A balanced portfolio with a tech focus and moderate exposure to cryptocurrencies

Report created on Feb 1, 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 primarily composed of the iShares Core Equity Portfolio, which constitutes 70% of the allocation, followed by the Horizons NASDAQ-100® Index ETF at 20%, and the Fidelity Advantage Bitcoin ETF™ at 10%. This composition leans heavily towards equities, with a significant portion dedicated to tech-heavy ETFs. While this setup aligns with a balanced risk profile, it may lack diversification across different asset types. To enhance diversification, consider adding fixed income or alternative investments to mitigate potential equity market volatility.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 14.57%, outperforming many benchmarks. However, it also experienced a maximum drawdown of -25.32%, indicating vulnerability during market downturns. While past performance suggests strong growth potential, it is crucial to remember that historical results do not guarantee future outcomes. Regularly reviewing the portfolio's risk-return balance can help manage potential drawdowns while maintaining growth.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, indicates a wide range of potential returns. With an annualized return of 23.58% across simulations, the portfolio shows promise. However, the 5th percentile projects only a 2.3% return, highlighting the inherent uncertainty. Simulations suggest a 95% chance of positive returns, but reliance on historical data means projections may not capture all future risks. Regularly update assumptions and consider stress-testing the portfolio against different scenarios for a more robust outlook.

Asset classes Info

  • US Equity
    51%
  • Stocks
    17%
  • Other
    10%

The portfolio's asset class allocation is concentrated in US Equity at 51%, with Equity at 17% and Other at 10%. This heavy equity focus can drive growth but may also increase volatility. Compared to benchmarks, the allocation lacks significant exposure to fixed income or alternative assets, which could provide stability. To enhance diversification and reduce risk, consider introducing bonds or commodities, which typically behave differently from equities during market fluctuations.

Sectors Info

  • Technology
    25%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    7%
  • Health Care
    7%
  • Energy
    5%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

Technology dominates the sector allocation with a 25% share, followed by Financial Services at 14% and Consumer Cyclicals at 10%. This tech-heavy focus aligns with growth trends but may also increase sensitivity to sector-specific risks like regulatory changes or interest rate hikes. Balancing this concentration by increasing exposure to less volatile sectors, such as Utilities or Consumer Defensive, could enhance stability and provide a buffer against tech sector volatility.

Regions Info

  • North America
    68%
  • Europe Developed
    12%
  • Japan
    4%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America, comprising 68% of the allocation. This concentration may limit exposure to growth opportunities in emerging markets or other regions. While North American markets have historically performed well, diversifying geographically can reduce regional risk and capture growth in other parts of the world. Consider increasing exposure to underrepresented regions like Asia or Latin America for a more balanced global footprint.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    29%
  • Mid-cap
    15%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio's market capitalization distribution is skewed towards Mega and Big caps, which together make up 70% of the allocation. This focus on larger companies can provide stability but may limit exposure to the growth potential of smaller firms. Including more Mid, Small, or Micro-cap stocks could enhance diversification and tap into higher growth opportunities, albeit with increased volatility. Balancing market caps can improve the portfolio's risk-return profile.

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 using the Efficient Frontier, which seeks the best risk-return ratio for the given assets. By adjusting the current allocations, the portfolio could achieve a more efficient balance. This optimization does not necessarily mean adding new assets but rather reallocating existing ones to maximize returns for the level of risk taken. Regularly revisiting this optimization can help maintain alignment with the investor's risk tolerance and financial goals.

Dividends Info

  • iShares Core Equity Portfolio 1.90%
  • Weighted yield (per year) 1.33%

With a dividend yield of 1.33%, the portfolio provides some income, primarily from the iShares Core Equity Portfolio. While not the primary focus, dividends can contribute to total returns, offering a buffer during market downturns. For investors seeking more income, increasing exposure to high-dividend stocks or dividend-focused ETFs might be beneficial. However, it's essential to balance this with growth objectives to maintain the portfolio's overall strategy.

Ongoing product costs Info

  • Horizons NASDAQ-100® Index ETF 0.25%
  • Weighted costs total (per year) 0.05%

The portfolio's costs are relatively low, with the Horizons NASDAQ-100® Index ETF having a Total Expense Ratio (TER) of 0.25% and the overall portfolio at 0.05%. These low costs support better long-term performance by minimizing the drag on returns. Maintaining cost efficiency is crucial, so regularly reviewing and comparing TERs with similar products can ensure the portfolio remains competitive. Consider potential savings from switching to lower-cost alternatives if available.

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