A balanced Canadian portfolio with strong US equity focus and moderate diversification

Report created on Dec 26, 2024

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 heavily weighted towards two ETFs: Vanguard S&P 500 Index ETF at 76.16% and iShares Core Equity Portfolio at 23.84%. This composition leans significantly towards US equities, which is typical for investors seeking growth through large-cap stocks. However, this allocation may not be as diversified as a global index fund. While the portfolio is classified as balanced, it could benefit from incorporating a wider range of asset types to enhance diversification and reduce potential risk.

Growth Info

Historically, the portfolio has delivered a robust compound annual growth rate (CAGR) of 17.33%, outperforming many standard benchmarks. This impressive performance is tempered by a maximum drawdown of -27.93%, indicating significant volatility during downturns. The portfolio's returns are concentrated, with 90% generated in just 22 days, highlighting potential sensitivity to market timing. While past performance is a useful reference, it does not guarantee future results, so maintaining a diversified strategy is crucial.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, shows optimistic projections for this portfolio. With 1,000 simulations, the 50th percentile suggests a potential return of 715.04%. However, it's important to note that these are just estimates and actual future performance can vary. The positive outcomes in all simulations reflect the portfolio's historical strength, but investors should remain cautious and consider potential market changes that could impact future returns.

Asset classes Info

  • US Equity
    87%
  • Stocks
    6%

The portfolio is predominantly invested in US equity, making up 87.01% of the allocation. This heavy concentration in a single asset class can offer high growth potential but also increases vulnerability to US market fluctuations. A more balanced allocation across different asset classes, such as bonds or international equities, could reduce risk and provide more stable returns. Diversifying asset classes can help mitigate the impact of market volatility and improve long-term performance.

Sectors Info

  • Technology
    30%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is concentrated, with technology at 29.97%, followed by financial services at 15.03%. While these sectors have driven recent market gains, they can also be volatile, particularly during economic shifts like interest rate changes. A more balanced sector distribution could provide stability and reduce risk. Expanding exposure to underrepresented sectors like utilities or healthcare might offer defensive qualities and smoother performance across various market conditions.

Regions Info

  • North America
    93%
  • Europe Developed
    4%
  • Japan
    1%
  • Asien Schwellenländer
    1%
  • Asien
    1%

The portfolio's geographic exposure is heavily tilted towards North America, comprising 93.01%. While this may align with a focus on familiar markets, it limits exposure to growth opportunities in other regions. Underweighting areas like emerging markets or Europe could mean missing out on potential diversification benefits. A more geographically balanced portfolio might better withstand regional economic downturns and capture global growth.

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's current asset allocation can be optimized using the Efficient Frontier, which identifies the best possible risk-return balance. By adjusting the weightings of existing assets, investors can potentially achieve higher returns for the same level of risk. This optimization does not necessarily mean adding new assets but rather rebalancing the current mix. It's about finding the sweet spot where the portfolio delivers optimal performance relative to its risk profile.

Dividends Info

  • Vanguard S&P 500 Index ETF 0.70%
  • iShares Core Equity Portfolio 1.50%
  • Weighted yield (per year) 0.89%

The portfolio's total dividend yield is modest at 0.89%, with Vanguard S&P 500 Index ETF yielding 0.7% and iShares Core Equity Portfolio at 1.5%. While dividends contribute to total returns, this portfolio prioritizes capital appreciation over income generation. Investors seeking higher yields might consider adding dividend-focused funds or stocks. However, this should be balanced against growth objectives to maintain the portfolio's overall strategy.

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