A cautious portfolio with high North American equity exposure and moderate sector diversification

Report created on Dec 6, 2024

Risk profile Info

3/7
Cautious
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 to equity, particularly in North America. The iShares Core Equity Portfolio holds the largest share at 40%, followed by two S&P 500 ETFs at 20% each. The Vanguard FTSE Canadian High Dividend Yield comprises 15%, while the Horizons High Interest Savings ETF rounds out the portfolio with 5%. This composition suggests a focus on stable, income-generating assets while maintaining some exposure to growth-oriented equities. A more balanced asset distribution could enhance risk management and long-term returns.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 11.88%, with a maximum drawdown of -16.92%. This indicates robust growth potential with moderate risk exposure. The portfolio's performance is driven by its substantial equity holdings, particularly in North America. However, historical data may not predict future returns due to changing market conditions. To maintain or improve performance, consider regularly reviewing asset allocations and market trends.

Projection Info

Using 1,000 Monte Carlo simulations, the portfolio shows a 50th percentile projection of 341.14% growth. This simulation uses historical data to estimate future outcomes, providing a range of potential returns. However, it is crucial to remember that these projections are not guarantees and are subject to market volatility. Regularly updating simulations with current data can help refine expectations and inform decision-making.

Asset classes Info

  • US Equity
    59%
  • Stocks
    25%
  • Cash
    5%

The portfolio is heavily weighted towards US equities, comprising 58.5% of the total allocation. This concentration can lead to higher volatility and risk. Diversifying into other asset classes, like bonds or international equities, could reduce risk and enhance stability. A more balanced allocation across asset classes can improve the overall risk-return profile, aligning better with cautious investment goals.

Sectors Info

  • Financials
    22%
  • Technology
    21%
  • Energy
    9%
  • Consumer Discretionary
    8%
  • Industrials
    8%
  • Health Care
    8%
  • Telecommunications
    7%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The portfolio's sector allocation is diverse, with notable exposure to financial services and technology, each over 20%. While this provides growth opportunities, it also increases vulnerability to sector-specific downturns. A more balanced sector allocation could reduce risk and enhance resilience. Regularly reviewing sector performance and adjusting allocations to align with market trends can optimize returns.

Regions Info

  • North America
    84%
  • Europe Developed
    6%
  • Japan
    2%
  • Asia Emerging
    1%
  • Asia Developed
    1%
  • Australasia
    1%

With 83.7% of assets in North America, the portfolio is heavily exposed to this region's economic conditions. While this can offer stability due to the mature markets, it limits the benefits of geographic diversification. Expanding exposure to emerging markets or other developed regions could enhance diversification and reduce risk. Regularly assessing geopolitical and economic developments can guide geographic allocation adjustments.

Redundant positions Info

  • Horizons S&P 500 Index ETF
    Vanguard S&P 500 Index ETF
    High correlation

The portfolio includes highly correlated assets, notably the Horizons and Vanguard S&P 500 Index ETFs. High correlation suggests these assets move together, offering limited diversification benefits. Reducing overlap by replacing one of the correlated ETFs with a less correlated asset could improve diversification. This adjustment can enhance portfolio efficiency and better manage risk.

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 can be optimized by adjusting allocations to achieve a better risk-return ratio. The Efficient Frontier analysis suggests that removing highly correlated assets can enhance efficiency. This optimization focuses on maximizing returns for the same level of risk. Regularly reviewing and rebalancing the portfolio based on efficient frontier analysis can help maintain optimal performance.

Dividends Info

  • Horizons High Interest Savings ETF 2.80%
  • Vanguard FTSE Canadian High Dividend Yield 2.50%
  • Vanguard S&P 500 Index ETF 0.70%
  • iShares Core Equity Portfolio 1.50%
  • Weighted yield (per year) 1.26%

The portfolio yields an average dividend of 1.26%, with contributions from the Horizons High Interest Savings ETF and Vanguard FTSE Canadian High Dividend Yield. Dividends provide a steady income stream, enhancing total returns. However, focusing solely on dividends can limit growth potential. Balancing dividend-yielding assets with growth-oriented investments can optimize income and growth.

Ongoing product costs Info

  • Horizons S&P 500 Index ETF 0.10%
  • Weighted costs total (per year) 0.02%

The portfolio's costs are relatively low, with the Horizons S&P 500 Index ETF having a total expense ratio of 0.1%. Minimizing costs is crucial as they can erode returns over time. Regularly reviewing and comparing expense ratios across similar funds can help identify cost-saving opportunities. Lowering costs without compromising on quality can significantly improve long-term returns.

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