A cautious yet highly diversified portfolio with a focus on U.S. equities and bonds

Report created on Jan 24, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is composed of 40% U.S. equities, 30% bonds, 20% international equities, and 10% cash, showing a cautious approach with a focus on stability. Compared to a typical benchmark, this portfolio leans more towards equities, providing a balance between growth and income. The high allocation to bonds and cash indicates a preference for lower volatility, aligning with a cautious risk profile. To maintain this balance, consider periodically reviewing asset weightings to ensure they align with your risk tolerance and investment objectives.

Growth Info

Historically, this portfolio has achieved a compound annual growth rate (CAGR) of 9.00%, with a maximum drawdown of -21.89%. This performance suggests resilience, although the drawdown highlights potential volatility. The portfolio's ability to recover from downturns is crucial for long-term growth. Comparing this to a benchmark, the portfolio performs well, but it is important to remember that past performance does not guarantee future results. Regularly reviewing performance against benchmarks can help ensure continued alignment with your investment goals.

Projection Info

Using Monte Carlo simulations, which predict potential outcomes based on historical data, this portfolio shows a 50th percentile end value of 160.0%. This suggests a strong likelihood of positive returns, with 982 out of 1,000 simulations yielding gains. The projected annualized return of 7.36% aligns well with historical performance. It's important to note that these projections are not guarantees but provide a useful framework for understanding potential risks and returns. Monitoring these projections can help you adjust your strategy as needed.

Asset classes Info

  • Stocks
    60%
  • Bonds
    30%
  • Cash
    10%

The asset allocation consists of 60% stocks, 30% bonds, and 10% cash. This distribution supports diversification by spreading risk across different asset classes. Compared to typical benchmarks, this allocation leans towards equities, offering potential for growth while maintaining stability through bonds and cash. The balanced mix aligns with a cautious risk profile, providing a solid foundation for long-term growth. Regularly reviewing asset class allocations can ensure they remain aligned with your investment goals and risk tolerance.

Sectors Info

  • Technology
    15%
  • Financials
    10%
  • Industrials
    6%
  • Consumer Discretionary
    6%
  • Health Care
    6%
  • Telecommunications
    5%
  • Consumer Staples
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation includes a notable 15% in technology, 10% in financial services, and a balanced spread across other sectors. This composition aligns well with common benchmarks, indicating a diversified approach. However, a tech-heavy allocation may introduce higher volatility, especially during interest rate changes. Ensuring sector diversification can help mitigate risks and capture opportunities across different economic cycles. Reviewing sector allocations periodically can ensure they remain in line with your investment strategy.

Regions Info

  • North America
    42%
  • No data
    30%
  • Europe Developed
    8%
  • Japan
    3%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographic exposure is predominantly in North America at 42%, with notable allocations to Europe and Japan. This allocation aligns with typical benchmarks but shows limited exposure to emerging markets, potentially reducing diversification benefits. While focusing on developed markets may offer stability, increasing exposure to emerging regions could enhance growth potential. Regularly reviewing geographic allocations can help maintain diversification and capitalize on global opportunities.

Market capitalization Info

  • Mega-cap
    27%
  • Large-cap
    19%
  • Mid-cap
    11%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's market capitalization distribution is weighted towards mega and big caps, with 27% and 19% respectively. This focus on larger companies typically offers stability and lower volatility, aligning with a cautious risk profile. However, the limited allocation to small and micro caps may restrict growth potential. Balancing market cap exposure can provide a mix of stability and growth, enhancing overall diversification. Periodically reviewing market cap allocations can ensure they support your investment goals.

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 Efficient Frontier analysis suggests that the current portfolio could be optimized for a better risk-return ratio. A more efficient portfolio with the same risk level could achieve an expected return of 2.68%, higher than the current projection. This optimization involves adjusting current asset allocations without increasing risk. Regularly reviewing your portfolio's efficiency can help ensure it remains aligned with your risk tolerance and return objectives.

Dividends Info

  • FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS 3.10%
  • FIDELITY ZERO TOTAL MARKET INDEX FUND 1.10%
  • iShares® 0-3 Month Treasury Bond ETF 5.10%
  • Weighted yield (per year) 1.88%

The portfolio's total dividend yield is 1.88%, with contributions from both equities and bonds. This yield provides a steady income stream, aligning with a cautious investment approach. Dividends can enhance total returns, especially in low-interest environments. Ensuring a balance between growth and income-focused assets can optimize returns while maintaining stability. Regularly reviewing dividend yields can help ensure they align with your income needs and investment strategy.

Ongoing product costs Info

  • FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.02%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Weighted costs total (per year) 0.01%

The total expense ratio (TER) of 0.01% is impressively low, supporting better long-term performance by minimizing costs. Lower costs mean more of your returns stay invested, compounding over time. This cost efficiency aligns well with best practices, ensuring more of your investment works towards achieving your goals. Continuously monitoring and managing costs can help maintain this advantage and improve overall portfolio performance.

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