Growth-focused portfolio with full allocation to Fidelity 500 Index Fund showcasing low diversity
Report created on Aug 19, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
FX Fidelity 500 Index Fund
FXAIX - US3159117502 100.00%
This portfolio is entirely invested in the Fidelity 500 Index Fund, reflecting a singular focus on U.S. large-cap equities. Such a concentrated allocation in one asset class, while simplifying management, significantly limits diversification. The fund's exposure spans across all major sectors, with a notable emphasis on technology, financial services, and consumer cyclical industries. Despite covering a broad spectrum of the market, the lack of asset class diversification could heighten volatility and risk, especially during market downturns.
Growth
Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 15.79%, with a maximum drawdown of -33.83%. These figures indicate a strong performance trend, albeit with significant short-term losses during market corrections. The days contributing most to returns suggest that a small number of exceptionally positive trading days have driven a substantial portion of the portfolio's growth, a common characteristic of equity investments that underscores the importance of staying invested over the long term.
Projection
Using Monte Carlo simulations, a method that forecasts potential future outcomes by varying historical inputs, the portfolio's future performance was estimated. Results show a wide range of potential outcomes, from a 147.4% increase at the 5th percentile to a 996.8% increase at the 67th percentile, indicating a high degree of uncertainty but generally positive expectations. However, it's crucial to remember that these projections are based on past performance, which is not a reliable indicator of future results.
Asset classes
- Stocks 100%
The portfolio's allocation is exclusively to stocks, specifically within the Fidelity 500 Index Fund, providing no asset class diversification. While this focus on stocks, particularly large-cap stocks, has historically offered substantial growth potential, it also exposes investors to higher market volatility compared to portfolios with a mix of asset classes, such as bonds or real estate, which can offer stabilizing effects during market downturns.
Sectors
- Technology 33%
- Financials 14%
- Consumer Discretionary 11%
- Health Care 10%
- Telecommunications 10%
- Industrials 8%
- Consumer Staples 6%
- Energy 3%
- Utilities 2%
- Real Estate 2%
- Basic Materials 2%
Sector allocation within the Fidelity 500 Index Fund is broadly diversified, covering technology, financial services, consumer cyclicals, healthcare, and more. This wide sectoral coverage helps mitigate some risks associated with sector-specific downturns. However, the heavy weighting towards technology (33%) could expose the portfolio to sector-specific volatility, particularly in times of regulatory changes or market corrections within the tech industry.
Regions
- North America 99%
Geographically, the portfolio is almost entirely invested in North American assets, with a 99% allocation. This heavy domestic focus may limit exposure to potential growth opportunities in developed and emerging markets outside of North America. While investing predominantly in the U.S. aligns with the fund's objective, international diversification could provide additional risk mitigation and exposure to global growth trends.
Market capitalization
- Mega-cap 47%
- Large-cap 35%
- Mid-cap 18%
- Small-cap 1%
The market capitalization breakdown shows a strong preference for mega (47%) and big (35%) cap stocks, with a smaller allocation towards medium (18%) and minimal exposure to small (1%) cap stocks. This distribution is typical for funds tracking major indices like the S&P 500, favoring stability and lower volatility associated with larger companies. However, this may limit potential high-growth opportunities often found in smaller cap stocks.
Dividends
- Fidelity 500 Index Fund 0.90%
- Weighted yield (per year) 0.90%
The dividend yield of the portfolio, at 0.90%, contributes to its total return. While not the primary driver of growth, dividends offer a steady income stream, which can be particularly valuable in flat or declining markets. Reinvesting these dividends can also compound growth over time, although investors seeking higher income may need to look towards assets with higher yield profiles.
Ongoing product costs
- Fidelity 500 Index Fund 0.02%
- Weighted costs total (per year) 0.02%
With a total expense ratio (TER) of 0.02%, the portfolio benefits from exceptionally low costs, maximizing the potential for net returns. Low-cost index funds like the Fidelity 500 Index Fund are efficient vehicles for long-term growth, as they minimize the drag on performance that higher fees can cause over time. This cost efficiency is a significant positive aspect of the portfolio.
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