A balanced and highly diversified portfolio with strong exposure to North American and developed markets
Report created on Jul 22, 2025Risk profile
4/7
Diversification profile
5/5
Positions
-
XU iShares Core S&P 500 Index ETF
XUS - CA46434R1091 50.00% -
HX Global X S&P/TSX Capped Composite Index Corporate Class ETF
HXCN - CA44057A1075 22.50% -
XE iShares Core MSCI EAFE IMI
XEF - CA46434T1057 22.50% -
XE iShares Core MSCI Emerging Markets IMI Index ETF
XEC - CA46434U1021 5.00%
This portfolio is heavily weighted towards equities, with a significant portion in the iShares Core S&P 500 Index ETF, making up half of the portfolio. The inclusion of the Global X S&P/TSX Capped Composite Index Corporate Class ETF and the iShares Core MSCI EAFE IMI Index ETF enhances its diversification across North American and developed international markets. The modest allocation to the iShares Core MSCI Emerging Markets IMI Index ETF introduces emerging market exposure, albeit in a limited capacity. This composition aligns with a balanced risk profile, aiming to capture growth while mitigating volatility through geographical and sectoral diversification.
Growth
With a Compound Annual Growth Rate (CAGR) of 12.93% and a maximum drawdown of -29.25%, the portfolio has demonstrated resilience and an ability to recover from market downturns. The days contributing to 90% of returns indicate significant gains were realized on relatively few days, highlighting the importance of staying invested over the long term. This performance, while past results are not indicative of future outcomes, suggests a well-constructed approach to balancing risk and reward.
Projection
Using Monte Carlo simulation, which projects future performance based on historical data, this portfolio shows a wide range of outcomes. The 50th percentile outcome suggests a substantial potential for growth. However, it's crucial to remember that such simulations are hypothetical and subject to limitations, including the inability to predict future market conditions or unexpected global events.
Asset classes
- US Equity 50%
- Stocks 22%
The portfolio’s asset class distribution, predominantly in US and international equities, supports its balanced risk classification. This allocation is conducive to achieving growth over time, with equity markets historically outperforming other asset classes like cash or bonds over the long term. However, the absence of alternative asset classes may limit opportunities for further diversification and risk mitigation.
Sectors
- Technology 23%
- Financials 20%
- Industrials 12%
- Consumer Discretionary 9%
- Health Care 7%
- Telecommunications 7%
- Energy 6%
- Basic Materials 5%
- Consumer Staples 5%
- Utilities 3%
- Real Estate 2%
Sector allocations are well-spread, with a notable emphasis on technology and financial services. This sector concentration reflects current global market trends but may expose the portfolio to sector-specific risks. Diversifying across sectors can help cushion against volatility in any single sector, ensuring more stable long-term performance.
Regions
- North America 73%
- Europe Developed 14%
- Japan 5%
- Asia Emerging 3%
- Asia Developed 2%
- Australasia 2%
- Africa/Middle East 1%
The geographic allocation underscores a strong focus on North America and developed markets, with minimal exposure to emerging markets. While this may reduce volatility, it could also limit potential high-growth opportunities available in emerging economies. Increasing exposure to these regions could enhance diversification and return potential, albeit with higher risk.
Market capitalization
- Mega-cap 47%
- Large-cap 33%
- Mid-cap 18%
- Small-cap 3%
The distribution across market capitalizations, with a preference for mega and big-cap stocks, suggests a conservative approach, favoring companies with established track records over potentially higher-growth but riskier small and micro-cap stocks. This strategy aligns with the portfolio's balanced risk profile but may limit upside potential from smaller companies.
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 current allocation appears well-optimized for a balanced risk-return profile, as indicated by its historical performance and Monte Carlo projections. However, continually assessing the portfolio against the Efficient Frontier could reveal opportunities to tweak the allocation for an even better risk-adjusted return, without necessarily increasing the overall risk level.
Dividends
- iShares Core MSCI Emerging Markets IMI Index ETF 1.20%
- iShares Core MSCI EAFE IMI 1.00%
- iShares Core S&P 500 Index ETF 0.60%
- Weighted yield (per year) 0.58%
The dividend yields, while modest, contribute to the portfolio's total return, providing a steady income stream in addition to potential capital appreciation. Given the balanced nature of the portfolio, these yields support the strategy of generating returns through both growth and income.
Ongoing product costs
- Global X S&P/TSX Capped Composite Index Corporate Class ETF 0.05%
- Weighted costs total (per year) 0.01%
With very low total expense ratios, this portfolio is positioned to maximize net returns over time. Lower costs mean more of the investment's return is kept by the investor, a crucial factor in building wealth, especially when compounded over many years.
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