Balanced and highly diversified portfolio with a strong foundation in index funds

Report created on Aug 11, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is structured around a solid core of index funds, allocating 50% to a broad-based U.S. equity index, 20% to international equities, 15% to an extended market index, 10% to U.S. bonds, and 5% to large-cap growth stocks. This composition reflects a balanced approach, leaning towards equities for growth while maintaining a cushion of bonds for stability. The heavy reliance on index funds suggests a preference for passive investment strategies, aiming to mirror the performance of the market rather than outperform it.

Growth Info

Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 12.50%, with a maximum drawdown of -32.28%. This performance indicates a strong recovery capability from market downturns, attributing to its diversified nature. It's important to note that while past performance is a useful indicator, it does not guarantee future results. The days contributing most to returns highlight the impact of significant market movements, underscoring the importance of staying invested during volatility for long-term growth.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a wide range of potential performances for this portfolio. With 971 out of 1,000 simulations showing positive returns and a median potential increase of 313.3%, these projections provide a cautiously optimistic outlook. However, investors should remember that these simulations are hypothetical and cannot account for unforeseen market changes.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%

The asset allocation shows a strong preference for stocks (89%), with a smaller portion in bonds (10%) and a negligible cash holding (1%). This allocation supports the portfolio's balanced profile but leans towards growth, suitable for investors with a moderate risk tolerance. The minimal cash holding suggests a strategy fully invested for growth, with bonds providing some income and dampening volatility.

Sectors Info

  • Technology
    25%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Health Care
    8%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

Sectoral allocation is well-diversified, with technology (25%) leading, followed by financial services (14%) and consumer cyclical (10%). This sector spread indicates a balanced yet growth-oriented approach, as technology and consumer cyclical sectors often lead market gains during economic expansions. However, the significant weight in technology also introduces sector-specific risks, such as volatility from regulatory changes or market sentiment shifts.

Regions Info

  • North America
    71%
  • No data
    10%
  • Europe Developed
    8%
  • Japan
    3%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographic exposure is heavily North American (71%), with smaller allocations to developed Europe (8%), Japan (3%), and emerging markets. This distribution reflects a conservative approach to international diversification, favoring stability over the potentially higher returns (and higher volatility) of emerging markets. Given the client's U.S. base, this allocation aligns with a home country bias but could benefit from greater international exposure to tap into global growth opportunities.

Market capitalization Info

  • Mega-cap
    35%
  • Large-cap
    25%
  • Mid-cap
    17%
  • Small-cap
    8%
  • Micro-cap
    3%

The portfolio's market capitalization breakdown shows a preference for mega (35%) and big (25%) cap stocks, with lesser exposure to medium (17%), small (8%), and micro (3%) caps. This tilt towards larger companies may reduce volatility but could also limit potential for outsized gains from smaller, faster-growing firms. Diversifying further across market caps could enhance return potential while maintaining a balanced risk profile.

Redundant positions Info

  • FIDELITY LARGE CAP GROWTH INDEX FUND INSTITUTIONAL PREMIUM CLASS
    Fidelity 500 Index Fund
    High correlation

The high correlation between the Fidelity 500 Index Fund and the Fidelity Large Cap Growth Index Fund suggests redundancy, limiting diversification benefits. By investing in assets that move too similarly, the portfolio may not be fully leveraging the risk-reducing benefits of diversification. Rebalancing to include less correlated assets could help spread risk more effectively.

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.

Optimizing the portfolio involves addressing the overlap between the Fidelity 500 Index Fund and the Fidelity Large Cap Growth Index Fund. By reallocating from highly correlated assets to those offering genuine diversification, the portfolio can achieve a more efficient risk-return profile. This process should consider the investor's risk tolerance and investment goals, ensuring the portfolio remains aligned with their long-term objectives.

Dividends Info

  • FIDELITY EXTENDED MARKET INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.50%
  • FIDELITY LARGE CAP GROWTH INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.30%
  • FIDELITY TOTAL INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 2.40%
  • Fidelity 500 Index Fund 0.90%
  • FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS 2.90%
  • Weighted yield (per year) 1.31%

Dividend yields across the funds add a modest income component to the portfolio, with a total yield of 1.31%. While the focus appears to be on growth, dividends contribute to total returns and provide a small cushion during market downturns. For investors seeking more income, reallocating towards higher-yielding assets could be beneficial.

Ongoing product costs Info

  • FIDELITY EXTENDED MARKET INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.04%
  • FIDELITY LARGE CAP GROWTH INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.04%
  • FIDELITY TOTAL INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.06%
  • Fidelity 500 Index Fund 0.02%
  • FIDELITY U.S. BOND INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.02%
  • Weighted costs total (per year) 0.03%

The portfolio's total expense ratio (TER) of 0.03% is impressively low, maximizing the potential for net returns. Keeping costs low is crucial for long-term investment success, especially in a low-yield environment. This cost efficiency is a strong attribute of the portfolio, aligning with best practices for maximizing investor returns over time.

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