A balanced portfolio with strong North American focus and moderate sector diversification

Report created on Jan 7, 2025

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 composed predominantly of ETFs, with a significant allocation towards North American equities. Vanguard FTSE Canada All Cap and Vanguard S&P 500 Index ETFs each make up 30% of the portfolio, reflecting a robust commitment to both Canadian and U.S. markets. This structure is typical for a balanced portfolio, aiming to capture growth from large, stable economies. While this allocation is solid, consider diversifying further to include more global markets, which can reduce risk and enhance potential returns over time.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 12.57%, indicating impressive growth over time. This performance is notable when compared to typical market benchmarks, suggesting effective asset selection and allocation. However, the maximum drawdown of -18.04% reflects periods of significant volatility. While past performance is encouraging, it's important to remember that it doesn't guarantee future results. Maintaining a diversified approach can help mitigate future risks and sustain growth.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, indicates promising growth potential. With 1,000 simulations, the portfolio shows a 50th percentile return of 380.9% and an annualized return of 13.17%. This suggests a positive outlook, but it's important to remember that simulations are based on past data and cannot predict future market behavior with certainty. Continuously monitoring and adjusting the portfolio based on changing market conditions can help optimize returns.

Asset classes Info

  • US Equity
    65%
  • Stocks
    30%

The portfolio's asset allocation heavily favors equities, which account for over 95% of the total composition. This aligns with a moderately aggressive investment strategy, aiming for higher returns through equity market exposure. While this can lead to significant gains, it also exposes the portfolio to equity market volatility. Consider incorporating more fixed-income assets to balance risk and provide stability, especially during market downturns. This could enhance the portfolio's resilience and risk-adjusted returns.

Sectors Info

  • Technology
    27%
  • Financials
    19%
  • Industrials
    9%
  • Consumer Discretionary
    9%
  • Telecommunications
    7%
  • Energy
    7%
  • Health Care
    7%
  • Basic Materials
    5%
  • Consumer Staples
    5%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation shows a significant tilt towards Technology (26.69%) and Financial Services (18.74%). This concentration can lead to higher volatility, especially if these sectors face downturns. While such allocation can drive growth in booming periods, diversification across more sectors can mitigate sector-specific risks. Balancing sector exposure can also ensure the portfolio benefits from a broader range of economic cycles and trends, enhancing long-term stability and growth potential.

Regions Info

  • North America
    93%
  • Europe Developed
    3%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

The geographic allocation is heavily skewed towards North America, comprising 92.81% of the portfolio. This concentration may limit exposure to growth opportunities in other regions, such as emerging markets. While North American markets are stable and reliable, diversifying into other geographic areas can enhance returns and reduce regional risk. Consider increasing exposure to Europe, Asia, and other emerging markets to capture global growth and further diversify the portfolio.

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 current allocation could potentially be optimized using the Efficient Frontier, a concept that helps identify the best possible risk-return balance. By adjusting the weights of existing assets, the portfolio might achieve a more favorable risk-return ratio. However, this optimization focuses solely on current holdings and does not necessarily imply diversification across new assets. Regularly reassessing the portfolio's efficiency can ensure it remains aligned with investment goals and risk tolerance.

Dividends Info

  • Hamilton Enhanced U.S. Covered Call ETF 5.80%
  • Vanguard FTSE Canada All Cap 1.30%
  • Vanguard S&P 500 Index ETF 0.50%
  • iShares Core MSCI All Country World ex Canada Index ETF 0.70%
  • Weighted yield (per year) 1.26%

The portfolio's dividend yield is relatively low, at 1.26%, with the highest contribution from the Hamilton Enhanced U.S. Covered Call ETF at 5.8%. While dividends can provide a steady income stream, the portfolio's focus on growth-oriented ETFs suggests an emphasis on capital appreciation. Investors seeking income might consider reallocating to higher-yielding assets. However, if growth is the primary goal, maintaining the current allocation may be appropriate, as it aligns with the strategy of reinvesting gains for future growth.

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