Moderately diversified Canadian portfolio with balanced risk and focus on equities and gold

Report created on Dec 14, 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 consists of four ETFs: iShares Core Equity Portfolio (65%), Vanguard S&P 500 Index ETF (15%), iShares Gold Bullion (10%), and Vanguard Canadian Aggregate Bond (10%). This composition indicates a strong focus on equities, with a substantial allocation to gold and bonds for diversification. Equities often provide growth potential, while gold and bonds can serve as stabilizing factors in volatile markets. To better align with a balanced risk profile, consider adjusting the weightings to increase exposure to fixed income or other low-risk assets, which can help mitigate potential downturns in the equity markets.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 12.77%, with a maximum drawdown of -24.65%. This indicates a strong performance with significant growth potential, though it has experienced notable declines during market downturns. Understanding past performance is crucial, but it doesn't guarantee future results. To maintain or improve performance, consider regularly reviewing and rebalancing the portfolio to ensure alignment with market conditions and personal risk tolerance.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns. With 1,000 simulations, the portfolio's 5th percentile return is 62.26%, while the 67th percentile is 410.67%. These projections indicate a high probability of positive returns, with 989 simulations showing gains. While such simulations provide valuable insights, they rely on historical data and assumptions, which may not hold true in the future. Regularly reassess your investment strategy to adapt to changing market conditions.

Asset classes Info

  • US Equity
    45%
  • Stocks
    16%
  • Other
    10%
  • Bonds
    10%

The portfolio's asset allocation includes US Equity (45.28%), Equity (16.36%), Other (10.09%), Bond (9.99%), and Cash (0.43%). This distribution highlights a significant emphasis on equities, offering growth potential but also increased volatility. The inclusion of bonds and gold aims to balance risk, providing stability during market fluctuations. To enhance diversification, consider incorporating additional asset classes, such as real estate or international equities, which can reduce reliance on any single market segment.

Sectors Info

  • Technology
    18%
  • Financials
    15%
  • Industrials
    9%
  • Consumer Discretionary
    8%
  • Health Care
    7%
  • Telecommunications
    5%
  • Energy
    5%
  • Consumer Staples
    4%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a concentration in Technology (18.33%) and Financial Services (15.19%), with smaller exposures to Industrials, Consumer Cyclicals, and Healthcare. This sectoral distribution reflects a focus on growth-oriented industries, which can drive portfolio performance but also increase sensitivity to sector-specific risks. To achieve a more balanced sectoral exposure, consider diversifying across additional sectors, such as Utilities or Real Estate, which may offer defensive characteristics during economic downturns.

Regions Info

  • North America
    62%
  • Europe Developed
    9%
  • Japan
    4%
  • Asia Emerging
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America (62.01%), with smaller allocations to Europe Developed, Japan, and other regions. This concentration in North America can benefit from the region's economic strength but also exposes the portfolio to regional risks. To enhance geographic diversification, consider increasing exposure to emerging markets or other underrepresented regions, which can offer growth opportunities and reduce dependence on North American markets.

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.

Utilizing the Efficient Frontier, the portfolio can potentially be optimized by adjusting the current asset allocation to achieve the best possible risk-return ratio. Although the portfolio is already moderately diversified, slight rebalancing might enhance its efficiency. Focus on maintaining a balance between equities, bonds, and alternative investments like gold to maximize returns while controlling risk. Periodically reassess the allocation to ensure it remains aligned with your risk tolerance and investment goals.

Dividends Info

  • Vanguard Canadian Aggregate Bond 1.80%
  • Vanguard S&P 500 Index ETF 0.70%
  • iShares Core Equity Portfolio 1.50%
  • Weighted yield (per year) 1.26%

The portfolio's overall dividend yield stands at 1.26%, with contributions from the Vanguard Canadian Aggregate Bond (1.8%), iShares Core Equity Portfolio (1.5%), and Vanguard S&P 500 Index ETF (0.7%). While dividends provide a steady income stream, the current yield is relatively modest, reflecting the portfolio's growth focus. To increase income, consider reallocating towards higher-yielding assets or dividend-focused ETFs, which can enhance cash flow without compromising growth potential.

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