A balanced Canadian portfolio with strong equity focus and limited bond exposure

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 primarily composed of equities, making up 90% of the holdings, with a small allocation to bonds at 10%. This structure leans towards a growth-focused strategy while maintaining a minimal defensive position through bonds. Compared to a typical balanced portfolio, which might have a more even split between stocks and bonds, this portfolio is more aggressive. The high equity allocation is suitable for those seeking capital appreciation but may expose the investor to higher volatility. Consider periodically reviewing the bond allocation to ensure it aligns with changing risk tolerance and market conditions.

Growth Info

Historically, this portfolio has shown strong performance with a Compound Annual Growth Rate (CAGR) of 11.81%. This indicates robust growth over the investment period. The max drawdown of -28.09% highlights the potential volatility, which is expected with a high equity concentration. Compared to market benchmarks, this performance is commendable, suggesting effective asset selection and timing. However, past performance should not be taken as a guarantee of future results, and investors should prepare for market fluctuations. Regularly reviewing performance against personal goals and market conditions is advisable.

Projection Info

Forward projections using Monte Carlo simulations estimate a range of potential outcomes. With 1,000 simulations, the median (50th percentile) outcome suggests a 151.39% increase, while the best-case (67th percentile) predicts a 211.3% gain. These projections provide a probabilistic view based on historical data, but it's important to remember that they are not predictions. The simulations highlight the portfolio's potential for growth but also underscore the inherent uncertainties. Investors should use these projections as a guide, not a certainty, and remain flexible to adjust strategies as needed.

Asset classes Info

  • US Equity
    41%
  • Stocks
    27%
  • Bonds
    10%

The portfolio is heavily weighted towards equities, with over 68% in North American stocks. Bonds represent a smaller portion at nearly 10%, providing limited income and risk mitigation. This allocation suggests a preference for growth over income stability. In comparison to a balanced benchmark, which might have a more even distribution between asset classes, this portfolio is more aggressive. To enhance diversification, consider increasing exposure to other asset classes like international equities or alternative investments, which could provide additional risk management benefits.

Sectors Info

  • Financials
    19%
  • Technology
    18%
  • Industrials
    11%
  • Consumer Discretionary
    8%
  • Health Care
    7%
  • Energy
    7%
  • Basic Materials
    6%
  • Telecommunications
    5%
  • Consumer Staples
    5%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is diverse, with significant weights in financial services, technology, and industrials. This balance aligns well with common benchmarks, offering a mix of growth and stability. However, the tech sector's 17.97% allocation could introduce volatility, especially during economic shifts or interest rate changes. While diversification across sectors is commendable, monitoring sector performance and adjusting allocations to align with economic trends or personal risk tolerance is beneficial. Staying informed about sector-specific developments can help in making timely adjustments.

Regions Info

  • North America
    68%
  • Europe Developed
    9%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio is predominantly focused on North America, with 68.43% exposure, and lesser allocations to Europe and Asia. This geographic concentration may limit exposure to global market opportunities and increase vulnerability to regional economic downturns. Compared to global benchmarks, which often have a more balanced geographic spread, this portfolio is North America-heavy. Consider diversifying into underrepresented regions to capture growth opportunities and reduce geographic risk. Balancing exposure across different markets can enhance resilience against localized economic disruptions.

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 potentially be optimized using the Efficient Frontier, a concept that helps identify the best risk-return balance. By adjusting the current asset allocation, investors can achieve a more efficient portfolio, maximizing returns for a given level of risk. This optimization focuses on existing assets, suggesting that reallocating between equities and bonds could enhance performance. While efficiency does not guarantee diversification, it can improve the risk-return profile, making the portfolio more resilient to market fluctuations.

Dividends Info

  • Vanguard Canadian Aggregate Bond 1.60%
  • Weighted yield (per year) 0.16%

The portfolio's overall dividend yield is modest at 0.16%, primarily driven by the bond allocation's 1.6% yield. This suggests a focus on capital appreciation rather than income generation. For investors seeking regular income, this yield may be insufficient. Consider exploring higher-yielding investments or dividend-focused strategies to enhance income streams. Balancing growth and income can provide a more stable return profile, especially for investors nearing retirement or those requiring consistent cash flow.

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