Two low cost index funds creating a stock only portfolio with strong US tilt and broad diversification
Report created on Aug 13, 2026Risk profile
4/7
Diversification profile
3/5
Positions
-
FX Fidelity 500 Index Fund
FXAIX - US3159117502 75.00% -
FT FIDELITY TOTAL INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS
FTIHX - US31635V6386 25.00%
This portfolio is built from just two mutual funds: a US large‑cap index at 75% and a broad international index at 25%. That means all of the exposure comes from stocks, with no bonds or alternatives. A two‑fund setup like this is structurally simple, which makes it easier to understand how the portfolio behaves over time. The heavier weight in the US fund means US companies drive most of the returns and risks, while the international sleeve still adds global breadth. Overall, it’s a straightforward “core equity” structure: one major anchor in the domestic market and a smaller but meaningful allocation to the rest of the world.
Growth
From 2016-08-15 to 2026-08-10, $1,000 grew to about $3,753, a compound annual growth rate (CAGR) of 14.2%. CAGR is like average speed on a long road trip, smoothing out bumps along the way. Over this period the portfolio lagged the US market by 1.14 percentage points per year but beat the global market by 1.56 points, showing that the US tilt was helpful versus the world but slightly diluted by the international slice. The worst drop, or max drawdown, was about -33.7% during early 2020, very similar to both benchmarks, which is typical for an all‑stock portfolio.
Projection
The Monte Carlo projection looks forward 15 years by running 1,000 simulated paths based on historical return and volatility patterns. Think of it as re‑rolling the last decade’s dice many times to see a range of plausible futures, not a prediction. The median outcome grows $1,000 to about $2,652, with a wide “likely” band from roughly $1,783 to $4,125 and a very wide possible band from $968 to $7,551. The average simulated return is 7.93% per year. These ranges highlight that stock‑only portfolios can both underperform and outperform expectations; past data shapes the simulations but can’t guarantee future results.
Asset classes
- Stocks 100%
All 100% of this portfolio is in stocks, with no allocation to bonds, cash, or other asset classes. Equity‑only portfolios typically have higher growth potential but also sharper ups and downs, because there’s nothing more stable in the mix to soften big market moves. Compared with many mixed‑asset benchmarks that blend stocks and bonds, this structure naturally falls on the higher‑risk side, even if it’s diversified within equities. The “Balanced Investors” risk label here reflects how the provider classifies the funds, but in asset‑class terms this is clearly a pure equity approach, fully tied to global stock market cycles.
Sectors
- Technology 34%
- Financials 14%
- Industrials 10%
- Consumer Discretionary 9%
- Telecommunications 9%
- Health Care 8%
- Consumer Staples 5%
- Energy 3%
- Basic Materials 3%
- Utilities 2%
- Real Estate 2%
Sector exposure is spread across many industries, with technology the largest at 34%, followed by financials at 14%, industrials at 10%, and consumer‑linked areas making up a notable share. This pattern is broadly in line with major world and US indices, where tech is also dominant. A tech‑heavy weighting tends to benefit from innovation and growth cycles but can be more sensitive when interest rates rise or when markets rotate toward more defensive areas. The presence of sectors like health care, consumer staples, energy, utilities, and real estate provides ballast, helping ensure the portfolio isn’t relying on just one theme or industry group.
Regions
- North America 77%
- Europe Developed 9%
- Asia Developed 5%
- Japan 4%
- Asia Emerging 3%
- Australasia 1%
- Africa/Middle East 1%
- Latin America 1%
Geographically, around 77% of the portfolio sits in North America, with the rest spread across developed Europe, Japan, other developed Asia, and several emerging regions. This creates a clear home‑country tilt toward the US while still maintaining moderate exposure to international markets. Compared to a fully global market‑cap index, the US share here is higher, which has historically been helpful over the past decade but also means outcomes depend heavily on one economy and currency. The additional allocation to Europe, Japan, and emerging regions adds diversification benefits, as those markets can move differently from the US over various cycles.
Market capitalization
- Mega-cap 46%
- Large-cap 34%
- Mid-cap 18%
- Small-cap 2%
Market capitalization is skewed toward the largest companies, with about 46% in mega‑caps and 34% in large‑caps, while mid‑caps and small‑caps account for 18% and 2% respectively. This mirrors the construction of major broad‑market indices, where giant firms dominate overall value. Large companies tend to be more stable and liquid, often with more diversified businesses, which can reduce company‑specific risk. The smaller slice in mid‑ and small‑caps still introduces some exposure to potentially faster‑growing but more volatile firms. Overall, the size mix is typical of a core index approach and avoids any extreme tilt toward very small companies.
Factors
Factor exposure here is broadly neutral across value, size, momentum, quality, and low volatility, meaning it behaves much like the overall market on those dimensions. Factor exposure is basically how much the portfolio leans into traits like cheapness (value) or stability (low volatility) that research links to returns. The only mild deviation is a low yield score at 30%, suggesting the holdings tend to reinvest earnings rather than pay high dividends. That pattern is common in growth‑oriented or tech‑heavy indices. Overall, the balanced factor profile implies returns are mainly driven by broad market moves rather than strong tilts toward specific investing styles.
Risk contribution
-
Fidelity 500 Index Fund
Weight: 75.00% 78.9% -
FIDELITY TOTAL INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS
Weight: 25.00% 21.1%
Risk contribution shows how much each holding drives the portfolio’s overall ups and downs, which can differ from simple weight. Here, the US index fund is 75% of assets but contributes about 78.9% of total risk, while the international fund is 25% of assets and 21.1% of risk. The risk/weight ratios (around 1.05 and 0.84) indicate the US sleeve is slightly more volatile than its share and the international sleeve slightly less. This is a relatively proportional pattern, with no single position contributing massively more risk than its size suggests, consistent with a two‑fund structure tracking diversified indices.
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 this portfolio sits on or very close to the optimal curve for its two holdings. The Sharpe ratio, which measures return per unit of risk after adjusting for a 4% risk‑free rate, is 0.62 for the current mix, compared with 0.83 at the maximum‑Sharpe point and 0.63 at the minimum‑variance point. Since the current allocation already lies near the frontier, it’s using these two funds efficiently for the chosen risk level. Any meaningful change in the risk/return tradeoff would come from adding different types of assets, not just tweaking the existing 75/25 split.
Dividends
- FIDELITY TOTAL INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 2.40%
- Fidelity 500 Index Fund 1.00%
- Weighted yield (per year) 1.35%
The overall dividend yield of about 1.35% is relatively modest, with the international fund yielding 2.40% and the US fund at 1.00%. Dividend yield measures how much cash companies pay out each year as a percentage of price. Lower yields often reflect markets where firms reinvest more profits into growth or where valuations are higher. In a portfolio like this, most of the historical total return has come from price appreciation rather than income. For investors who track cash flows, it’s helpful to remember that dividends are only one part of the picture; reinvested earnings can still show up as capital gains over time.
Ongoing product costs
- FIDELITY TOTAL INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.06%
- Fidelity 500 Index Fund 0.02%
- Weighted costs total (per year) 0.03%
Total ongoing costs (TER) for this portfolio are very low at roughly 0.03% per year, with the US index fund at 0.02% and the international fund at 0.06%. TER, or Total Expense Ratio, is the annual fee charged by funds as a percentage of assets, quietly reducing returns in the background. Low fees are powerful because the money not spent on costs stays invested and compounds. Compared with many actively managed or higher‑cost funds, this level of pricing is impressively low and strongly aligned with best practices for long‑term index investing, forming a solid structural advantage that does not depend on market conditions.
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