A growth-focused portfolio with significant US exposure and balanced international diversification
Report created on Dec 15, 2024Risk profile
5/7
Diversification profile
4/5
Positions
-
FZ FIDELITY ZERO TOTAL MARKET INDEX FUND
FZROX 70.00% -
FZ FIDELITY ZERO INTERNATIONAL INDEX FUND
FZILX 30.00%
The portfolio is composed primarily of two funds: the Fidelity Zero Total Market Index Fund at 70% and the Fidelity Zero International Index Fund at 30%. This allocation indicates a strong preference for broad market exposure, with an emphasis on the US market. The portfolio aims to capture the growth potential of the entire market while maintaining some international diversification. This structure is simple yet effective for those seeking to invest in a wide range of equities. To maintain balance, consider reviewing the allocation periodically to ensure alignment with your investment goals and market conditions.
Growth
Historically, the portfolio has shown a compound annual growth rate (CAGR) of 12.29%, with a maximum drawdown of -34.44%. This suggests strong performance over time, albeit with significant volatility during downturns. Understanding past performance helps set realistic expectations, but remember that past results do not guarantee future returns. It's crucial to evaluate if the portfolio's risk and return profile aligns with your financial goals. Regularly reviewing performance in the context of your investment horizon and risk tolerance can guide necessary adjustments.
Projection
The forward projection uses Monte Carlo simulations to estimate potential future outcomes. With 1,000 simulations, the portfolio's annualized return was 11.28%, with 963 simulations resulting in positive returns. This analysis provides a range of possible future returns, helping gauge the likelihood of achieving your financial goals. However, these projections are based on historical data and assumptions, which may not account for future market conditions. Use these insights to inform your strategy, but remain adaptable to changing markets.
Asset classes
- Stocks 100%
The portfolio is heavily weighted towards stocks, comprising 99.93% of the allocation. This indicates a high-risk, high-reward strategy typical for growth-focused investors. While stocks offer the potential for substantial returns, they also expose the portfolio to significant volatility. Consider diversifying into other asset classes, such as bonds or alternatives, to reduce risk and enhance stability. A more balanced asset mix can help protect against market downturns and provide a steadier return path.
Sectors
- Technology 26%
- Financials 16%
- Health Care 11%
- Industrials 10%
- Consumer Discretionary 10%
- Telecommunications 8%
- Consumer Staples 6%
- Energy 4%
- Basic Materials 4%
- Utilities 3%
- Real Estate 3%
Sector allocation is diversified, with significant exposure to technology (26.06%), financial services (16.02%), and healthcare (10.65%). This distribution reflects a focus on sectors with strong growth potential. However, the concentration in technology may increase vulnerability to sector-specific risks. To mitigate this, periodically assess sector weightings and consider rebalancing if any sector becomes overly dominant. A well-balanced sector mix can help manage risk and capture opportunities across different economic cycles.
Regions
- North America 72%
- Europe Developed 12%
- Japan 5%
- Asia Emerging 4%
- Asia Developed 3%
- Australasia 2%
- Africa/Middle East 1%
- Latin America 1%
Geographically, the portfolio is heavily skewed towards North America, with 72.20% exposure, followed by Europe Developed and Japan. This reflects a strong US market focus, which can benefit from domestic growth but may limit exposure to emerging market opportunities. While international diversification is present, consider increasing allocations to regions with higher growth potential. A more geographically diverse portfolio can reduce regional risks and capitalize on global economic trends.
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 identifies the best possible risk-return ratio based on current assets. By adjusting allocations between existing funds, you can potentially enhance returns without increasing risk. This process involves analyzing historical data to determine the optimal mix. While optimization can improve efficiency, it should align with your risk tolerance and investment goals. Regular rebalancing ensures the portfolio remains on the Efficient Frontier as market conditions change.
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