A balanced Canadian portfolio with strong North American focus and moderate diversification

Report created on Jan 12, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is predominantly composed of ETFs, with a significant portion allocated to the iShares Core Equity Portfolio at 65.79%. The iShares Core S&P 500 (CAD Hedged) and iShares Core Growth ETF Portfolio make up 21.05% and 13.16% respectively. Compared to a typical balanced portfolio, there is a heavy emphasis on equities, with limited exposure to bonds and cash. This composition suggests a focus on growth, but with potential for higher volatility. To achieve a more traditional balance, consider increasing bond allocation, which could stabilize returns during market downturns.

Growth Info

The historical performance of this portfolio shows a strong Compound Annual Growth Rate (CAGR) of 13.28%, indicating robust growth over the past period. However, it also experienced a maximum drawdown of -30.58%, highlighting vulnerability during market downturns. Compared to common benchmarks, this performance is impressive, but the drawdown risk suggests the need for risk management strategies. Diversifying further or adding defensive assets could mitigate the impact of future market corrections, maintaining growth while reducing volatility.

Projection Info

Monte Carlo simulation, a method using historical data to predict future outcomes, shows a promising outlook for this portfolio. With 1,000 simulations, the 50th percentile projects a 427.86% increase, while the 5th percentile predicts a modest 97.12% rise. Notably, 999 simulations resulted in positive returns, reinforcing the portfolio's growth potential. However, it's important to remember that these projections are based on past data and cannot guarantee future performance. Regularly reviewing and adjusting the portfolio in response to market changes is crucial to optimize future outcomes.

Asset classes Info

  • US Equity
    57%
  • Stocks
    19%
  • Bonds
    2%
  • Cash
    1%

The portfolio is heavily weighted towards US equities at 57.2%, with smaller allocations to general equities and bonds. This concentration in equities suggests a growth-oriented strategy, but it also increases exposure to market volatility. Compared to benchmark norms, the bond allocation is notably low, which could limit the portfolio's ability to cushion against downturns. To enhance diversification and risk management, consider increasing the bond allocation or adding alternative investments, which could provide more stability and reduce volatility.

Sectors Info

  • Technology
    24%
  • Financials
    19%
  • Industrials
    11%
  • Consumer Discretionary
    10%
  • Health Care
    8%
  • Telecommunications
    7%
  • Energy
    6%
  • Consumer Staples
    5%
  • Basic Materials
    5%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation reveals a significant concentration in Technology at 24%, followed by Financial Services at 18.66%. This concentration aligns with common benchmarks but exposes the portfolio to sector-specific risks, particularly if these sectors face challenges. For example, technology-heavy portfolios may suffer during periods of rising interest rates. To mitigate such risks, consider diversifying into underrepresented sectors like Utilities or Consumer Defensive, which typically offer more stability and can act as a buffer during economic downturns.

Regions Info

  • North America
    78%
  • Europe Developed
    11%
  • Japan
    4%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is predominantly focused on North America at 78.22%, with limited exposure to other regions. While this aligns with typical Canadian portfolios, it reduces international diversification benefits. This concentration could lead to increased risk if the North American market underperforms. To optimize geographic diversification, consider increasing exposure to emerging markets or other developed regions. This can help balance risks and take advantage of growth opportunities in different economic environments.

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.

This portfolio can potentially be optimized using the Efficient Frontier, a concept that seeks the best risk-return ratio for a given set of assets. By adjusting the allocation among existing assets, the portfolio could achieve a more efficient balance. This doesn't necessarily mean adding new assets but rather reallocating within the current holdings to maximize returns for a given level of risk. Regularly revisiting and rebalancing the portfolio can help maintain this optimal balance, ensuring the best possible performance.

Dividends Info

  • iShares Core Equity Portfolio 0.90%
  • iShares Core Growth ETF Portfolio 1.00%
  • iShares Core S&P 500 (CAD Hedged) 0.50%
  • Weighted yield (per year) 0.83%

With a total dividend yield of 0.83%, the portfolio's income generation is relatively modest. The iShares Core Equity Portfolio and iShares Core Growth ETF Portfolio contribute yields of 0.9% and 1.0%, respectively. While dividend income can provide a steady cash flow, this portfolio's focus on growth suggests dividends are not a primary objective. For investors seeking higher income, consider adding high-dividend stocks or ETFs. However, this may involve trade-offs with growth potential, so balance income needs with growth goals.

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