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

Report created on Dec 28, 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 primarily composed of two ETFs: Vanguard S&P 500 Index ETF and iShares Core Equity Portfolio. With 65.625% in the former, it heavily leans towards US equities, while the latter at 34.375% provides additional equity exposure. This composition aligns with a balanced profile but could benefit from increased diversification. Typically, balanced portfolios feature a mix of equities and fixed income. Consider diversifying into bonds or alternative assets to better align with common balanced benchmarks and potentially reduce volatility.

Growth Info

Historical performance is impressive, with a CAGR of 16.67%. This indicates strong growth over time, outperforming many typical balanced portfolios. However, the max drawdown of -28.2% suggests significant risk during downturns. Comparing this with benchmarks, the returns are high, but the risk is also substantial. To mitigate this, consider incorporating more defensive assets to cushion against market volatility while maintaining growth potential.

Projection Info

Forward projections using Monte Carlo simulations show promising outcomes, with a median return of 712.89% and all simulations yielding positive returns. Monte Carlo analysis uses historical data to simulate potential future outcomes, offering a range of possibilities. While encouraging, it's important to remember that these projections are based on past data and not guarantees. Diversifying further could help in achieving more stable outcomes across various market conditions.

Asset classes Info

  • US Equity
    82%
  • Stocks
    8%

With 81.55% in US equities, the portfolio is heavily weighted towards a single asset class. This overexposure can increase risk, as it lacks the balance that comes with diversified asset classes. Ideally, balanced portfolios incorporate a mix of equities, fixed income, and possibly alternative investments. Consider reallocating some equity exposure to bonds or other asset classes to achieve a more diversified and potentially less volatile portfolio.

Sectors Info

  • Technology
    29%
  • Financials
    16%
  • Consumer Discretionary
    10%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is skewed towards technology at 28.79%, followed by financial services and consumer cyclicals. This concentration in tech could lead to higher volatility, especially in rising interest rate environments. While sector diversity is present, the heavy tech focus could be risky. To mitigate this, consider balancing exposure across sectors more evenly, reducing reliance on any single sector and enhancing stability.

Regions Info

  • North America
    90%
  • Europe Developed
    5%
  • Japan
    2%
  • Asia Emerging
    1%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio's geographic allocation is predominantly North American at 90.18%, with minimal exposure to other regions. This concentration limits global diversification benefits. Common benchmarks often include more international exposure to spread risk and capitalize on global growth opportunities. Expanding into emerging markets or increasing European exposure might provide better diversification and opportunities for growth.

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 current asset allocation suggests potential for optimization using the Efficient Frontier, which seeks the best risk-return ratio. By adjusting the weights of existing assets, the portfolio could achieve a more efficient balance. This doesn't necessarily mean adding new assets, but rather reallocating within the current holdings to maximize returns for a given level of risk.

Dividends Info

  • Vanguard S&P 500 Index ETF 0.50%
  • iShares Core Equity Portfolio 0.90%
  • Weighted yield (per year) 0.64%

The portfolio's total dividend yield is relatively low at 0.64%, with both ETFs contributing modestly. While dividends are not the primary focus of this growth-oriented portfolio, they can provide a steady income stream. For those seeking more income, consider integrating higher-yielding assets. However, ensure that this aligns with overall growth objectives and risk tolerance.

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