A growth-focused portfolio with high concentration in large-cap US stocks and limited diversification
Report created on Jan 31, 2025Risk profile
5/7
Diversification profile
2/5
Positions
-
FX Fidelity 500 Index Fund
FXAIX - US3159117502 83.80% -
FB FIDELITY BLUE CHIP GROWTH FUND FIDELITY BLUE CHIP GROWTH FUND
FBGRX - US3163893031 9.78% -
NV NVIDIA Corporation
NVDA - US67066G1040 6.42%
This portfolio is heavily concentrated, with 83.8% invested in the Fidelity 500 Index Fund and 9.78% in the Fidelity Blue Chip Growth Fund, leaving 6.42% in NVIDIA Corporation. The high allocation to a single index fund suggests a focus on large-cap US stocks, which may limit diversification. While this composition can capture broad market movements, it may expose the portfolio to significant market-specific risks. Consider adding different asset classes or funds to diversify exposure and reduce potential volatility.
Growth
Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 17.84%. However, it has experienced a substantial maximum drawdown of -51.36%. This indicates strong growth potential but also significant risk during market downturns. Comparing to benchmarks, this performance suggests a high-risk, high-reward strategy. To mitigate potential losses, consider incorporating less volatile assets or funds to balance the risk-return profile.
Projection
Forward projections using Monte Carlo simulations show a wide range of potential outcomes, with the 5th percentile at 419.8% and the 67th at 8,014.7%. This method uses historical data to simulate future performance, but remember, past performance doesn't guarantee future results. The high annualized return of 38.42% across simulations indicates optimistic growth expectations, but it's essential to remain cautious and consider potential market changes that could impact these projections.
Asset classes
- Stocks 100%
The portfolio is entirely composed of stocks, which limits diversification across asset classes. While stocks offer growth potential, they can be volatile. Diversifying into bonds, real estate, or other asset classes could provide stability and reduce risk. Compared to a balanced benchmark, this portfolio lacks the diversification that can help cushion against market fluctuations. Consider exploring additional asset classes to enhance risk-adjusted returns.
Sectors
- Technology 38%
- Financials 12%
- Consumer Discretionary 11%
- Health Care 10%
- Telecommunications 9%
- Industrials 7%
- Consumer Staples 5%
- Energy 3%
- Utilities 2%
- Real Estate 2%
- Basic Materials 2%
The portfolio shows a significant concentration in the technology sector, accounting for 38% of the holdings. This high exposure can lead to increased volatility, especially during periods of technological disruption or regulatory changes. While tech has been a strong performer, diversification across more sectors could reduce risk. Consider balancing the portfolio by increasing exposure to underrepresented sectors like healthcare or consumer defensive for more stable returns.
Regions
- North America 99%
- Europe Developed 1%
Geographically, the portfolio is almost entirely focused on North America, with 99% allocation. This heavy concentration can expose the portfolio to regional risks, such as economic downturns or policy changes. While the US market has been strong, diversifying into international markets could provide opportunities for growth and reduce region-specific risks. Consider exploring emerging markets or developed regions outside North America to enhance global diversification.
Market capitalization
- Mega-cap 52%
- Large-cap 31%
- Mid-cap 16%
- Small-cap 1%
The portfolio is skewed towards mega-cap stocks, with 52% allocation, followed by large-cap at 31%. This focus on larger companies offers stability but may limit growth potential found in smaller-cap stocks. Including more mid-cap or small-cap stocks could enhance diversification and provide additional growth opportunities. Balancing market capitalization exposure can help manage risk and tap into different growth dynamics across company sizes.
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 could benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. This involves adjusting current allocations to achieve a more balanced risk profile. While the current setup has delivered strong returns, optimizing the asset mix could improve risk management without sacrificing growth potential. Consider exploring reallocation strategies to enhance efficiency and align with your risk tolerance.
Dividends
- FIDELITY BLUE CHIP GROWTH FUND FIDELITY BLUE CHIP GROWTH FUND 0.20%
- Fidelity 500 Index Fund 1.20%
- Weighted yield (per year) 1.03%
The portfolio's dividend yield is relatively low at 1.03%, with the Fidelity 500 Index Fund contributing 1.20%. While dividends can provide a steady income stream, this portfolio is more growth-oriented. For investors seeking income, increasing exposure to dividend-paying stocks or funds might be beneficial. However, for growth-focused investors, this yield aligns with the portfolio's primary objective of capital appreciation.
Ongoing product costs
- FIDELITY BLUE CHIP GROWTH FUND FIDELITY BLUE CHIP GROWTH FUND 0.47%
- Fidelity 500 Index Fund 0.02%
- Weighted costs total (per year) 0.06%
The total expense ratio (TER) of the portfolio is impressively low at 0.06%, with the Fidelity 500 Index Fund contributing just 0.02%. Low costs are a significant advantage, as they can enhance long-term returns by minimizing the drag on performance. Maintaining this cost efficiency is beneficial, but always keep an eye on fees when considering new investments to ensure they don't erode potential gains.
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