A growth-focused portfolio with significant US exposure and a moderate diversification profile
Report created on Dec 20, 2024Risk profile
5/7
Diversification profile
3/5
Positions
-
FC Fidelity Contrafund
FCNTX - US3160711095 58.00% -
FL FIDELITY LOW-PRICED STOCK FUND FIDELITY LOW-PRICED STOCK FUND
FLPSX - US3163453059 20.00% -
FI Fidelity US Sustainability Index Fund In
FITLX 13.00% -
FS CONSTRUCTION AND HOUSING PORTFOLIO CONSTRUCTION AND HOUSING PORTFOLIO
FSHOX - US3163906163 9.00%
The portfolio is heavily weighted towards equities, with 97.6% in stocks and minor allocations in cash and other assets. This aligns with a growth-oriented strategy, prioritizing capital appreciation over income generation. Compared to common benchmarks, such as a 60/40 stock-bond split, this portfolio is more aggressive. While this composition can lead to higher returns, it also increases exposure to market volatility. Consider introducing more bonds or alternative assets to balance risk and enhance diversification, especially if market conditions shift.
Growth
Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 9.51%, indicating strong performance. However, it also experienced a significant max drawdown of -33.41%, highlighting its vulnerability to market downturns. This performance suggests the portfolio's aggressive nature, which can be rewarding but risky. Comparing this to a benchmark like the S&P 500, which has similar volatility, the returns align well. Maintaining a focus on risk management strategies, such as diversification, can help mitigate future drawdowns.
Projection
Using Monte Carlo simulations, which model potential future outcomes based on historical data, the portfolio shows a broad range of possibilities. The 5th percentile suggests a potential loss of 27.19%, while the 67th percentile indicates a gain of 335.2%. With 913 simulations yielding positive returns, the outlook is optimistic, but the wide variability underscores the uncertainty of future performance. Remember, these projections are not guarantees, as past market conditions may not repeat. Regularly reviewing and adjusting the portfolio can help navigate changing market dynamics.
Asset classes
- Stocks 98%
- Other 1%
- Cash 1%
The portfolio's asset class distribution is heavily skewed towards stocks, with minimal diversification into bonds and other categories. This concentration can amplify returns during bull markets but also heightens risk during downturns. Compared to a balanced benchmark, this allocation is aggressive. Introducing more varied asset classes, such as bonds or real estate, could enhance diversification and provide a buffer against stock market volatility, aligning the portfolio more closely with a diversified growth strategy.
Sectors
- Technology 23%
- Financials 15%
- Telecommunications 15%
- Consumer Discretionary 15%
- Industrials 10%
- Health Care 10%
- Consumer Staples 3%
- Basic Materials 3%
- Energy 3%
- Real Estate 2%
- Utilities 1%
Sector allocation reveals a strong concentration in technology, financial services, and communication services, making up over half of the portfolio. This focus on growth sectors can drive significant returns but also adds volatility, especially in economic downturns or regulatory changes. Compared to broader market indices, this sector concentration is higher. To mitigate sector-specific risks, consider diversifying into underrepresented sectors like utilities or consumer defensive, which tend to be more stable during economic fluctuations.
Regions
- North America 91%
- Europe Developed 4%
- Japan 2%
- Asia Developed 1%
- Asia Emerging 1%
- Latin America 1%
Geographically, the portfolio is primarily focused on North America, with 91.1% exposure, and limited international diversification. This concentration can lead to regional risk, particularly if the US economy faces challenges. Compared to global benchmarks, this allocation is less diversified. Expanding geographic exposure, particularly in emerging markets, could enhance diversification and provide growth opportunities in regions with different economic cycles. Balancing US dominance with international investments can reduce overall portfolio risk.
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 identifies the best possible risk-return ratio. This involves adjusting the current asset allocation to achieve the highest expected return for a given level of risk. While this optimization focuses on maximizing returns, it doesn't necessarily improve diversification. Regularly reassessing the portfolio's position on the Efficient Frontier can ensure it remains aligned with investment goals and market conditions, enhancing overall portfolio efficiency.
Dividends
- FIDELITY LOW-PRICED STOCK FUND FIDELITY LOW-PRICED STOCK FUND 6.10%
- CONSTRUCTION AND HOUSING PORTFOLIO CONSTRUCTION AND HOUSING PORTFOLIO 0.70%
- Weighted yield (per year) 1.28%
The portfolio's dividend yield is relatively low at 1.28%, reflecting its growth orientation. The Fidelity Low-Priced Stock Fund contributes the most to this yield with 6.1%, while others offer minimal income. For investors seeking regular income, this may not be sufficient. Dividends can provide a steady cash flow and reduce reliance on capital appreciation. If income generation becomes a priority, consider reallocating some assets into higher-yielding funds or dividend-paying stocks to balance growth with income needs.
Ongoing product costs
- Fidelity Contrafund 0.39%
- Fidelity US Sustainability Index Fund In 0.11%
- FIDELITY LOW-PRICED STOCK FUND FIDELITY LOW-PRICED STOCK FUND 0.89%
- CONSTRUCTION AND HOUSING PORTFOLIO CONSTRUCTION AND HOUSING PORTFOLIO 0.71%
- Weighted costs total (per year) 0.48%
The portfolio's total expense ratio (TER) is 0.48%, which is relatively low and supports better long-term performance by minimizing fees. The Fidelity US Sustainability Index Fund offers the lowest cost at 0.11%, while the Fidelity Low-Priced Stock Fund is the highest at 0.89%. Keeping costs low is crucial for maximizing net returns over time. Periodically reviewing and potentially switching to lower-cost alternatives can further enhance returns. Ensuring cost efficiency aligns well with maintaining a growth-focused strategy.
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