A growth-focused portfolio with strong US exposure and moderate diversification

Report created on Apr 17, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed entirely of stock funds, with a significant emphasis on US markets. This includes the Fidelity 500 Index Fund and Fidelity ZERO Total Market Index Fund, each holding 30%, and the Fidelity US Sustainability Index Fund at 20%. The remaining 20% is allocated to the Fidelity ZERO International Index Fund, providing some international exposure. Compared to a typical benchmark, this portfolio is heavily weighted towards US equities, which can lead to strong performance during US market growth but may increase risk if the US market underperforms. Consider balancing with more international exposure for broader diversification.

Growth Info

Historically, the portfolio has demonstrated a robust CAGR of 11.51%, indicating strong annual growth. This performance is impressive compared to typical market benchmarks, suggesting effective asset selection. However, the portfolio also experienced a significant maximum drawdown of -34.11%, highlighting its exposure to market volatility. Despite this, the high CAGR suggests resilience and growth potential. To mitigate potential losses during downturns, consider diversifying with assets that have lower correlation to US equities, which can help stabilize returns during turbulent periods.

Projection Info

The forward projection using Monte Carlo simulation indicates an annualized return of 11.56%, with 955 out of 1,000 simulations showing positive returns. Monte Carlo simulations use historical data to estimate potential future outcomes, but it's important to note that past performance does not guarantee future results. The projections suggest a high likelihood of positive outcomes, but the range of potential returns is broad, with a 5th percentile end value of 4.2% and a 67th percentile of 408.9%. Consider maintaining a balance between growth and risk to achieve favorable long-term outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio's asset allocation is 100% in stocks, which can lead to higher returns but also increases risk. Compared to a more diversified benchmark, this allocation lacks exposure to other asset classes like bonds or real estate, which can provide stability during market downturns. While this all-stock approach aligns with a growth-focused strategy, it may not be suitable for all investors. Consider incorporating a small percentage of bonds or alternative investments to reduce volatility and enhance risk-adjusted returns.

Sectors Info

  • Technology
    29%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio is heavily weighted in technology (29%), financial services (16%), and consumer cyclical (11%) sectors. This sectoral allocation is common in growth-oriented portfolios but can lead to higher volatility, especially during interest rate changes or economic shifts. The balanced presence across 11 sectors helps mitigate some risk, but the concentration in technology may lead to increased volatility. To enhance stability, consider diversifying further into sectors like utilities or consumer defensive, which tend to perform well in different economic conditions.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Japan
    3%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is primarily focused on North America (81%), with limited exposure to other regions. This concentration in the US market can lead to high returns during periods of US market growth but may expose the portfolio to regional economic risks. Compared to global benchmarks, the portfolio is underweight in emerging markets and Europe, which can offer growth opportunities and diversification benefits. Consider increasing exposure to international markets to reduce reliance on the US economy and tap into global growth potential.

Market capitalization Info

  • Mega-cap
    45%
  • Large-cap
    33%
  • Mid-cap
    18%
  • Small-cap
    2%
  • Micro-cap
    1%

The portfolio is predominantly invested in large-cap stocks, with 45% in mega caps and 33% in big caps. This focus on larger companies can provide stability and steady growth, as these firms tend to be more established and financially resilient. However, the limited exposure to small (2%) and micro (1%) caps may reduce potential for higher returns from smaller, rapidly growing companies. To enhance diversification and growth potential, consider increasing allocation to small- and mid-cap stocks, which can offer higher returns albeit with increased risk.

Redundant positions Info

  • FIDELITY ZERO TOTAL MARKET INDEX FUND
    Fidelity US Sustainability Index Fund In
    Fidelity 500 Index Fund
    High correlation

The portfolio's assets are highly correlated, particularly among the Fidelity 500 Index Fund, Fidelity ZERO Total Market Index Fund, and Fidelity US Sustainability Index Fund. High correlation means these assets tend to move together, limiting diversification benefits. During market downturns, this can lead to amplified losses. To improve diversification, consider adding assets with lower correlation to US equities, such as international stocks or alternative investments, which can help stabilize returns and reduce overall portfolio risk.

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 benefit from optimization using the Efficient Frontier, which identifies the best possible risk-return ratio. Currently, the portfolio's high correlation among assets suggests overlapping exposures that may not maximize diversification benefits. Adjusting allocations to include less correlated assets can enhance efficiency, potentially improving returns for the same level of risk. This process involves reallocating within existing asset classes to achieve a more balanced and diversified portfolio aligned with growth objectives.

Dividends Info

  • Fidelity 500 Index Fund 1.40%
  • FIDELITY ZERO INTERNATIONAL INDEX FUND 2.90%
  • FIDELITY ZERO TOTAL MARKET INDEX FUND 1.30%
  • Weighted yield (per year) 1.39%

The portfolio's dividend yield is relatively low at 1.39%, reflecting its growth-oriented strategy. Dividends can provide a steady income stream and help cushion against market volatility, but they are not the primary focus of this portfolio. For investors seeking income, consider increasing exposure to dividend-paying stocks or funds, which can enhance total returns and provide a buffer during market downturns. However, if growth is the primary goal, maintaining the current strategy may be appropriate.

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