Cautious Moderate Diversification Portfolio with Strong Historical Performance and Room for Optimization

Report created on Dec 3, 2024

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio mainly consists of ETFs with a significant allocation to the Vanguard S&P 500 Index ETF and iShares Core Equity Portfolio, making up over 80% of the total. This composition reflects a cautious investment approach, emphasizing diversified equity exposure. The inclusion of the Horizons High Interest Savings ETF adds a cash component, offering liquidity and stability. The small position in Celestica Inc. indicates a minor tilt towards individual stock selection. Overall, this setup provides a balanced mix of growth potential and risk management, suitable for investors seeking moderate growth while maintaining a conservative stance.

Growth Info

Historically, the portfolio has delivered a solid CAGR of 11.88%, demonstrating its ability to generate stable returns over time. The maximum drawdown of -17.21% indicates that while the portfolio has experienced some volatility, it has been relatively resilient during market downturns. With only 21 days accounting for 90% of the returns, the portfolio's performance has been driven by a few key periods, highlighting the importance of staying invested for the long term. This performance history suggests a well-managed portfolio that aligns with the cautious risk profile.

Projection Info

A Monte Carlo simulation, which runs numerous hypothetical scenarios to predict future performance, suggests a wide range of potential outcomes. With the 50th percentile projecting a 3,468.17% return, the portfolio has the potential for significant growth. Even the 5th percentile shows a positive return of 697.72%, indicating a low probability of loss. The annualized return of 32.12% across all simulations underscores the portfolio's strong growth potential. This analysis provides confidence in the portfolio's ability to meet long-term investment goals, even in uncertain market conditions.

Asset classes Info

  • US Equity
    62%
  • Cash
    18%
  • Stocks
    9%
  • Stocks
    1%

The portfolio's asset class distribution is heavily weighted towards US Equity, accounting for over 62% of the allocation. This focus on equities provides growth potential but also introduces volatility. The cash component, represented by the Horizons High Interest Savings ETF, offers stability and liquidity, mitigating some of the risks associated with equities. The presence of a small stock allocation adds a layer of diversification, albeit minimal. To enhance diversification, consider balancing the equity exposure with other asset classes like bonds or alternative investments.

Sectors Info

  • Technology
    23%
  • Financials
    13%
  • Health Care
    8%
  • Consumer Discretionary
    8%
  • Industrials
    8%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation within the portfolio is diverse, with Technology, Financial Services, and Healthcare leading the way. This distribution provides exposure to a range of industries, each with its own growth drivers and risks. However, the heavy reliance on Technology could lead to increased volatility, especially during sector-specific downturns. To mitigate this risk, consider ensuring a more balanced sector allocation, reducing overexposure to any single industry. This approach can enhance stability and provide a more consistent return profile over time.

Regions Info

  • North America
    72%
  • Europe Developed
    5%
  • Japan
    2%
  • Asia Emerging
    1%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly focused on North America, with over 72% of assets allocated to the region. While this provides exposure to a stable and mature market, it may limit potential growth opportunities in other regions. The small allocations to Europe, Japan, and emerging markets offer some diversification but could be expanded to capture global growth trends. A more balanced geographic allocation could reduce regional risks and enhance the portfolio's resilience to economic fluctuations in any single market.

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 there is room for improvement in achieving a more efficient portfolio. By moving along the efficient frontier, investors can potentially achieve higher returns for the same level of risk or reduce risk while maintaining current returns. To optimize the portfolio, consider adjusting the asset allocation to better align with the efficient frontier, focusing on diversification and balancing risk. This process can help achieve a more tailored risk-return profile, enhancing the portfolio's overall performance and aligning with the investor's goals.

Dividends Info

  • Horizons High Interest Savings ETF 4.50%
  • Vanguard S&P 500 Index ETF 1.00%
  • iShares Core Equity Portfolio 1.80%
  • Weighted yield (per year) 1.90%

The portfolio's dividend yield is modest, with a total yield of 1.9%. The Horizons High Interest Savings ETF contributes a significant portion with a 4.5% yield, providing a stable income stream. The Vanguard S&P 500 Index ETF and iShares Core Equity Portfolio offer lower yields, reflecting their focus on growth. To enhance income, consider increasing exposure to dividend-paying assets or funds. This approach can provide a more consistent cash flow, complementing the portfolio's growth-oriented components and supporting long-term financial goals.

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