Balanced Portfolio with Moderate Risk and Diversification Focused on North American Equities and Technology Sector Exposure

Report created on Dec 4, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of three ETFs, with the iShares Core Equity Portfolio making up 60%, TD Global Technology Leaders Index ETF at 20%, and iShares Core S&P 500 Index ETF also at 20%. This composition suggests a strong focus on equity investments, particularly in large-cap stocks, with a significant allocation to technology and U.S. equities. The use of ETFs provides broad market exposure and diversification benefits, making it easier to manage risk. A balanced approach is evident, suitable for investors looking for growth while maintaining a moderate risk profile.

Growth Info

Historically, the portfolio has demonstrated impressive performance with a compound annual growth rate (CAGR) of 16.74%. This indicates strong past returns, likely driven by the equity-heavy allocation and significant exposure to the U.S. market, which has performed well over recent years. However, the maximum drawdown of -27.5% highlights the potential volatility and risk associated with such an equity-focused portfolio. It's important to recognize that past performance doesn't guarantee future results, but it provides a benchmark for evaluating the portfolio's historical resilience and growth potential.

Projection Info

Using a Monte Carlo simulation with 1,000 scenarios, the portfolio's future performance was projected with a hypothetical initial investment. The simulation indicates a 5th percentile outcome of 216.38% and a median (50th percentile) outcome of 1,074.75%, suggesting potential for significant growth. The annualized return across simulations is 20.54%, showing optimistic prospects. Monte Carlo simulations help investors understand potential outcomes by accounting for market volatility and randomness, offering a range of possible future returns. This can assist in setting realistic expectations and planning for various market conditions.

Asset classes Info

  • US Equity
    66%
  • Stocks
    15%

The portfolio is primarily allocated to U.S. equities at 65.81%, with additional exposure to general equity at 15.26%. The small cash position of 0.49% and minimal allocation to other assets suggest a strong preference for equities, aligning with the growth-oriented strategy. This asset class allocation can offer higher returns but comes with increased risk and volatility. To balance risk, consider incorporating more fixed income or alternative asset classes. Diversifying across different asset classes can help reduce portfolio risk and provide more stable returns over time.

Sectors Info

  • Technology
    32%
  • Financials
    16%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Health Care
    7%
  • Energy
    5%
  • Consumer Staples
    4%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio's sector allocation is heavily skewed towards technology, representing 32% of the total holdings. Other significant sectors include financial services at 15.86% and consumer cyclicals at 9.95%. While this concentration in technology can drive growth, it also increases sector-specific risk. A more balanced sector allocation could help mitigate this risk, especially in volatile market conditions. Diversifying across sectors can provide a buffer against downturns in any single industry, enhancing the portfolio's resilience and long-term performance.

Regions Info

  • North America
    81%
  • Europe Developed
    10%
  • Japan
    4%
  • Asia Emerging
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly focused on North America, with 81.47% of its assets allocated there. This strong regional bias could expose the portfolio to risks associated with economic or political changes in North America. While this allocation has benefited from the strong performance of U.S. markets, diversifying into other regions could enhance the portfolio's resilience. Consider increasing exposure to international markets to capture growth opportunities and reduce reliance on North American equities. Geographic diversification can help mitigate regional risks and provide access to broader market opportunities.

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 optimization chart suggests opportunities to enhance risk-adjusted returns along the efficient frontier. Moving towards a riskier portfolio could involve increasing exposure to equities or high-growth sectors, while a more conservative approach might include adding bonds or other fixed-income assets. Before optimizing, ensure the current portfolio aligns with financial goals and risk tolerance. While optimization can improve performance, focus first on achieving a well-diversified and cost-effective portfolio. This foundational step is crucial for building a resilient investment strategy that can withstand various market conditions.

Dividends Info

  • TD Global Technology Leaders Index ETF 0.10%
  • iShares Core Equity Portfolio 1.50%
  • iShares Core S&P 500 Index ETF 0.90%
  • Weighted yield (per year) 1.10%

The portfolio's dividend yield stands at 1.1%, with the iShares Core Equity Portfolio contributing the highest yield at 1.5%. While dividends provide a source of income, the yield here is relatively modest, reflecting the growth-oriented nature of the portfolio. For investors seeking higher income, consider incorporating dividend-focused investments or funds. Balancing growth and income can enhance the portfolio's overall return potential, providing both capital appreciation and cash flow. However, ensure that any changes align with your investment goals and risk tolerance.

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