A growth-focused portfolio with strong US exposure and low-cost diversified funds

Report created on Jan 6, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with 85% in the Fidelity Zero Total Market Index Fund, 10% in the Fidelity Zero International Index Fund, and 5% in bonds. This composition aligns with a growth profile by emphasizing stock investments, which typically offer higher potential returns but also come with increased volatility. Given the high equity exposure, the portfolio leans towards a higher risk classification. To enhance diversification and potentially reduce volatility, consider increasing the bond allocation or adding other asset types like real estate or commodities.

Growth Info

Historically, the portfolio has shown strong performance, with a Compound Annual Growth Rate (CAGR) of 13.08%. This indicates robust growth over time, though it experienced a significant maximum drawdown of -33.22%. This suggests that while the portfolio can deliver substantial returns, it is also susceptible to large losses during market downturns. To mitigate the impact of such downturns, consider strategies like rebalancing or incorporating more defensive assets that can stabilize returns during volatile periods.

Projection Info

Forward projections using Monte Carlo simulations suggest an average annualized return of 7.54%, with a wide range of potential outcomes. This method uses historical data to simulate future performance, providing insights into possible scenarios. However, it's important to note that past performance does not guarantee future results. The portfolio's projected outcomes show substantial growth potential, but the downside risk is also notable. Regularly reassessing risk tolerance and adjusting the portfolio to align with changing market conditions can help manage this uncertainty.

Asset classes Info

  • Stocks
    95%
  • Bonds
    5%

The portfolio is predominantly invested in stocks, comprising nearly 95% of the asset allocation, with a minor bond component at about 5%. This high stock allocation is typical for a growth-oriented strategy, aiming for capital appreciation. However, the lack of significant diversification across asset classes could expose the portfolio to market volatility. To achieve a more balanced risk-return profile, consider increasing exposure to bonds or alternative investments, which can provide stability and income during market downturns.

Sectors Info

  • Technology
    28%
  • Financials
    14%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Real Estate
    3%
  • Basic Materials
    3%
  • Utilities
    2%

Sector allocation is concentrated, with a notable emphasis on technology at 28%, followed by financial services and healthcare. This concentration suggests a potential for high volatility, especially during economic shifts affecting these sectors. While the technology sector can drive significant growth, it can also lead to increased risk during downturns. To enhance sector diversification, consider reducing the overweight in technology and increasing allocations to underrepresented sectors like utilities or consumer staples, which may offer more stability.

Regions Info

  • North America
    85%
  • No data
    5%
  • Europe Developed
    4%
  • Japan
    2%
  • Asia Emerging
    1%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio's geographic exposure is heavily skewed towards North America, accounting for over 85% of the allocation. This concentration may limit global diversification benefits and expose the portfolio to regional economic risks. To enhance diversification, consider increasing exposure to international markets, particularly emerging economies, which can provide growth opportunities and reduce reliance on a single region. Expanding geographic diversity can help mitigate risks associated with regional economic downturns or currency fluctuations.

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 potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. This involves adjusting the current asset allocation to achieve maximum expected returns for a given level of risk. While the portfolio is already growth-oriented, exploring efficient allocation strategies can enhance performance without increasing risk. Consider consulting with a financial advisor to explore optimization techniques that align with your risk tolerance and investment goals, ensuring the portfolio remains on track for long-term success.

Dividends Info

  • FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS 3.10%
  • FIDELITY ZERO TOTAL MARKET INDEX FUND 1.10%
  • Weighted yield (per year) 1.09%

The portfolio's dividend yield is relatively modest at 1.09%, reflecting its growth-oriented focus. Dividends can provide a steady income stream and contribute to total returns, particularly during periods of market uncertainty. To enhance income potential, consider increasing exposure to dividend-paying stocks or funds, which can offer a balance between growth and income. This approach can provide a cushion against market volatility and support long-term wealth accumulation through reinvested dividends.

Ongoing product costs Info

  • FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.02%

The portfolio benefits from impressively low costs, with the Fidelity U.S. Bond Index Fund Institutional Premium Class charging just 0.02%. Low costs are crucial for maximizing long-term returns, as they reduce the drag on performance. Maintaining a focus on cost-efficient investments is a positive strategy that supports overall portfolio growth. Regularly reviewing and minimizing expenses by opting for low-cost index funds or ETFs can further enhance the portfolio's performance over time.

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