A concentrated growth heavy equity portfolio with strong historic returns and modest diversification across regions
Report created on Nov 14, 2024Risk profile
4/7
Diversification profile
3/5
Positions
-
QQ Invesco NASDAQ 100 Index ETF CAD Units
QQC - CA46090T2092 40.00% -
VF Vanguard S&P 500 Index ETF
VFV - CA92205Y1051 40.00% -
ZG BMO MSCI All Country World High Quality Index ETF
ZGQ - CA05580K1021 20.00%
This portfolio is very simple and very growth‑tilted: three equity ETFs, roughly 40% in a Nasdaq 100 tracker, 40% in a broad US large‑cap tracker, and 20% in a global high‑quality fund. That means about four‑fifths of the money is essentially tied to large US companies, with a smaller slice smoothing things out globally. Simplicity like this is easy to monitor and rebalance, which is a real plus. The flip side is a near‑total lack of bonds or defensive assets. Someone wanting a more “balanced” feel could slowly add a stabilizing sleeve, for example a broad lower‑volatility or income‑oriented holding, while keeping this core structure intact.
Growth
Historically this mix has been a rocket: a compound annual growth rate (CAGR) of about 16.7%, meaning $10,000 hypothetically growing like a car averaging 16.7% “speed” per year. Max drawdown of about ‑27% shows that during rough patches you’d have seen your balance fall by more than a quarter before recovering. The fact that just 24 days made up 90% of returns illustrates how a handful of very strong days drive long‑term results, so staying invested has been crucial. This outcome has beaten typical balanced benchmarks, but it’s still based on past data, which never guarantees the next 10–20 years will look the same.
Projection
The Monte Carlo analysis ran 1,000 simulations using historical patterns, like shuffling past return and volatility behavior to see many “what if” futures. A 5th percentile outcome around 188% means $10,000 might end closer to $28,800 in a poor scenario, while the 50th percentile near 780% implies something like $88,000 in a middle‑of‑the‑road path. An average simulated annual return near 18% is very strong. Still, these models rely heavily on the past, which can overweight unusually good decades. It helps to treat them as rough ranges, not promises, and decide if you’d still be comfortable if future returns ended up much lower with similar or higher volatility.
Asset classes
- US Equity 92%
- Stocks 1%
- Cash 1%
Almost everything here is equity: roughly 92% US equity and a sliver of other equity, with about 1% in cash. For a “balanced” risk profile, that’s aggressive; most balanced blends include a meaningful share of bonds or other stabilizers. The benefit is maximum participation in stock market growth, which your historic performance numbers clearly reflect. The drawback is that portfolio value can swing sharply during downturns, and there’s little in the mix designed to cushion those blows. To bring the profile closer to a traditional balanced stance, gradually carving out even 10–20% into lower‑volatility or capital‑preservation assets could meaningfully smooth the ride without fully sacrificing upside.
Sectors
- Technology 44%
- Telecommunications 14%
- Consumer Discretionary 10%
- Health Care 8%
- Financials 7%
- Industrials 6%
- Consumer Staples 5%
- Utilities 2%
- Energy 1%
- Basic Materials 1%
- Real Estate 1%
Sector exposure is heavily skewed toward growth themes: about 44% in technology, plus sizable allocations to communication services and consumer cyclicals. This is very similar to many major US large‑cap growth benchmarks, which is why the growth has been so strong. The risk is that tech‑ and growth‑heavy portfolios tend to get hit harder when interest rates rise or when investors rotate toward more defensive or value‑oriented areas. On the positive side, you are not purely one‑sector; healthcare, financials, industrials, and consumer defensive all show up meaningfully, which is healthy. Over time, nudging a bit more into sectors that behave differently from tech could help reduce big drawdowns.
Regions
- North America 93%
- Europe Developed 3%
- Asia Developed 1%
- Asia Emerging 1%
- Japan 1%
Geographically, this portfolio is dominated by North America at roughly 93%, with only small slices in developed Europe and Asia. That lines up with many Canadian and US investors who naturally tilt heavily to North America, and it has worked well in the last decade thanks to US market leadership. The trade‑off is exposure to country‑specific risks like policy changes, currency shifts, or prolonged underperformance of US markets. That’s where your global “high quality” ETF helps, but at 20% it can only move the needle so much. Gradually increasing non‑North American exposure can make the portfolio more resilient if leadership shifts to other regions over time.
Market capitalization
- Mega-cap 51%
- Large-cap 34%
- Mid-cap 14%
- Small-cap 1%
Market‑cap exposure is strongly skewed to the largest companies: about 51% mega‑cap, 34% big, 14% medium, and only 1% small. This is very much in line with major indices, which are also dominated by mega and large caps. That alignment is a strength: mega‑caps are usually more stable, transparent, and liquid, making them dependable core holdings. The flip side is that you capture less of the sometimes‑higher long‑term growth potential of smaller companies, which can lead during certain cycles but are also more volatile. If someone wants a bit more diversification in return drivers, a small dedicated sleeve tilted toward mid‑ or small‑caps could broaden the opportunity set without disrupting the core.
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.
From a risk‑return optimization angle, this portfolio sits on the aggressive end for a “balanced” risk score. The Efficient Frontier is a simple idea: for any set of assets, there’s a curve showing the best return you can historically get for each level of risk. With only three, highly correlated equity ETFs, the frontier is fairly narrow; moving along it mostly means trading a bit of Nasdaq growth for more global or broad market exposure. Efficiency here would mean tweaking those weights to slightly lower volatility without significantly lowering expected return, not necessarily changing the overall high‑equity nature. To truly alter the risk‑return profile, you’d need to add more diverse types of holdings.
Dividends
- Invesco NASDAQ 100 Index ETF CAD Units 0.20%
- Vanguard S&P 500 Index ETF 0.50%
- BMO MSCI All Country World High Quality Index ETF 0.40%
- Weighted yield (per year) 0.36%
The overall dividend yield of roughly 0.36% is quite low, with each ETF sitting under 0.5%. That matches a growth‑oriented approach: many index constituents reinvest profits into expansion instead of paying high dividends. For someone focused on long‑term wealth building and comfortable selling small pieces of the portfolio for cash needs, this can be very effective. However, it is less friendly for investors wanting regular income to spend, such as retirees, because most of the return is expected to come from price appreciation. If reliable cash flow is a priority, introducing a modest portion of higher‑yielding or income‑focused holdings could complement this growth core without abandoning its strengths.
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