A balanced portfolio with a strong focus on US equities and low-cost structure
Report created on Jan 26, 2025Risk profile
4/7
Diversification profile
3/5
Positions
-
FX Fidelity 500 Index Fund
FXAIX - US3159117502 76.78% -
FX FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS
FXNAX - US3161463563 23.22%
The portfolio is primarily composed of the Fidelity 500 Index Fund, making up 76.78%, and the Fidelity U.S. Bond Index Fund Institutional Premium Class at 23.22%. This structure leans heavily towards equities, which aligns with a balanced risk profile. The allocation mirrors a common benchmark strategy, providing a straightforward approach to capturing market growth while maintaining some stability through bonds. This composition offers a classic stock-bond mix, suitable for moderate risk tolerance. Consider examining if this allocation meets your specific financial goals and risk appetite.
Growth
Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 11.45%, indicating solid growth over time. However, it experienced a maximum drawdown of -28.54%, highlighting potential volatility. This performance is comparable to typical equity markets, reflecting the portfolio's significant equity exposure. While past performance is no guarantee of future results, it provides a benchmark for evaluating risk and return expectations. Regularly reviewing performance against your financial goals can help ensure alignment with your investment strategy.
Projection
Using Monte Carlo simulations, the portfolio's future performance was estimated with 1,000 simulations. The median (50th percentile) projected return is 179.8%, with a 5th percentile at 27.1%, indicating a wide range of potential outcomes. Monte Carlo simulations use historical data to project future scenarios, providing a probabilistic view of returns. While useful, these projections are not certainties. They can help in understanding potential risks and rewards, thus informing decisions on maintaining or adjusting the current allocation.
Asset classes
- Stocks 77%
- Bonds 23%
With 77% in stocks and 23% in bonds, the portfolio is moderately diversified across asset classes. This allocation aligns with a balanced investment strategy, offering growth potential from equities and stability from bonds. Compared to common benchmarks, this mix is typical for moderate risk profiles. Ensuring diversification across different asset classes can help manage risk and enhance returns over time. Periodically reassessing asset class allocation can ensure it remains aligned with changing market conditions and personal financial goals.
Sectors
- Technology 25%
- Financials 10%
- Consumer Discretionary 8%
- Health Care 8%
- Telecommunications 7%
- Industrials 6%
- Consumer Staples 4%
- Energy 3%
- Utilities 2%
- Real Estate 2%
- Basic Materials 1%
The portfolio's sector allocation is led by Technology at 25%, followed by Financial Services at 10%. This suggests a significant concentration in tech, which could lead to higher volatility, especially during economic shifts impacting the tech industry. Sector diversification can mitigate sector-specific risks and capture opportunities across different economic cycles. While the current allocation aligns with many market indices, consider whether this concentration fits your risk tolerance and long-term objectives.
Regions
- North America 76%
- No data 23%
Geographically, the portfolio is heavily weighted toward North America, with 76% exposure. This focus on the U.S. market aligns with many domestic investors' preferences but may limit diversification benefits from international markets. Exposure to global markets can provide additional growth opportunities and mitigate regional economic risks. Consider evaluating the potential benefits of incorporating more international diversification to balance the portfolio's geographic exposure.
Market capitalization
- Mega-cap 36%
- Large-cap 26%
- Mid-cap 14%
The portfolio includes a diverse range of market capitalizations, with 36% in mega-cap and 26% in large-cap stocks. This distribution provides a balance between stability and growth potential. Mega-cap stocks offer stability, while large and medium caps can capture growth. This allocation aligns with typical index fund strategies, providing a mix of established companies and growth opportunities. Regularly reviewing market cap exposure can help ensure alignment with your risk tolerance and growth expectations.
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's current allocation can be optimized using the Efficient Frontier, which identifies the best risk-return ratio for the given assets. This optimization focuses on achieving the highest possible return for a given level of risk, without necessarily altering the asset classes. Regularly assessing the portfolio's position on the Efficient Frontier can help ensure it remains aligned with your risk tolerance and return objectives.
Dividends
- Fidelity 500 Index Fund 1.20%
- FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS 3.10%
- Weighted yield (per year) 1.64%
The portfolio has a total dividend yield of 1.64%, with the Fidelity 500 Index Fund yielding 1.20% and the bond fund yielding 3.10%. Dividends provide a steady income stream, contributing to total returns. For investors seeking income, this yield may enhance cash flow, though it remains relatively modest. Consider whether the current dividend yield aligns with your income needs and explore options to optimize yield if necessary.
Ongoing product costs
- Fidelity 500 Index Fund 0.02%
- FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.02%
- Weighted costs total (per year) 0.02%
The portfolio benefits from impressively low costs, with a Total Expense Ratio (TER) of just 0.02%. This cost efficiency supports better long-term performance by minimizing fees that erode returns. Low costs are a significant advantage, particularly in passive index investing, where fees can significantly impact net returns over time. Maintaining this cost structure is beneficial, and periodic reviews can ensure continued cost-effectiveness.
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