A highly diversified balanced portfolio with strong North American and technology exposure
Report created on Dec 14, 2024Risk profile
4/7
Diversification profile
5/5
Positions
-
XE iShares Core Equity Portfolio
XEQT - CA46436D1087 100.00%
This portfolio is entirely composed of the iShares Core Equity ETF, which is diversified across multiple sectors and regions. The ETF structure allows for broad market exposure, making it a convenient choice for investors seeking diversification without holding individual stocks. The portfolio is classified as balanced, indicating a moderate approach to risk and return. For investors, this means a potential for steady growth while managing volatility. However, relying solely on a single ETF might limit customization options. Consider whether this level of diversification aligns with your personal investment goals and risk tolerance.
Growth
Historically, this portfolio has delivered a compound annual growth rate (CAGR) of 13.68%, suggesting strong past performance. The maximum drawdown of -29.76% indicates the potential risk during market downturns. Understanding these figures helps investors gauge the risk-return profile of their investments. While past performance is not a guarantee of future results, it provides insight into how the portfolio might react under different market conditions. Regularly reviewing performance metrics can help ensure alignment with long-term financial objectives.
Projection
Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with an annualized return of 14.59%. Monte Carlo analysis uses historical data to simulate various market scenarios, providing a probabilistic view of future returns. This method highlights the uncertainty inherent in investing and underscores the importance of diversification. While the median outcome is promising, it's crucial to prepare for less favorable scenarios. Stay informed about market trends and consider adjusting your strategy if significant deviations occur.
Asset classes
- US Equity 47%
- Stocks 25%
- Cash 1%
The portfolio's asset class allocation is heavily weighted towards US equities at 46.74%, with a smaller allocation to general equities and minimal cash holdings. This concentration in US equities provides exposure to the world's largest economy and a diverse range of industries. However, it also subjects the portfolio to risks specific to the US market. To enhance diversification, consider adding assets from other regions or asset classes, such as fixed income or commodities, depending on your risk profile and investment goals.
Sectors
- Technology 21%
- Financials 20%
- Industrials 12%
- Consumer Discretionary 9%
- Health Care 8%
- Energy 7%
- Telecommunications 6%
- Basic Materials 6%
- Consumer Staples 5%
- Utilities 3%
- Real Estate 3%
Sector allocation is led by technology and financial services, each representing over 20% of the portfolio. These sectors are known for their growth potential but can also be volatile. By investing in various sectors, the portfolio aims to balance growth opportunities with risk management. However, sector concentration may increase vulnerability to sector-specific downturns. Regularly review sector performance and consider rebalancing if any sector becomes disproportionately large, ensuring alignment with your risk tolerance and investment objectives.
Regions
- North America 72%
- Europe Developed 14%
- Japan 6%
- Asia Emerging 3%
- Asia Developed 2%
- Australasia 2%
- Africa/Middle East 1%
Geographic allocation is predominantly North American at 72.46%, with significant exposure to developed European markets and Japan. This provides access to stable, mature economies but may limit growth opportunities available in emerging markets. Geographic diversification can help mitigate regional risks, such as political instability or economic downturns. Consider increasing exposure to emerging markets if your risk tolerance allows, as these regions can offer higher growth potential and further diversify your portfolio.
Dividends
- iShares Core Equity Portfolio 1.50%
- Weighted yield (per year) 1.50%
With a dividend yield of 1.5%, this portfolio offers modest income alongside capital appreciation. Dividends can provide a steady income stream and help cushion against market volatility. For income-focused investors, the yield may be lower than desired, prompting consideration of higher-yielding investments. Reinvesting dividends can enhance long-term growth through compounding. Evaluate whether the current yield meets your income needs and consider adjusting your allocation if income generation is a priority.
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