A balanced Canadian portfolio with strong US equity focus and moderate diversification

Report created on Dec 31, 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 heavily weighted towards US equities, with a 62% allocation to the Vanguard S&P 500 Index ETF and a 13% allocation to the Invesco NASDAQ 100 Index ETF. This composition suggests a focus on large-cap US stocks, which are typically considered stable and reliable. While this structure aligns well with common benchmarks, the concentration in US equities could limit exposure to other potentially lucrative markets. To enhance diversification, consider adding assets from emerging markets or other regions, which may offer growth opportunities and further risk distribution.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 15.48%, indicating strong performance. The maximum drawdown of -22.92% highlights the potential volatility, which is not uncommon for equity-heavy portfolios. This performance outpaces many traditional benchmarks, suggesting the portfolio's composition has been effective in capturing market gains. However, past performance is not always indicative of future results. Maintaining a balanced approach and regularly reviewing asset allocation can help sustain favorable performance while managing risk.

Projection Info

Monte Carlo simulations project an annualized return of 16.72% across 1,000 scenarios, with all simulations showing positive returns. This method uses historical data to forecast potential outcomes, but it's important to remember that these are only estimates. The portfolio's projected growth is promising, particularly at the 50th percentile with a 665.54% end value. While these projections are optimistic, they rely on past market conditions. Regular reassessment of the portfolio's risk profile and potential market changes can help align expectations with evolving realities.

Asset classes Info

  • US Equity
    86%
  • Stocks
    6%

The portfolio is primarily composed of US equity (86.38%), with a small allocation to other equities. This heavy tilt towards US equities suggests a focus on stable, mature markets, which can provide steady returns. However, the limited exposure to other asset classes might reduce potential diversification benefits. To improve risk management, consider incorporating bonds or alternative assets, which can help stabilize returns during market downturns. Balancing between equities and other asset classes can create a more resilient portfolio.

Sectors Info

  • Technology
    32%
  • Financials
    13%
  • Consumer Discretionary
    11%
  • Health Care
    9%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The portfolio is concentrated in the technology sector, which accounts for 32.26% of the allocation. This sectoral concentration can lead to higher volatility, especially during periods of technological disruption or regulatory changes. While technology has been a strong performer, diversifying into other sectors like healthcare or consumer staples could mitigate risks associated with sector-specific downturns. Balancing sector weights can enhance the portfolio's resilience against market fluctuations and provide more stable returns over time.

Regions Info

  • North America
    92%
  • Europe Developed
    4%
  • Japan
    1%
  • Asien Schwellenländer
    1%
  • Asien
    1%

With 92.43% of assets allocated to North America, the portfolio shows a significant regional concentration. While this aligns with common benchmarks, it may limit exposure to growth opportunities in other regions. Diversifying geographically can reduce risks associated with economic or political events in a single area. Consider increasing allocations to emerging markets or underrepresented regions to capture diverse growth potential and enhance overall portfolio resilience. A more balanced geographic spread can help manage risks and improve long-term returns.

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's risk-return profile could potentially be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. This approach focuses on maximizing returns for a given level of risk or minimizing risk for a given level of returns. By adjusting the allocation between existing assets, the portfolio can achieve a more efficient balance. However, this optimization is based solely on current holdings and does not account for potential benefits from adding new asset classes or regions.

Dividends Info

  • Invesco NASDAQ 100 Index ETF CAD Units 0.20%
  • Vanguard S&P 500 Index ETF 0.50%
  • iShares Core Equity Portfolio 0.90%
  • Weighted yield (per year) 0.56%

The portfolio's dividend yield is relatively low at 0.56%, reflecting its focus on growth-oriented ETFs. Dividends can provide a steady income stream and enhance total returns, particularly during periods of market volatility. While growth stocks may offer higher capital appreciation, incorporating dividend-paying assets can help balance the portfolio. Consider adding securities with higher dividend yields to increase income potential and provide a cushion against market fluctuations. This can enhance the portfolio's overall stability and return profile.

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