Balanced portfolio with significant U.S. exposure and low-cost index funds for moderate risk investors

Report created on Dec 18, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is dominated by the Fidelity ZERO Total Market Index Fund, making up 64% of the allocation, complemented by a 20% investment in the Fidelity U.S. Bond Index Fund Institutional Premium Class. The Fidelity ZERO International Index Fund rounds out the portfolio at 16%. This structure suggests a focus on U.S. equities with a balanced approach that includes bonds for stability. The mix of stocks and bonds indicates a strategy aimed at achieving moderate growth while managing risk, typical for a balanced risk profile.

Growth Info

The portfolio has demonstrated a historical compound annual growth rate (CAGR) of 10.85%, indicating strong past performance. However, it also experienced a maximum drawdown of -28.18%, highlighting potential volatility. This means that while the portfolio has performed well over time, there have been periods of significant decline. Investors should be prepared for fluctuations and consider their ability to withstand temporary losses in pursuit of long-term gains.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a range of potential returns. The simulations indicate a 50th percentile return of 152.24% and a 67th percentile return of 216.89%. While 933 out of 1,000 simulations showed positive returns, it's essential to remember that these are probabilistic estimates and not guarantees. The annualized return of 7.62% suggests a robust outlook, but investors should remain aware of the inherent uncertainties in such projections.

Asset classes Info

  • Stocks
    80%
  • Bonds
    20%

The portfolio's asset allocation is primarily in stocks at 79.96%, with bonds comprising 19.86%. This allocation reflects a growth-oriented strategy with a substantial equity component, providing potential for capital appreciation. The bond allocation helps mitigate risk and offers a buffer during market downturns. The minimal cash and other asset classes indicate a focus on long-term investments rather than liquidity or alternative strategies.

Sectors Info

  • Technology
    22%
  • Financials
    12%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Industrials
    8%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio is diversified across several sectors, with notable allocations in Technology (22.28%), Financial Services (12.10%), and Healthcare (8.69%). This sectoral balance provides exposure to both growth and defensive industries, helping to stabilize returns across different economic cycles. While the concentration in Technology suggests a tilt towards growth, the inclusion of sectors like Consumer Defensive and Utilities offers some protection against market volatility.

Regions Info

  • North America
    65%
  • No data
    20%
  • Europe Developed
    7%
  • Japan
    3%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America, with 64.99% of assets allocated there. The remaining exposure is spread across Europe, Japan, and other regions. This concentration in North America reflects a focus on the U.S. market, which may offer stability and growth but also exposes the portfolio to regional economic risks. Diversification into international markets could enhance returns and reduce regional risk, though the current allocation is predominantly U.S.-centric.

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 to achieve the best possible risk-return ratio. By adjusting the current asset allocation, investors might enhance returns without significantly increasing risk. However, efficiency in this context focuses on maximizing returns for a given level of risk, not necessarily achieving broader diversification or other investment goals.

Dividends Info

  • FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS 3.30%
  • FIDELITY ZERO TOTAL MARKET INDEX FUND 1.10%
  • Weighted yield (per year) 1.36%

The portfolio's dividend yield of 1.36% is modest, with the Fidelity U.S. Bond Index Fund contributing a higher yield of 3.3% compared to the Fidelity ZERO Total Market Index Fund's 1.1%. Dividends provide a steady income stream, which can be particularly beneficial in volatile markets. While the focus is on growth, incorporating higher-yielding assets could enhance income and provide additional stability.

Ongoing product costs Info

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

The portfolio benefits from low costs, particularly with the Fidelity U.S. Bond Index Fund's expense ratio of 0.02%. Low fees are crucial for maximizing long-term returns, as they minimize the drag on performance. Investors should continue to monitor expenses and consider cost-effective investment options to ensure that fees do not erode potential gains over time.

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