Balanced portfolio with a focus on US equities and moderate dividend yield

Report created on Apr 11, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed of three main investments: the Fidelity 500 Index Fund at 50%, Schwab U.S. Dividend Equity ETF at 30%, and Fidelity Total International Index Fund at 20%. The portfolio aligns with a balanced risk profile, emphasizing US equities with a moderate international component. This composition is common among investors seeking growth with some income through dividends. While the portfolio is broadly diversified, the heavy weighting in US equities suggests a domestic market focus. Balancing US and international exposure could enhance diversification and reduce potential risks associated with market-specific downturns.

Growth Info

Historically, this portfolio has demonstrated a robust CAGR of 11.96%, indicating strong growth over time. The maximum drawdown of -33.52% reflects significant volatility, typical of equity-heavy portfolios. Comparatively, the portfolio's performance aligns well with major US equity indices, suggesting effective market participation. However, past performance doesn't guarantee future results. Investors should consider the potential for similar volatility and ensure their risk tolerance aligns with such fluctuations. Regularly reviewing performance against personal financial goals can help maintain alignment with investment objectives.

Projection Info

Utilizing Monte Carlo simulations, this portfolio shows a wide range of potential outcomes, projecting a median growth of 297.3%. Monte Carlo analysis uses historical data to simulate many possible future scenarios, providing insight into potential risks and returns. While the 5th percentile shows a modest positive return, the 67th percentile suggests substantial growth, indicating a favorable risk-return profile. However, these projections are based on historical trends and don't account for unforeseen market events. Investors should use these insights to understand potential risks and adjust allocations as needed to align with their financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is 100% in stocks, offering no exposure to bonds or other asset classes. This concentration in equities can lead to higher volatility, especially during market downturns. While stocks are essential for growth, incorporating other asset classes like bonds can provide stability and reduce risk. Diversifying across asset classes is crucial for managing risk and achieving a balanced portfolio. Investors might consider adding bonds or alternative investments to mitigate volatility and enhance long-term stability, depending on their risk tolerance and investment objectives.

Sectors Info

  • Technology
    22%
  • Financials
    16%
  • Health Care
    13%
  • Industrials
    10%
  • Consumer Staples
    9%
  • Consumer Discretionary
    8%
  • Telecommunications
    8%
  • Energy
    6%
  • Consumer Discretionary
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a significant concentration in technology (22%), followed by financial services (16%) and healthcare (13%). This composition reflects a typical growth-oriented approach, but it also exposes the portfolio to sector-specific risks. For instance, tech-heavy portfolios may experience higher volatility during interest rate hikes or regulatory changes. The sector balance aligns with broader market indices, suggesting a diversified approach. However, investors should monitor sector trends and consider rebalancing if certain sectors become over- or under-weighted relative to market conditions and their investment goals.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Japan
    3%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is heavily weighted towards North America (81%), with limited exposure to Europe and Asia. This US-centric focus can lead to concentrated risk, particularly if the US market underperforms. While the strong US allocation benefits from domestic market growth, adding more international exposure could enhance diversification and tap into growth opportunities abroad. Investors should consider increasing allocations to emerging markets or other underrepresented regions to balance geographic risks and potentially improve long-term returns.

Market capitalization Info

  • Large-cap
    44%
  • Mega-cap
    33%
  • Mid-cap
    20%
  • Small-cap
    3%

The portfolio is predominantly invested in large-cap stocks, with 44% in big caps and 33% in mega caps. This focus on large, established companies offers stability and lower volatility compared to small-cap stocks. However, it may limit potential high-growth opportunities often found in smaller companies. Including more medium and small-cap stocks can enhance growth potential and diversification. Investors should evaluate their risk tolerance and growth objectives to determine the appropriate balance between large and small-cap investments.

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 asset allocation can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for given assets. By adjusting allocations among existing assets, the portfolio could achieve a more favorable balance between risk and return. This optimization focuses on maximizing returns for a given level of risk, not necessarily on diversification. Regularly reviewing and rebalancing the portfolio can ensure it remains aligned with the investor's risk tolerance and financial objectives.

Dividends Info

  • Fidelity 500 Index Fund 1.10%
  • Schwab U.S. Dividend Equity ETF 4.20%
  • Weighted yield (per year) 1.81%

With a total dividend yield of 1.81%, this portfolio provides moderate income through dividends, primarily from the Schwab U.S. Dividend Equity ETF. Dividends can offer a steady income stream, beneficial for reinvestment or supplementing cash flow. While the yield is lower than some income-focused portfolios, it complements the growth strategy. Investors seeking higher income might explore additional dividend-focused funds or stocks. However, balancing income and growth is essential to ensure the portfolio aligns with long-term financial objectives.

Ongoing product costs Info

  • Fidelity 500 Index Fund 0.02%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Weighted costs total (per year) 0.03%

The portfolio boasts impressively low costs, with a total expense ratio (TER) of 0.03%. Low costs are advantageous for long-term performance, as they minimize the drag on returns. This efficient cost structure supports better compounding of returns over time. Investors should continue to monitor expenses and consider cost-effective options when making changes. Keeping costs low is a vital component of maximizing net returns and achieving financial goals efficiently.

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