Concentrated Canadian financials tilt with moderate diversification and a high income and value flavour
Report created on May 4, 2024Risk profile
4/7
Diversification profile
3/5
Positions
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RY Royal Bank of Canada
RY - CA7800871021 17.83% -
BM Bank of Montreal
BMO - CA0636711016 17.42% -
TU TD Active U.S. Enhanced Dividend ETF
TUED - CA87250Q1063 16.19% -
TG TD Growth ETF Portfolio
TGRO 15.30% -
BA Evolve Canadian Banks and Lifecos Enhanced Yield Index Fund
BANK - CA30053T1093 11.58% -
SH Shopify Inc
SHOP - CA82509L1076 10.93% -
LS Lightspeed Commerce Inc
LSPD - CA53229C1077 5.94% -
TD Toronto Dominion Bank
TD - CA8911605092 4.81%
The portfolio is built around a tight group of Canadian financial stocks and a few focused ETFs. A handful of big positions in banks and one high‑growth tech stock make up most of the total weight, with the ETFs adding a layer of diversification on top. This structure matters because concentrated portfolios can move more sharply when something affects their core theme. A setup like this blends income‑oriented blue chips with a small number of growth names and multi‑asset ETFs. The key takeaway is that outcomes will be driven far more by how Canadian financials and a couple of tech names behave than by broad global markets.
Growth
Historically, $1,000 grew to about $1,485, giving a compound annual growth rate (CAGR) of 10.03%. CAGR is like average speed on a road trip, smoothing out the bumps along the way. That slightly beat both the US market and global market over this period, which is encouraging. The trade‑off is a max drawdown of about -26%, meaning at one point the portfolio was roughly a quarter below a previous peak. This depth of drop is a bit worse than the US market but similar to global stocks. The main takeaway: returns have been solid for the risk taken, but big swings are absolutely part of the ride.
Asset classes
- Stocks 57%
- Stocks 16%
- US Equity 15%
- No data 12%
Asset‑class exposure is dominated by equities, with stocks and equity ETFs clearly in the driver’s seat. A stock‑heavy mix matters because shares are typically the main growth engine but also the main source of big ups and downs. Compared with more conservative mixes that add large amounts of bonds or cash, this structure leans toward capital growth rather than capital preservation. That lines up reasonably well with a “balanced” risk rating, though on the equity‑heavy side of that label. The practical takeaway is that portfolio outcomes will follow the equity market cycle closely, so an investor using this mix should be comfortable riding through multi‑year bull and bear swings.
Sectors
- Financials 53%
- Technology 22%
- Industrials 3%
- Health Care 2%
- Telecommunications 2%
- Basic Materials 1%
- Energy 1%
- Consumer Discretionary 1%
- Real Estate 1%
This breakdown covers the equity portion of your portfolio only.
Sector‑wise, the portfolio is very tilted: over half in financials, with a substantial slice in technology and small allocations sprinkled across other areas. Relative to broad market benchmarks, this is a strong overweight to one economic corner and an underweight to many others. That concentration can be a strength if financials and select growth names outperform, but it also raises vulnerability to sector‑specific shocks like credit issues, regulation changes, or rate‑driven earnings pressure. Tech exposure adds extra volatility, particularly when interest rates move sharply. A helpful framing: this is not a “market‑like” sector mix; it’s a targeted bet where one or two sectors will drive most of the experience.
Regions
- North America 85%
This breakdown covers the equity portion of your portfolio only.
Geographically, the portfolio is heavily anchored in North America, with a strong Canadian flavour layered on top of US exposure via ETFs. That means results will be closely tied to North American economic growth, interest‑rate policy, and currency moves, rather than being spread widely across the globe. Compared with global benchmarks that diversify meaningfully into Europe and Asia, this positioning is more regionally focused. This alignment can be positive if an investor wants to lean into markets they know best, but it does reduce protection if another region leads for a long stretch. The key takeaway is that global diversification benefits are present but relatively muted compared to a fully world‑oriented portfolio.
Market capitalization
- Mega-cap 48%
- Large-cap 30%
- Small-cap 7%
- Mid-cap 3%
This breakdown covers the equity portion of your portfolio only.
By market cap, the portfolio skews toward mega‑cap and large‑cap companies, with only modest exposure to mid‑ and small‑cap names. Big firms tend to be more established, with steadier earnings and better access to capital, which can make them somewhat more resilient in stress compared with tiny companies. At the same time, smaller firms sometimes deliver faster growth during certain parts of the cycle. Overall, this large‑cap tilt aligns well with common benchmarks and best practices, providing a solid core of liquid, well‑researched companies. The key implication is that most of the risk and return here will mirror the behaviour of large, well‑known North American names rather than niche or speculative plays.
True holdings
-
Part of fund(s):
- Evolve Canadian Banks and Lifecos Enhanced Yield Index Fund
- TD Canadian Equity Index ETF
- TD Growth ETF Portfolio
-
Part of fund(s):
- Evolve Canadian Banks and Lifecos Enhanced Yield Index Fund
- TD Canadian Equity Index ETF
- TD Growth ETF Portfolio
-
Part of fund(s):
- TD Canadian Equity Index ETF
- TD Growth ETF Portfolio
-
Part of fund(s):
- Evolve Canadian Banks and Lifecos Enhanced Yield Index Fund
- TD Canadian Equity Index ETF
- TD Growth ETF Portfolio
-
TP TPU 6.03%
Part of fund(s):- TD Growth ETF Portfolio
-
-
TP TPE 3.07%
Part of fund(s):- TD Growth ETF Portfolio
-
TD TDB 2.29%
Part of fund(s):- TD Growth ETF Portfolio
-
NA National Bank of Canada 1.59%
Part of fund(s):- Evolve Canadian Banks and Lifecos Enhanced Yield Index Fund
-
BN Bank of Nova Scotia 1.50%
Part of fund(s):- Evolve Canadian Banks and Lifecos Enhanced Yield Index Fund
- TD Canadian Equity Index ETF
- TD Growth ETF Portfolio
- Top 10 total 76.29%
This breakdown covers the equity portion of your portfolio only.
Looking through the ETFs, many underlying exposures circle back to the same Canadian financial names you already hold directly. Royal Bank of Canada and Bank of Montreal both end up close to 20% each when you combine single‑stock and ETF exposure, and Toronto Dominion Bank is similarly boosted. This “double‑counting” of the same companies creates hidden concentration even when it looks like you own several different funds. Overlap data only uses ETF top‑10s, so true overlap is likely higher. The key implication is that the portfolio is less diversified by company than it first appears, with a heavy reliance on a tight cluster of big Canadian institutions.
Factors
Factor exposures are estimated using statistical models based on historical data and measure systematic (market-relative) tilts, not absolute portfolio characteristics. Results may vary depending on the analysis period, data availability, and currency of the underlying assets.
Factor exposure shows strong tilts toward value and yield, with other factors roughly market‑like. Factors are characteristics like “cheap vs. expensive” (value) or “high vs. low dividend” (yield) that research links to long‑term returns. A high value score suggests the holdings lean toward companies trading at lower prices relative to fundamentals, which can help during periods when investors favour cheaper, steadier businesses. The strong yield tilt fits with the financials focus and supports a meaningful income stream. On the flip side, lower quality exposure suggests fewer classic “defensive compounders” and more reliance on cyclical or economically sensitive names. In practice, this mix may shine in value‑friendly, income‑oriented markets but lag in speculative growth booms.
Risk contribution
-
Shopify Inc
Weight: 10.93% 32.1% -
Lightspeed Commerce Inc
Weight: 5.94% 13.7% -
Bank of Montreal
Weight: 17.42% 13.1% -
TD Active U.S. Enhanced Dividend ETF
Weight: 16.19% 11.7% -
Royal Bank of Canada
Weight: 17.83% 10.7% - Top 5 risk contribution 81.3%
Risk contribution, which measures how much each position adds to overall volatility, is very skewed. Shopify, at about 11% weight, drives over 32% of total risk, and Lightspeed also contributes far more risk than its size would suggest. By contrast, the big bank positions have risk contributions below their weights, reflecting their more stable behaviour. This pattern is common when a portfolio mixes steady blue chips with a few high‑beta growth names. The important takeaway is that trimming or enlarging just one or two volatile stocks can dramatically change how bumpy the overall ride feels, even if the rest of the holdings stay exactly the same.
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.
On the risk‑return chart, the current portfolio sits below the efficient frontier, with a Sharpe ratio of 0.6 versus 0.97 for the optimal mix. The Sharpe ratio compares excess return to volatility, like measuring how much “reward” you’re getting per unit of “bumpiness.” Being 3.65 percentage points below the frontier at the same risk level means the existing holdings could be rearranged to target higher expected return or lower volatility without adding new investments. The minimum‑variance mix still offers a stronger Sharpe than today’s allocation. The key insight is that tightening position sizes—especially the most volatile names—and leaning more on the steadier holdings could move the portfolio closer to that more efficient trade‑off.
Dividends
- Evolve Canadian Banks and Lifecos Enhanced Yield Index Fund 3.60%
- Bank of Montreal 3.60%
- Royal Bank of Canada 1.40%
- Toronto Dominion Bank 1.70%
- TD Growth ETF Portfolio 0.50%
- TD Active U.S. Enhanced Dividend ETF 0.70%
- Weighted yield (per year) 1.57%
The portfolio generates an overall yield of about 1.57%, with some holdings paying significantly more and others paying very little. Dividends are cash payouts from companies or funds; they can be a steady source of income and a meaningful part of long‑term total return, especially when reinvested. The stronger yield from the bank and enhanced income ETF aligns well with the value and income tilts seen in factor data. Meanwhile, growth‑oriented positions contribute more through potential price appreciation than cash flow. Taken together, this mix offers a modest baseline income that can help soften volatility over time, without fully shifting the focus away from long‑term capital growth.
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