A cautious portfolio with significant exposure to the US market and moderate diversification

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Cautious Investors

This portfolio suits a cautious investor seeking moderate growth with a focus on capital preservation. With a lower risk tolerance, the investor prioritizes stability over aggressive returns, preferring a balanced approach. The investment horizon is likely long-term, aiming to build wealth steadily while minimizing exposure to market volatility. This strategy aligns with a cautious risk profile, emphasizing diversification and cost efficiency to achieve consistent, sustainable growth.

Positions

  • SPDR S&P 500 ETF Trust
    SPY - US78462F1030
    63.25%
  • AGFiQ U.S. Market Neutral Anti-Beta Fund
    BTAL - US00110G4082
    21.50%
  • Invesco DB US Dollar Index Bullish Fund
    UUP - US46141D2036
    15.25%

The portfolio is heavily weighted towards the SPDR S&P 500 ETF Trust, making up over 63% of the total allocation. This indicates a strong focus on large-cap US equities, providing exposure to a broad range of industries within the US economy. The AGFiQ U.S. Market Neutral Anti-Beta Fund accounts for 21.5%, offering a hedge against market volatility, while the Invesco DB US Dollar Index Bullish Fund at 15.25% provides currency exposure. Compared to typical diversified portfolios, this structure is more concentrated, which may limit diversification benefits. Consider diversifying further to mitigate sector-specific risks.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 10.29%. This indicates strong growth over time, outperforming many conservative investment strategies. The maximum drawdown of -22.69% suggests vulnerability to market downturns, though it remains within acceptable limits for cautious investors. Benchmarking against broader indices, the portfolio aligns well with historical market performance. While past performance is not indicative of future results, maintaining a diversified and balanced approach could help sustain returns.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests an annualized return of 6.99%. This method provides a range of potential future portfolio values, with the 50th percentile showing a 135.24% increase. However, the 5th percentile indicates a potential -8.25% loss, highlighting risks in adverse conditions. While simulations offer insights, they rely on past data and cannot predict future market movements with certainty. Regularly reviewing and adjusting the portfolio based on changing market conditions is advisable.

Asset classes

  • Stocks
    63%
  • Cash
    34%
  • Bonds
    2%

The portfolio primarily consists of stocks at 63.4%, with cash and bond allocations significantly lower. This equity-heavy allocation aligns with a growth-oriented strategy but may expose the portfolio to higher volatility. Compared to typical benchmarks, there's a noticeable underweight in bonds, which could offer stability and income. Given the cautious risk profile, increasing bond exposure might enhance stability and reduce volatility, balancing growth potential with risk management.

Sectors

  • Technology
    25%
  • Financials
    12%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Industrials
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Real Estate
    3%
  • Utilities
    3%
  • Basic Materials
    2%

Sector allocation is concentrated in technology, which represents 25% of the portfolio. This can lead to higher returns during tech booms but also increased risk during downturns in the sector. Other sectors like financial services, consumer cyclicals, and healthcare have moderate representation, providing some diversification. However, the limited exposure to sectors like utilities and basic materials may miss out on defensive benefits. Reassessing sector weights to balance growth and defensive sectors could enhance portfolio resilience.

Regions

  • North America
    84%
  • Europe Developed
    1%
  • Asia Developed
    0%

The portfolio's geographic allocation is heavily skewed towards North America, with over 83% exposure. This concentration may limit diversification benefits and expose the portfolio to regional economic risks. Minimal exposure to Europe and Asia Developed suggests a potential opportunity to diversify geographically. Expanding into international markets could reduce regional risk and take advantage of global growth opportunities, aligning with a cautious investment approach.

Dividends

  • SPDR S&P 500 ETF Trust 0.80%
  • Weighted yield (per year) 0.51%

The portfolio's dividend yield stands at 0.51%, with the SPDR S&P 500 ETF Trust contributing 0.8%. This yield is modest and may not significantly impact total returns but provides a steady income stream. For cautious investors, dividends can offer stability and potential reinvestment opportunities. Evaluating higher-yielding investments could boost income without compromising growth, aligning with long-term wealth-building goals.

Ongoing product costs

  • AGFiQ U.S. Market Neutral Anti-Beta Fund 1.43%
  • SPDR S&P 500 ETF Trust 0.10%
  • Invesco DB US Dollar Index Bullish Fund 0.75%
  • Weighted costs total (per year) 0.49%

With a Total Expense Ratio (TER) of 0.49%, the portfolio's costs are relatively low, supporting better long-term returns. The AGFiQ U.S. Market Neutral Anti-Beta Fund has the highest cost at 1.43%, which could impact net returns. Reducing high-fee assets or replacing them with lower-cost alternatives can enhance overall performance. Maintaining a focus on cost efficiency is crucial for maximizing returns, especially for cautious investors prioritizing capital preservation.

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.

The portfolio can be optimized along the Efficient Frontier, which seeks the best possible risk-return ratio for the given assets. This involves reallocating existing assets to achieve a more balanced risk and return profile. While this optimization focuses on current holdings, it doesn't necessarily enhance diversification. Regularly reviewing asset weights and considering new investments can further improve efficiency and align with evolving market conditions.

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