A balanced portfolio with high dividend focus and strong tech exposure in North America

Report created on Jan 12, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio consists of two main ETFs, each making up 50% of the total allocation. The Vanguard FTSE Canadian High Dividend Yield ETF and the iShares NASDAQ 100 (CAD Hedged) ETF provide a blend of high dividend Canadian stocks and growth-oriented U.S. tech stocks. Compared to typical balanced portfolios, this setup is heavily concentrated in equities, lacking significant exposure to bonds or other asset classes. The focus on just two ETFs limits diversification, which can increase risk during market downturns. To enhance diversification, consider incorporating additional asset types like bonds or international equities.

Growth Info

Historically, the portfolio has shown a strong Compound Annual Growth Rate (CAGR) of 14.3%, reflecting robust growth over time. However, it has also experienced a maximum drawdown of -32.99%, indicating potential vulnerability to market downturns. Compared to benchmarks, this performance suggests high returns but also higher risk. While past performance is not indicative of future results, it provides insight into how the portfolio might react to market changes. To mitigate drawdowns, consider diversifying into less volatile asset classes or sectors.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast future performance, indicates a wide range of potential outcomes. With 1,000 simulations, the portfolio's expected annualized return is 15.03%. The 5th percentile outcome suggests a possible 87.85% return, while the 67th percentile projects a 699.08% return. Although these projections are promising, it's important to remember that past data can't predict future results with certainty. To manage expectations, regularly review and adjust the portfolio to align with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    50%
  • US Equity
    49%

The portfolio is heavily weighted in equities, with Canadian and U.S. equities making up nearly 100% of the allocation. This focus on equities can drive growth but also increases exposure to market volatility. Compared to a typical balanced portfolio, which might include bonds and other asset classes, this setup lacks diversification. To reduce risk and enhance stability, consider incorporating additional asset classes like fixed income or real estate. This can help balance growth potential with risk management.

Sectors Info

  • Financials
    29%
  • Technology
    26%
  • Energy
    15%
  • Telecommunications
    10%
  • Consumer Discretionary
    7%
  • Utilities
    3%
  • Consumer Staples
    3%
  • Health Care
    3%
  • Industrials
    2%
  • Basic Materials
    1%

Sector allocation reveals a significant concentration in financial services and technology, making up over 55% of the portfolio. While these sectors can offer growth, they also expose the portfolio to sector-specific risks, such as regulatory changes or technological disruptions. Compared to benchmark sector distributions, this concentration is higher, which may increase volatility. To mitigate sector-specific risks, consider diversifying into underrepresented sectors, like healthcare or industrials, which can provide stability during sector downturns.

Regions Info

  • North America
    99%
  • Europe Developed
    1%
  • Latin America
    1%

The portfolio's geographic exposure is predominantly in North America, with over 98% allocation. This focus on North American equities limits exposure to international markets, which can reduce diversification and increase vulnerability to regional economic downturns. Compared to global benchmarks, this geographic concentration is notably high. To enhance diversification and mitigate regional risks, consider adding exposure to emerging markets or developed markets outside North America, which can offer growth opportunities and reduce regional dependency.

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's current asset allocation could be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. This involves adjusting the weights of existing assets to maximize returns for a given level of risk. However, optimization is limited to the current assets and doesn't necessarily improve diversification. To achieve a more efficient portfolio, consider rebalancing between the two ETFs or introducing new asset classes. This can help align the portfolio with personal risk preferences and market conditions.

Dividends Info

  • Vanguard FTSE Canadian High Dividend Yield 2.20%
  • iShares NASDAQ 100 (CAD Hedged) 0.20%
  • Weighted yield (per year) 1.20%

The portfolio's overall dividend yield is 1.2%, primarily driven by the Vanguard FTSE Canadian High Dividend Yield ETF, which offers a 2.2% yield. Dividends can provide a steady income stream and contribute to total returns, which is beneficial for income-focused investors. However, the low yield from the iShares NASDAQ 100 ETF reduces the overall dividend income. For investors seeking higher income, consider reallocating towards higher-yielding assets or funds. Balancing growth with income can enhance long-term returns while providing regular cash flow.

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