary
    5%
  • Industrials
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%
  • Consumer Discretionary
    1%

The sector allocation shows a strong emphasis on healthcare and technology, representing over 38% of the portfolio. This concentration can lead to heightened volatility, especially if these sectors face downturns. In comparison, a more balanced sector distribution might offer better risk management. While technology and healthcare have historically driven growth, diversifying into other sectors like consumer staples or utilities could mitigate sector-specific risks and stabilize returns.

Regions Info

  • North America
    85%
  • Europe Developed
    3%

The portfolio's geographic exposure is heavily weighted towards North America, at over 85%. This concentration may limit diversification benefits, as it exposes the portfolio to regional economic and political risks. A more globally diversified portfolio would typically include a higher allocation to international markets, which can help reduce regional dependency and enhance growth opportunities. Exploring investments in developed and emerging markets could provide additional diversification and potential returns.

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 Efficient Frontier analysis suggests that the current portfolio could be optimized for a better risk-return balance. While the optimal portfolio offers a return of 3.77% at a lower risk, it's essential to note that optimization focuses on existing assets. Adjusting allocations between current holdings can enhance efficiency, but it may not address diversification or specific investment goals. Regularly reviewing the portfolio and considering new investments can help maintain an optimal risk-return profile.

Dividends Info

  • Fidelity Govt Cash Rsrvs 4.80%
  • Fidelity 500 Index Fund 1.30%
  • Alphabet Inc Class A 0.30%
  • Pfizer Inc 6.30%
  • PIMCO Corporate & Income Opportunity 9.10%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Weighted yield (per year) 3.61%

The portfolio boasts a respectable dividend yield of 3.61%, with contributions from various assets like Pfizer and the PIMCO fund. Dividends can provide a steady income stream, which is beneficial for cautious investors seeking regular returns. However, relying solely on dividends for income can be risky if companies cut payouts. It's wise to balance dividend-paying stocks with growth-oriented investments to maintain a well-rounded portfolio that supports both income and capital appreciation.

Ongoing product costs Info

  • Fidelity Govt Cash Rsrvs 0.26%
  • Fidelity 500 Index Fund 0.02%
  • PIMCO Corporate & Income Opportunity 1.19%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Weighted costs total (per year) 0.22%

The portfolio's total expense ratio (TER) is 0.22%, which is relatively low, indicating cost efficiency. Lower costs can significantly enhance long-term returns, as less money is deducted from the portfolio's earnings. However, the PIMCO Corporate & Income Opportunity fund has a higher expense ratio of 1.19%, which could be reconsidered. Exploring lower-cost alternatives, such as index funds or ETFs, may further reduce costs and improve net returns over time.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey