A highly diversified growth-focused portfolio with strong historical performance and moderate risk levels

Report created on Jan 26, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is composed of a mix of stock and bond funds, with a significant 85% allocation to stocks and 15% to bonds. The largest holding is the Fidelity Total Market Index Fund at 42%, providing broad market exposure. This composition reflects a growth-oriented strategy, as stocks generally offer higher long-term returns compared to bonds. It's important to compare this structure with a benchmark to ensure alignment with your investment goals. A well-balanced portfolio should align with your risk tolerance and financial objectives, maintaining a healthy mix of asset classes to optimize returns while managing risk.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 12.62%, indicating strong performance over time. This figure suggests that a hypothetical $10,000 investment could have grown significantly. However, it experienced a maximum drawdown of -31.63%, highlighting vulnerability during market downturns. Comparing against a benchmark can provide context for these figures. Understanding past performance helps set realistic expectations, but remember, past success doesn't guarantee future results. Regularly reviewing performance against a benchmark can help ensure the portfolio remains aligned with your financial goals.

Projection Info

The Monte Carlo simulation projects a range of potential future outcomes based on historical data, with a 50th percentile return of 66.2%. This means there's a 50% chance the portfolio could achieve this return or better. However, the 5th percentile projects a significant loss, indicating possible risks. While simulations provide valuable insights, they rely on historical data, which may not predict future market conditions accurately. It's crucial to use these projections as part of a broader strategy, considering your risk tolerance and investment horizon when making adjustments.

Asset classes Info

  • Stocks
    85%
  • Bonds
    18%

With 85% allocated to stocks and 15% to bonds, the portfolio leans heavily towards equities, suggesting a focus on growth. This allocation is typical for growth-oriented portfolios, aiming for higher long-term returns. Compared to a balanced benchmark, this might indicate a higher risk level due to equity volatility. Diversifying across asset classes can help manage risk, as bonds typically provide stability during market fluctuations. Consider periodically reviewing the asset class allocation to ensure it aligns with your changing risk tolerance and financial goals, making adjustments as needed.

Sectors Info

  • Technology
    18%
  • Financials
    14%
  • Industrials
    9%
  • Real Estate
    8%
  • Consumer Discretionary
    8%
  • Health Care
    7%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Consumer Discretionary
    1%

The portfolio's sector allocation shows a notable concentration in technology at 18%, followed by financial services at 14%. This mirrors common benchmarks, indicating a balanced approach. However, tech-heavy portfolios can experience higher volatility, especially during interest rate hikes. It's important to understand sector trends and their impact on performance. Diversifying across sectors can mitigate risks associated with any single industry downturn. Regularly reviewing sector allocations and staying informed about market trends can help maintain a diversified portfolio that aligns with your risk tolerance and investment objectives.

Regions Info

  • North America
    67%
  • No data
    15%
  • Europe Developed
    8%
  • Japan
    3%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

With 67% exposure to North America, the portfolio is heavily weighted towards this region, which is common for U.S.-based investors. This provides stability but may limit exposure to growth opportunities in other regions. The remaining allocation is spread across developed and emerging markets, adding some global diversification. Comparing to a global benchmark can highlight potential under- or over-exposures. Consider whether this geographic allocation aligns with your risk tolerance and investment goals. Increasing exposure to emerging markets could enhance diversification, though it may also introduce additional risk.

Market capitalization Info

  • Mega-cap
    27%
  • Large-cap
    21%
  • Mid-cap
    15%
  • Small-cap
    10%
  • Micro-cap
    7%

The portfolio's market capitalization breakdown shows a diverse range, with 27% in mega-cap and 21% in large-cap stocks. This suggests a focus on established companies, which can offer stability. However, 10% in small-cap and 7% in micro-cap stocks indicate potential for higher growth but increased volatility. Balancing market cap exposure can provide a mix of stability and growth. Regularly reviewing this allocation helps ensure it aligns with your investment strategy, adjusting as your risk tolerance or market conditions change.

Redundant positions Info

  • Fidelity Small Cap Value Index Fund
    Avantis® U.S. Small Cap Value ETF
    High correlation
  • Fidelity Total Market Index Fund
    Fidelity 500 Index Fund
    VANGUARD TOTAL STOCK MARKET INDEX FUND INSTITUTIONAL SHARES
    High correlation

The portfolio includes highly correlated assets, such as the Fidelity Small Cap Value Index Fund and Avantis® U.S. Small Cap Value ETF. These assets tend to move together, which can limit diversification benefits during market downturns. While some correlation is expected, it's important to manage it to avoid concentrated risks. Consider reducing overlap by diversifying into less correlated assets. This can enhance portfolio resilience, especially during volatile periods. Regularly assessing asset correlation helps maintain a diversified portfolio that aligns with your risk tolerance and financial objectives.

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 could benefit from optimization using the Efficient Frontier, which aims to maximize returns for a given level of risk. This involves adjusting the current asset allocation to achieve a more favorable risk-return ratio. However, optimization is based solely on existing assets, so it doesn't guarantee diversification improvements. Consider focusing on removing overlapping, highly correlated assets first to enhance diversification. Regularly reviewing and optimizing the portfolio helps ensure it remains aligned with your risk tolerance and financial goals, adapting to changing market conditions.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Fidelity Small Cap Value Index Fund 0.60%
  • Fidelity Total Market Index Fund 0.20%
  • FIDELITY REAL ESTATE INDEX FUND INSTITUTIONAL CLASS 2.80%
  • Fidelity 500 Index Fund 1.20%
  • REALESTATEREALRETURN STRATEGY FUND INSTITUTIONAL 0.60%
  • Vanguard Total Bond Market Index Fund Admiral Shares 3.70%
  • VANGUARD EMERGING MARKETS STOCK INDEX FUND ADMIRAL SHARES 0.70%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND INSTITUTIONAL SHARES 1.20%
  • VANGUARD DEVELOPED MARKETS INDEX FUND ADMIRAL SHARES 1.80%
  • Weighted yield (per year) 1.26%

The portfolio's average dividend yield is 1.26%, with the Vanguard Total Bond Market Index Fund Admiral Shares contributing the highest yield at 3.70%. Dividends provide a steady income stream, which can be especially valuable in volatile markets. For growth-focused portfolios, reinvesting dividends can enhance compounding returns. It's important to consider how dividends align with your income needs and financial goals. Regularly reviewing dividend contributions can help ensure they support your investment strategy, adjusting allocations as needed to maintain a balance between growth and income.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Fidelity Small Cap Value Index Fund 0.05%
  • Fidelity Total Market Index Fund 0.02%
  • FIDELITY REAL ESTATE INDEX FUND INSTITUTIONAL CLASS 0.07%
  • Fidelity 500 Index Fund 0.02%
  • REALESTATEREALRETURN STRATEGY FUND INSTITUTIONAL 6.09%
  • Vanguard Total Bond Market Index Fund Admiral Shares 0.05%
  • VANGUARD EMERGING MARKETS STOCK INDEX FUND ADMIRAL SHARES 0.14%
  • VANGUARD TOTAL STOCK MARKET INDEX FUND INSTITUTIONAL SHARES 0.03%
  • VANGUARD DEVELOPED MARKETS INDEX FUND ADMIRAL SHARES 0.08%
  • Weighted costs total (per year) 0.24%

The portfolio's total expense ratio (TER) is 0.24%, with the Real Estate Real Return Strategy Fund having the highest cost at 6.09%. Lower costs can significantly improve long-term returns, as fees compound over time. It's crucial to compare these costs against similar funds to ensure competitiveness. Reducing expenses where possible can enhance performance. Consider evaluating fund costs regularly and exploring lower-cost alternatives if they align with your investment strategy. Maintaining a cost-effective portfolio supports better long-term growth, helping achieve your financial goals.

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