A balanced portfolio with strong North American focus and limited emerging market exposure

Report created on Nov 8, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards North American equities, with a significant 37.79% in the Vanguard S&P 500 Index ETF. This substantial allocation indicates a strong focus on large-cap U.S. stocks. The BMO NASDAQ 100 Equity ETF adds a tech-heavy component, contributing 19.51%. These allocations suggest a preference for growth-oriented investments. The inclusion of Canadian high dividend yield and developed markets ex-North America ETFs provides some diversification. However, the limited exposure to emerging markets at 5.97% suggests a conservative approach to global diversification. Balancing growth with stability, this portfolio offers a blend of income and capital appreciation potential. Consider increasing exposure to underrepresented regions or sectors for enhanced diversification.

Growth Info

Historically, the portfolio has performed well with a compound annual growth rate (CAGR) of 14.13%. This impressive growth rate suggests strong past performance, driven mainly by the U.S. equities' bull market. However, it's important to remember that past performance doesn't guarantee future results. The maximum drawdown of -29.48% indicates significant volatility, which is a key consideration for risk management. Understanding that the majority of returns were concentrated in just 35 days highlights the potential for rapid changes in value. Ensure that your risk tolerance aligns with this level of volatility and be prepared for fluctuations in portfolio value.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes. With 1,000 simulations, the portfolio's end value varied significantly, with the 5th percentile showing a 68.42% increase and the 67th percentile projecting a 543.15% gain. These simulations use historical data to forecast future performance, but they cannot predict exact outcomes. They highlight the uncertainty and variability of potential returns. With an annualized return from simulations at 13.02%, the portfolio shows promise, but it's crucial to remain cautious. Regularly review your investment strategy to ensure it aligns with your goals and risk tolerance.

Asset classes Info

  • US Equity
    64%
  • Stocks
    20%
  • Other
    1%

The portfolio is predominantly composed of equity assets, with U.S. equities making up 63.99% and general equities at 19.59%. This heavy reliance on equities suggests a growth-oriented strategy, which can be beneficial in a rising market but may expose the portfolio to higher volatility. The minimal allocation to other asset classes indicates limited diversification outside of equities. To enhance stability, consider incorporating fixed income or alternative investments, which can provide a buffer during market downturns. Balancing equity exposure with other asset classes can help manage risk while still pursuing growth.

Sectors Info

  • Technology
    28%
  • Financials
    18%
  • Consumer Discretionary
    9%
  • Telecommunications
    9%
  • Health Care
    8%
  • Industrials
    8%
  • Energy
    7%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is notably skewed towards technology, which comprises 27.70% of the portfolio. This concentration reflects a strong emphasis on growth sectors, potentially capitalizing on the tech industry's rapid expansion. Financial services and consumer cyclicals follow, indicating a diversified approach across economically sensitive sectors. However, sectors like real estate and utilities have minimal representation, which could limit defensive capabilities during economic downturns. Consider reviewing sector allocations to ensure alignment with market conditions and personal risk preferences. A more balanced sector distribution could enhance resilience against sector-specific risks.

Regions Info

  • North America
    84%
  • Europe Developed
    6%
  • Asia Emerging
    4%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio exhibits a strong geographic concentration in North America, with 83.64% exposure. This focus can provide stability due to the region's established markets but may limit growth opportunities found in less developed regions. The minimal allocation to emerging markets and other international regions suggests a conservative approach to geographic diversification. While North American markets offer growth potential, expanding exposure to underrepresented regions could capture opportunities in emerging economies and reduce regional risk. Consider increasing allocations to diverse geographies to benefit from global growth trends.

Redundant positions Info

  • Vanguard US Total Market
    Vanguard S&P 500 Index ETF
    High correlation

The portfolio contains highly correlated assets, notably the Vanguard US Total Market and Vanguard S&P 500 Index ETFs. High correlation indicates that these assets tend to move in tandem, which can amplify risk during market downturns. While correlation can enhance returns in a rising market, it may reduce diversification benefits. Assess the portfolio for overlapping assets that do not add significant diversification value. Consider replacing or reducing these positions with assets that have lower correlation to enhance risk management and improve the portfolio's overall resilience.

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 could potentially be optimized using the Efficient Frontier concept, which seeks the best possible risk-return ratio. This involves adjusting the current asset allocation to achieve a more efficient portfolio. While the portfolio is already broadly diversified, removing or reducing highly correlated assets could enhance efficiency. Focus on achieving a balance between risk and return by reallocating within existing asset classes. Remember, optimization is based on current holdings and does not necessarily imply adding new assets. Regularly revisiting your portfolio's structure can ensure it remains aligned with your evolving investment goals.

Dividends Info

  • Vanguard FTSE Canada All Cap 1.90%
  • Vanguard FTSE Canadian High Dividend Yield 2.50%
  • Vanguard FTSE Emerging Markets 1.70%
  • Vanguard S&P 500 Index ETF 0.70%
  • Vanguard FTSE Developed All Cap ex North Amer Idx ETF 2.00%
  • Vanguard US Total Market 0.70%
  • BMO NASDAQ 100 Equity (CAD Hedged) 0.30%
  • Weighted yield (per year) 1.11%

The portfolio's overall dividend yield is 1.11%, with the highest yield from the Vanguard FTSE Canadian High Dividend Yield ETF at 2.5%. This yield provides a modest income stream, supplementing potential capital gains. Dividend-paying assets can offer stability and income, especially in volatile markets. However, the low overall yield suggests a primary focus on growth rather than income generation. If regular income is a priority, consider increasing allocations to higher-yielding assets. Balancing growth and income can provide a more comprehensive investment strategy that meets both short and long-term financial goals.

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