Portfolio Profile

Diversified Model Portfolio

Take Diversification to the Next Level

Diversification across stocks, bonds and international investments is a highly effective strategy to reduce investment risks. But diversification is inherently defensive and can adversely impact the returns of your portfolio.

Furthermore, financial markets can experience periods when high correlation develops between different types of investments, which can partially eliminate the benefits of diversification while increasing investment risk. In the worst-case scenario, investors may end up holding an investment portfolio that does not perform well in bull markets, but can drop rapidly in bear markets.

The strategy for our Diversified Portfolio is to invest in a diversified selection of stock, bond and international mutual funds using a conservative asset allocation mix. The Fidelity mutual funds chosen for the portfolio are broadly diversified, as well. This creates two layers of diversification for investors.

To further reduce investment risk, the portfolio aims to hold at least 50% of the assets in conservative bond funds and at least 10% in a safe cash reserve. As an alternative to the cash reserve, investors can use a money market fund of their choice or use the sweep feature of their brokerage account.

The Diversified Portfolio makes full use of our ProfitGuardTM technology: sell signals may be issued to sell stock and bond investments and to move the proceeds into the cash reserve when dangerous market conditions develop. As a result, in weak or declining markets the cash percent of the portfolio will gradually increase. The opposite will happen in bull markets: the cash percentage will gradually decrease as the mutual fund investments are purchased back.

I Want to Diversify, but Tell Me What to Buy and When to Sell

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Investment Results

Investment style: Moderate Allocation

Performance chart:

Note: horizontal lines on the chart indicate periods, when the entire portfolio is temporarily held in cash reserve to protect against market volatility.

Annual returns:

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