A broadly diversified portfolio with a balanced risk profile and strong historical performance

Report created on Jan 22, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of two funds: the Fidelity Total Market Index Fund at 77.11% and the Fidelity Total International Index Fund at 22.89%. This allocation reflects a significant focus on the US market, with a smaller portion dedicated to international investments. A balanced portfolio typically seeks to manage risk and return by diversifying across regions. This composition aligns well with a benchmark for balanced portfolios, providing broad market exposure while maintaining a focus on domestic equities. Consider reviewing the allocation periodically to ensure it continues to meet your investment goals and risk tolerance.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 13.62%. This indicates a robust growth rate over time, outperforming many benchmarks. However, it also experienced a maximum drawdown of -34.68%, highlighting potential volatility. Understanding past performance helps gauge how the portfolio might react in different market conditions. While historical data provides insights, it's essential to remember that past performance does not guarantee future results. Regularly reviewing performance against your financial goals can help ensure the portfolio remains aligned with your objectives.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was projected through 1,000 simulations. This method uses historical data to estimate potential outcomes, showing a range of possibilities. The results indicate a 5th percentile end value of 43.6%, a median (50th percentile) of 344.6%, and a 67th percentile of 494.7%. With 986 simulations showing positive returns, the portfolio appears well-positioned for future growth. However, it's important to note that simulations are based on historical data and cannot predict future performance with certainty. Regularly reassessing your portfolio strategy can help adapt to changing market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, providing significant exposure to equity markets. While equities offer growth potential, they also come with higher volatility compared to other asset classes like bonds or cash. A 100% stock allocation may suit investors with a higher risk tolerance seeking long-term growth. However, diversifying across asset classes can help manage risk and reduce potential drawdowns. Consider whether introducing other asset classes could enhance risk-adjusted returns and align better with your investment goals and risk appetite.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

The portfolio is diversified across several sectors, with a notable concentration in technology at 27%. Other significant sectors include financial services at 16% and consumer cyclical at 11%. This sector allocation aligns with common benchmarks, providing a balanced approach. However, a tech-heavy portfolio may experience higher volatility, especially during periods of rising interest rates or regulatory changes. Regularly reviewing sector allocations can help ensure they remain aligned with market trends and your investment strategy. Consider adjusting sector weights to manage potential risks and capitalize on emerging opportunities.

Regions Info

  • North America
    79%
  • Europe Developed
    9%
  • Japan
    4%
  • Asia Emerging
    3%
  • Asia
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America at 79%, with smaller allocations to Europe Developed, Japan, and other regions. This focus on North America aligns with many US-based investors' preferences but may limit exposure to potential growth opportunities in emerging markets. Geographic diversification can help mitigate regional risks and provide access to global growth. Consider whether increasing international exposure, particularly in emerging markets, could enhance diversification and align with your long-term investment objectives.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    31%
  • Mid-cap
    19%
  • Small-cap
    6%
  • Micro-cap
    2%

The portfolio is well-diversified by market capitalization, with 42% in mega-cap, 31% in large-cap, and 19% in mid-cap stocks. This distribution provides a mix of stability and growth potential, as mega-cap stocks offer stability while mid-cap stocks can provide higher growth prospects. Small and micro-cap stocks are present but limited, offering some exposure to higher-risk, high-reward opportunities. This balance aligns well with typical benchmark distributions, providing a diversified approach. Regularly reviewing market cap allocations can help ensure they remain aligned with your risk tolerance and investment strategy.

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, a concept that identifies the best possible risk-return ratio for a given set of assets. This optimization focuses on reallocating existing assets to achieve the most efficient balance between risk and return. While the current allocation is well-balanced, exploring optimization strategies can help enhance performance. Regularly reviewing the portfolio's efficiency ensures it remains aligned with your risk tolerance and investment goals, maximizing potential returns while managing risk effectively.

Dividends Info

  • Fidelity Total Market Index Fund 0.20%
  • Weighted yield (per year) 0.15%

With a total dividend yield of 0.15%, the portfolio provides some income, though it's primarily growth-focused. Dividends can contribute to total returns and offer a buffer during market volatility. However, the current yield is relatively low, reflecting the portfolio's emphasis on capital appreciation. For investors seeking income, exploring higher-yielding investments or dividend-focused strategies may be beneficial. Regularly reviewing dividend yields can help ensure they align with your income needs and investment strategy, while maintaining a focus on growth.

Ongoing product costs Info

  • Fidelity Total Market Index Fund 0.02%
  • FIDELITY TOTAL INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.06%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from impressively low costs, with a Total Expense Ratio (TER) of 0.03%. Low costs are advantageous as they enhance long-term returns by minimizing the drag on performance. This cost efficiency aligns well with best practices for portfolio management, supporting better outcomes. Regularly reviewing costs ensures they remain competitive and do not erode returns. Consider maintaining this cost-effective approach while exploring opportunities to further reduce expenses, ensuring the portfolio continues to deliver optimal performance.

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