Cautious Portfolio with Single-Focused Diversification and Balanced Asset Allocation

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Cautious Investors

This portfolio is suitable for a cautious investor who prioritizes capital preservation and moderate growth. Such an investor typically has a long-term investment horizon and a lower risk tolerance, preferring a stable and balanced approach. Their goals might include steady income generation and gradual wealth accumulation, with an emphasis on minimizing losses during market downturns. This portfolio aligns well with an investor seeking to maintain a conservative stance while still participating in market growth.

Positions

  • SPDR S&P 500 ETF Trust
    SPY - US78462F1030
    63.25%
  • AGFiQ U.S. Market Neutral Anti-Beta Fund
    BTAL - US00110G4082
    21.50%
  • Invesco DB US Dollar Index Bullish Fund
    UUP - US46141D2036
    15.25%

The portfolio is composed of three ETFs: SPDR S&P 500 ETF Trust at 63.25%, AGFiQ U.S. Market Neutral Anti-Beta Fund at 21.5%, and Invesco DB US Dollar Index Bullish Fund at 15.25%. This composition indicates a cautious approach with a focus on large-cap U.S. equities, market-neutral strategies, and currency exposure. The allocation is heavily weighted towards the S&P 500, providing broad market exposure but limiting diversification. To improve, consider adding more diverse asset classes to balance risk and potential returns.

Growth

Historically, the portfolio has performed well with a CAGR of 10.64%. However, it has experienced a maximum drawdown of -22.79%, indicating significant volatility during market downturns. This performance suggests that while the portfolio can generate strong returns, it is also susceptible to market fluctuations. To mitigate this risk, consider incorporating more stable assets like bonds or other fixed-income securities to provide a cushion during market declines.

Projection

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. The median (50th percentile) outcome showed a 139.8% increase, while the 5th percentile indicated a potential loss of -3.85%. This simulation highlights the range of possible outcomes and underscores the importance of diversification to manage risk. To enhance the portfolio's resilience, consider adding assets with lower correlations to the existing holdings.

Asset classes

  • Stocks
    64%
  • Cash
    32%
  • Bonds
    4%

The portfolio's asset classes are primarily stocks (63.96%), cash (32.12%), and bonds (3.92%). This allocation reflects a cautious strategy with a significant portion in cash, which can act as a buffer against market volatility. However, the low bond allocation may not provide sufficient income or stability. To further reduce risk, consider increasing the bond allocation or exploring other low-risk assets like high-quality corporate bonds or government securities.

Sectors

  • Technology
    22%
  • Financials
    11%
  • Health Care
    10%
  • Consumer Discretionary
    9%
  • Industrials
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Real Estate
    3%
  • Utilities
    3%
  • Basic Materials
    2%

The sector allocation is diverse, with the highest exposure in Technology (22.11%), followed by Financial Services (11.40%) and Healthcare (10.34%). This spread across sectors provides some level of diversification, but the heavy weighting in Technology could lead to sector-specific risks. To balance this, consider reducing exposure to the Technology sector and increasing investments in underrepresented sectors like Utilities or Basic Materials.

Regions

  • North America
    84%
  • Europe Developed
    1%
  • Asia Developed
    0%

Geographically, the portfolio is predominantly invested in North America (83.93%), with minimal exposure to Europe Developed (0.80%) and Asia Developed (0.02%). This concentration in North America limits international diversification and exposes the portfolio to regional risks. To achieve a more balanced geographic allocation, consider adding investments in emerging markets or other developed regions outside North America.

Dividends

  • AGFiQ U.S. Market Neutral Anti-Beta Fund 5.00%
  • SPDR S&P 500 ETF Trust 1.30%
  • Invesco DB US Dollar Index Bullish Fund 6.10%
  • Weighted yield (per year) 2.83%

Dividend yield information is not provided, but it is important to consider the income potential of the portfolio. Dividends can provide a steady income stream and contribute to total returns. If dividend yield is a priority, consider adding high-dividend-paying stocks or ETFs to the portfolio. This can enhance income generation and provide some downside protection during market downturns.

Ongoing product costs

  • AGFiQ U.S. Market Neutral Anti-Beta Fund 1.43%
  • SPDR S&P 500 ETF Trust 0.10%
  • Invesco DB US Dollar Index Bullish Fund 0.75%
  • Weighted costs total (per year) 0.49%

The total expense ratio (TER) of the portfolio is 0.49%, which is relatively low. The SPDR S&P 500 ETF Trust has the lowest cost at 0.1%, while the AGFiQ U.S. Market Neutral Anti-Beta Fund is the most expensive at 1.43%. Keeping costs low is crucial for long-term performance. To further reduce expenses, consider reallocating to lower-cost ETFs or funds with similar exposures.

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