A balanced Canadian portfolio with strong diversification and a focus on North American equities

Report created on Feb 7, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is entirely composed of the iShares Core Equity ETF, providing a broad exposure to equity markets. With a balanced risk classification and a high diversification score, it aligns well with a diversified investment strategy. The portfolio's composition is heavily weighted towards US equities, which make up 45% of the allocation, while other global equities account for 25%. This structure suggests a focus on growth and stability, typical of a balanced investment approach. To maintain this balance, consider periodically reviewing the allocation to ensure it aligns with your evolving financial goals and risk tolerance.

Growth Info

The historical performance of the portfolio has been impressive, with a Compound Annual Growth Rate (CAGR) of 13.65%. This indicates a strong track record of growth, significantly outperforming many traditional benchmarks. However, it's essential to note that the maximum drawdown was -29.76%, highlighting the potential for significant value fluctuations during market downturns. The majority of returns were concentrated in just 20 days, underscoring the importance of staying invested for the long term to capture these gains. While past performance is not indicative of future results, the historical data provides a solid foundation for future expectations.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future performance, suggests a positive outlook for the portfolio. With 1,000 simulations, the portfolio's annualized return is projected at 14.51%, and 998 of the simulations resulted in positive returns. This indicates a high likelihood of favorable outcomes, albeit with some variability. Key percentiles show potential end portfolio values, with the 5th percentile at 123.4% and the 67th at 664.6%. Remember, these projections are based on past data and involve inherent uncertainty, so they should be used as a guide rather than a guarantee.

Asset classes Info

  • US Equity
    45%
  • Stocks
    25%

The asset allocation is primarily concentrated in equities, with US equities representing 45% and other equities 25%. This allocation provides a strong growth potential but may also expose the portfolio to equity market volatility. The lack of fixed income or alternative asset classes suggests a focus on capital appreciation rather than income generation or risk mitigation. To enhance diversification, consider incorporating other asset classes that align with your risk tolerance and investment goals. This could help balance the portfolio's risk and return profile over different market cycles.

Sectors Info

  • Financials
    21%
  • Technology
    20%
  • Industrials
    12%
  • Consumer Discretionary
    10%
  • Health Care
    8%
  • Energy
    7%
  • Telecommunications
    6%
  • Basic Materials
    6%
  • Consumer Staples
    5%
  • Utilities
    3%
  • Real Estate
    3%

The portfolio is well-diversified across sectors, with financial services and technology leading at 21% and 20%, respectively. This sectoral distribution aligns closely with common benchmarks and provides a balanced exposure to various economic drivers. However, the concentration in financials and tech could lead to higher volatility during periods of sector-specific downturns. To manage this risk, consider periodically reviewing the sector allocations and adjusting them as needed to maintain diversification. Staying informed about sector trends and potential impacts on your portfolio is also crucial.

Regions Info

  • North America
    70%
  • Europe Developed
    16%
  • Japan
    6%
  • Asia Emerging
    2%
  • Asia
    2%
  • Australasia
    2%
  • Africa/Middle East
    1%

The geographic allocation is heavily weighted towards North America, which comprises 70% of the portfolio. This focus on North American equities provides exposure to a stable and mature market but may limit diversification benefits from international markets. Notably, Europe Developed and Japan offer some diversification, accounting for 16% and 6%, respectively. To enhance geographic diversification, consider increasing exposure to emerging markets or other regions. This could help mitigate risks associated with regional economic downturns and capture growth opportunities in diverse markets.

Market capitalization Info

  • Mega-cap
    43%
  • Large-cap
    32%
  • Mid-cap
    19%
  • Small-cap
    5%
  • Micro-cap
    1%

The portfolio's market capitalization breakdown is predominantly in mega-cap and big-cap stocks, at 43% and 32%, respectively. This allocation suggests a focus on large, established companies, which typically offer stability and lower volatility. However, with only 5% in small-cap and 1% in micro-cap stocks, the portfolio may miss out on the growth potential of smaller, more dynamic companies. To balance risk and return, consider increasing exposure to smaller market caps, which can provide diversification and enhance growth prospects over the long term.

Dividends Info

  • iShares Core Equity Portfolio 2.00%
  • Weighted yield (per year) 2.00%

The portfolio offers a modest dividend yield of 2.00%, which can provide a steady income stream alongside capital appreciation. Dividends are an essential component of total returns, especially for investors seeking regular income. While the yield is not exceptionally high, it aligns with the portfolio's balanced growth focus. To enhance income, consider strategies that increase dividend exposure, such as selecting funds or stocks with a history of stable and growing dividends. This approach can complement the portfolio's growth objectives while providing additional financial flexibility.

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