A balanced Canadian portfolio with significant financial sector and North American exposure
Report created on Jan 12, 2025Risk profile
4/7
Diversification profile
3/5
Positions
-
ZS BMO S&P 500 Index ETF
ZSP-U - CA05575T1185 35.04% -
XE iShares Core Equity Portfolio
XEQT - CA46436D1087 30.08% -
TD Toronto Dominion Bank
TD - CA8911605092 23.19% -
RY Royal Bank of Canada
RY - CA7800871021 11.69%
The portfolio comprises 35% BMO S&P 500 Index ETF, 30% iShares Core Equity Portfolio, and notable holdings in Toronto Dominion Bank and Royal Bank of Canada. This structure leans heavily towards equity, with a substantial focus on North American markets. Compared to a typical balanced portfolio, this one is moderately diversified, with a higher concentration in financial services. This composition suggests a focus on growth, but it may benefit from more international diversification to mitigate regional risks and enhance potential returns.
Growth
Historically, the portfolio has shown a strong Compound Annual Growth Rate (CAGR) of 13.75%, with a maximum drawdown of -32.6%. This indicates substantial growth potential but also significant volatility. When compared to common benchmarks, the growth rate is impressive, but the drawdown highlights potential risks during market downturns. While historical performance is a useful guide, it's important to note that past performance does not guarantee future results. Investors may consider strategies to reduce volatility, such as diversifying across more asset classes or regions.
Projection
The Monte Carlo simulation, which uses historical data to project potential future outcomes, suggests a 50th percentile return of 441.33% and a 67th percentile return of 656.09%. This indicates a positive outlook, with 989 out of 1,000 simulations showing positive returns. However, it's important to remember that these projections are based on historical trends and assumptions, which may not hold true in the future. Investors should regularly review their portfolios to ensure they align with their risk tolerance and investment goals.
Asset classes
- Stocks 35%
- US Equity 14%
- Stocks 7%
The asset allocation includes 34.9% stocks, 14.3% US equity, and 7.4% general equity, with minimal cash and other assets. This heavy equity weighting aligns with a growth-focused strategy, but it may expose the portfolio to higher volatility. Compared to typical balanced portfolios, which often include more fixed income for stability, this allocation is more aggressive. To enhance diversification, consider incorporating more varied asset classes, such as bonds or real estate, which can provide stability during market fluctuations.
Sectors
- Financials 41%
- Technology 6%
- Industrials 4%
- Consumer Discretionary 3%
- Health Care 2%
- Energy 2%
- Telecommunications 2%
- Basic Materials 2%
- Consumer Staples 2%
- Utilities 1%
- Real Estate 1%
The portfolio is dominated by financial services, which account for 40.9% of the total allocation. This concentration may expose the portfolio to sector-specific risks, such as regulatory changes or economic downturns affecting financial institutions. While the technology and industrial sectors provide some diversification, their relatively small weightings limit their impact. To reduce sector risk, consider increasing exposure to underrepresented sectors, which can help balance the portfolio and mitigate potential losses.
Regions
- North America 57%
- Europe Developed 4%
- Japan 2%
- Asia Emerging 1%
- Asia Developed 1%
- Australasia 1%
With 56.7% exposure to North America, the portfolio is heavily concentrated in this region, potentially limiting its diversification benefits. While this aligns with the investor's Canadian base, it may expose the portfolio to regional economic risks. Compared to global benchmarks, the portfolio is underexposed to Europe, Asia, and other emerging markets. Increasing geographic diversification can help mitigate risks associated with regional economic fluctuations and enhance potential returns through exposure to different growth opportunities.
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.
While the portfolio is efficient, optimization using the Efficient Frontier suggests a potential return of 16% with the same risk level. The Efficient Frontier represents the best possible risk-return ratio for a given set of assets. However, achieving this may require significant changes to the current allocation. Consider incremental adjustments to improve efficiency without drastically altering the portfolio's risk profile. Balancing risk and return is key to optimizing long-term growth.
Dividends
- Royal Bank of Canada 3.30%
- Toronto Dominion Bank 3.90%
- iShares Core Equity Portfolio 0.90%
- BMO S&P 500 Index ETF 0.50%
- Weighted yield (per year) 1.74%
The portfolio's total dividend yield is 1.74%, with significant contributions from Toronto Dominion Bank and Royal Bank of Canada. Dividends can provide a steady income stream, which is beneficial for investors seeking regular cash flow. However, the yield is relatively low compared to typical income-focused portfolios. To increase income potential, consider adding higher-yielding assets or funds. Balancing growth and income can help achieve a more stable and diversified portfolio.
What next?
Ready to invest in this portfolio?
Select a broker that fits your needs and watch for low fees to maximize your returns.
Create your own report?
Join our community!
The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.
Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.
Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.
Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.
By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.
Instrument logos provided by Elbstream.
Help us improve Insightfolio
Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey