A balanced and diversified US-focused portfolio with low costs and moderate risk

Report created on Dec 29, 2024

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 composed of 60% US equities through the Fidelity 500 Index Fund, 20% international equities via the Fidelity Zero International Index Fund, 10% bonds with the Vanguard Total Bond Market Index Fund ETF, and 10% in a money market fund. This structure aligns well with a balanced risk profile, offering exposure to a mix of growth-oriented and stable assets. Balancing between stocks, bonds, and cash can help manage volatility while capturing potential market gains. Consider reviewing the allocation periodically to ensure it remains aligned with your investment objectives and market conditions.

Growth Info

Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 10.91%, indicating strong growth over time. The maximum drawdown of -27.56% highlights potential volatility, especially during market downturns. Compared to benchmarks, this performance is robust, suggesting effective asset selection and allocation. It’s important to remember that past performance does not guarantee future results, and market conditions can change. Regularly reviewing performance in context with market trends can help maintain alignment with your goals.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast potential outcomes, shows a wide range of possible future returns. With 918 simulations showing positive returns and an annualized return of 6.24%, the portfolio appears well-positioned for moderate growth. The 5th percentile projection indicates potential losses, reminding us that future performance is uncertain. This tool helps visualize potential volatility and return scenarios, emphasizing the importance of a diversified approach to mitigate risks and explore opportunities.

Asset classes Info

  • Stocks
    80%
  • No data
    10%
  • Bonds
    10%

The portfolio's asset class distribution includes approximately 80% in stocks, 10% in bonds, and a small percentage in cash. This allocation is typical for a balanced portfolio, offering growth potential through equities while providing stability and income via bonds. Compared to benchmarks, the allocation is well-aligned, supporting both diversification and risk management. Regularly reviewing asset class weights can help ensure they remain suitable for your risk tolerance and market conditions.

Sectors Info

  • Technology
    23%
  • Financials
    12%
  • No data
    10%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Industrials
    7%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is diversified, with technology, financial services, and healthcare being the top three sectors. With technology at 22.5%, the portfolio may experience higher volatility during tech market shifts. This sectoral balance is comparable to common benchmarks, providing a mix of growth and stability. Monitoring sector trends and adjusting allocations as needed can help capitalize on emerging opportunities and mitigate risks associated with sector-specific downturns.

Regions Info

  • North America
    61%
  • No data
    10%
  • Europe Developed
    8%
  • Japan
    3%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America, with over 61% exposure, followed by Europe and Japan. This bias towards developed markets aligns with typical US-centric portfolios but may limit exposure to emerging market opportunities. While this allocation supports stability, diversifying further into underrepresented regions could enhance growth potential. Regularly reviewing geographic exposure ensures alignment with your global investment objectives and risk tolerance.

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 can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio based on existing assets. This approach helps identify potential allocation adjustments to enhance performance without increasing risk. While current allocations are well-balanced, exploring optimization opportunities can refine your strategy, ensuring alignment with your evolving financial goals and risk tolerance.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Fidelity 500 Index Fund 1.20%
  • Fidelity® Government Money Market Fund 4.90%
  • Weighted yield (per year) 1.58%

The portfolio's dividend yield is 1.58%, primarily driven by the money market fund and bond ETF. Dividends offer a steady income stream, which can be reinvested or used for income. For balanced investors, dividends contribute to total returns, providing stability during market fluctuations. Reviewing dividend policies and yields can help ensure they align with your income needs and long-term growth objectives.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Fidelity 500 Index Fund 0.02%
  • Weighted costs total (per year) 0.02%

With a Total Expense Ratio (TER) of 0.02%, the portfolio's costs are impressively low, supporting better long-term performance. Low costs mean more of your investment returns are retained, enhancing compounding over time. This efficient cost structure aligns with best practices, ensuring that fees do not erode potential gains. Regularly reviewing costs and exploring lower-cost options can further optimize returns.

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