A highly diversified portfolio with a focus on growth through large-cap US equities and technology

Report created on Jan 6, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is comprised of two funds and one ETF, with a significant allocation to the Fidelity Freedom 2045 Fund at 50%. The remaining allocation is split evenly between the Fidelity 500 Index Fund and the Invesco NASDAQ 100 ETF, each at 25%. Compared to typical balanced portfolios, this structure leans heavily towards equities, offering growth potential but with higher risk exposure. To align with balanced portfolio benchmarks, consider increasing bonds or alternative assets for more stability.

Growth Info

Historically, the portfolio has performed well with a Compound Annual Growth Rate (CAGR) of 10.45%. This indicates robust growth, outperforming many typical balanced portfolios. However, the maximum drawdown of -31.82% highlights potential vulnerability during market downturns. This performance suggests a strong growth trajectory but underscores the need for risk management strategies to cushion against significant market declines.

Projection Info

Using Monte Carlo simulations, which project potential outcomes based on historical data, the portfolio shows promising future returns. With an annualized return of 13.15% across simulations, the median outcome suggests significant growth potential. However, it's crucial to remember that these projections rely on past data and don't guarantee future results. Diversifying further could help mitigate risks reflected in the lower percentile outcomes.

Asset classes Info

  • Stocks
    97%
  • Bonds
    5%

The portfolio is heavily weighted towards stocks, comprising 96.58% of total assets, with minimal allocation to bonds at 4.81%. This stock-heavy allocation can drive high returns during bull markets but may increase volatility. For a balanced risk profile, consider adjusting the asset mix to include more bonds or other asset classes, which could offer a buffer during market fluctuations.

Sectors Info

  • Technology
    32%
  • Financials
    13%
  • Telecommunications
    10%
  • Industrials
    9%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Consumer Staples
    5%
  • Consumer Discretionary
    4%
  • Basic Materials
    3%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio's sector allocation is notably concentrated in technology, which makes up 32.1% of the total. While this sector has been a strong performer, such concentration can result in higher volatility, especially during periods of tech sector downturns. Balancing exposure across more sectors could enhance stability and reduce reliance on any single sector's performance.

Regions Info

  • North America
    80%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Asia Developed
    2%
  • Japan
    2%
  • Latin America
    1%
  • Africa/Middle East
    1%

The geographic allocation is predominantly focused on North America at 79.63%, with smaller exposures to Europe and Asia. This concentration offers strong alignment with US market trends but may limit diversification benefits. Expanding exposure to underrepresented regions could enhance global diversification, potentially offering more balanced risk-adjusted 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 portfolio can be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio with the current assets. Adjusting allocations between existing funds might enhance efficiency without adding new assets. This approach focuses on maximizing returns for a given level of risk, offering a strategic path to improved performance.

Dividends Info

  • Fidelity 500 Index Fund 1.20%
  • Invesco NASDAQ 100 ETF 0.60%
  • Weighted yield (per year) 0.45%

With a total dividend yield of 0.45%, the portfolio's income generation is modest, reflecting its growth-oriented nature. While dividends provide a steady income stream, the focus here is on capital appreciation. Investors seeking higher income may need to explore options with better yield potential, such as dividend-focused funds or stocks.

Ongoing product costs Info

  • FIDELITY FREEDOM 2045 FUND FIDELITY FREEDOM 2045 FUND 0.75%
  • Fidelity 500 Index Fund 0.02%
  • Invesco NASDAQ 100 ETF 0.15%
  • Weighted costs total (per year) 0.42%

The portfolio's total expense ratio (TER) is 0.42%, which is reasonable compared to industry averages. The low cost of the Fidelity 500 Index Fund at 0.02% helps keep overall expenses down. Reducing fees further could enhance returns, so consider exploring lower-cost alternatives, particularly for the higher-cost Fidelity Freedom 2045 Fund.

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