A balanced Canadian portfolio with strong North American focus and tech sector concentration

Report created on Jan 11, 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 primarily consists of equity ETFs, with a significant 63% weighting in the iShares Core Equity Portfolio, complemented by 19% in TD Global Technology Leaders Index ETF and 18% in Vanguard S&P 500 Index ETF. The composition leans heavily towards equities, which is typical for balanced portfolios, but it could benefit from a more diversified asset mix. Diversification across asset classes can help mitigate risks associated with market volatility. Consider incorporating fixed income or alternative investments to enhance stability and reduce overall risk.

Growth Info

Historically, the portfolio has performed well, achieving a compound annual growth rate (CAGR) of 16.05%. However, the maximum drawdown of -27.72% highlights potential volatility. This performance compares favorably to many benchmarks, indicating strong growth potential. While past performance is not a guarantee of future results, it suggests the portfolio's ability to capture market upswings. To maintain this growth trajectory, regularly review and adjust the portfolio to align with evolving market conditions and personal financial goals.

Projection Info

The Monte Carlo simulation, a tool that uses historical data to project future outcomes, indicates a wide range of potential returns, with a median scenario of 966.75% growth. While 999 out of 1,000 simulations showed positive returns, it's essential to remember that these projections are based on past data and assumptions. The optimistic forward projection suggests a strong potential for future growth, but it's crucial to remain cautious and diversify to protect against unforeseen market downturns.

Asset classes Info

  • US Equity
    65%
  • Stocks
    16%
  • Cash
    1%

The portfolio's asset allocation is heavily skewed towards US equity, making up nearly 65% of the total. This concentration can lead to higher volatility, especially during US market downturns. While equities offer growth potential, diversifying into other asset classes such as bonds or real estate can provide stability and income. A well-diversified portfolio across various asset classes helps manage risk and smooth out returns over time, aligning with a balanced investment approach.

Sectors Info

  • Technology
    32%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Telecommunications
    8%
  • Health Care
    7%
  • Energy
    5%
  • Consumer Staples
    4%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

With a notable 31.58% allocation in the technology sector, this portfolio is considerably tech-heavy. While technology has been a strong performer, it can also be volatile, particularly during periods of regulatory scrutiny or interest rate changes. Balancing sector exposure by increasing allocations to underrepresented sectors like healthcare or consumer staples could reduce risk and enhance diversification. A more balanced sector allocation can help mitigate sector-specific risks and improve long-term performance.

Regions Info

  • North America
    81%
  • Europe Developed
    10%
  • Japan
    4%
  • Asia Emerging
    2%
  • Asia Developed
    1%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, accounting for over 80% of its assets. While this focus has been beneficial, given North America's economic strength, it limits exposure to growth opportunities in other regions. Increasing allocations to emerging markets or underrepresented areas like Asia or Europe could enhance diversification and capture global growth potential. A more geographically balanced portfolio can help manage regional risks and capitalize on diverse economic cycles.

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 aims to achieve the best possible risk-return ratio given the current assets. This involves adjusting the allocation between existing holdings to maximize returns for a given level of risk. While this optimization does not guarantee diversification, it helps ensure that the portfolio is aligned with risk tolerance and investment objectives. Regularly reassessing and rebalancing the portfolio can maintain optimal performance.

Dividends Info

  • Vanguard S&P 500 Index ETF 0.50%
  • iShares Core Equity Portfolio 0.90%
  • Weighted yield (per year) 0.66%

The portfolio's overall dividend yield is modest at 0.66%, with the iShares Core Equity Portfolio yielding 0.9% and the Vanguard S&P 500 Index ETF at 0.5%. While dividends contribute to total returns, the focus here is more on growth than income. For investors seeking higher income, incorporating dividend-focused investments could enhance cash flow. Balancing growth and income through a mix of dividend-paying and growth-oriented assets can support both capital appreciation and income generation.

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