A balanced Canadian portfolio with high North American exposure and moderate risk tolerance

Report created on Dec 10, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is primarily composed of three ETFs, with the Vanguard All-Equity ETF Portfolio making up 55%, the Vanguard S&P 500 Index ETF at 29%, and the iShares NASDAQ 100 (CAD Hedged) at 16%. This allocation suggests a strong focus on equity investments, which can offer growth potential but also come with higher volatility. The portfolio's balanced risk classification indicates a mix of growth and stability, appealing to investors who are comfortable with moderate risk. To ensure alignment with personal goals, consider if the equity-heavy allocation matches your risk tolerance and investment objectives.

Growth Info

Historically, the portfolio has shown a commendable compound annual growth rate (CAGR) of 15.84%, with a maximum drawdown of -29.19%. This performance suggests that while the portfolio has delivered strong returns, it has also experienced significant fluctuations. Understanding past performance helps gauge potential future risks and rewards, but it's crucial to remember that past results do not guarantee future outcomes. To mitigate potential drawdowns, consider diversifying further or incorporating more defensive assets if market volatility becomes a concern.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was projected with 1,000 simulations. The median outcome suggests a potential return of 817.7%, while the 5th percentile indicates a lower bound of 160.19%. These projections, based on historical data, provide a range of possible outcomes, emphasizing the inherent uncertainty in predicting future returns. While useful, these simulations are not foolproof and should be supplemented with ongoing portfolio reviews. Regularly reassess your investment strategy to ensure it remains aligned with your risk tolerance and financial goals.

Asset classes Info

  • US Equity
    69%
  • Stocks
    17%

The portfolio is heavily weighted towards US equity, making up 69.47%, with the rest in broader equity and minimal allocations in cash and other asset classes. This concentration in equities can drive growth but also increases exposure to market volatility. Diversification across multiple asset classes can help reduce risk by spreading investments. Consider exploring fixed income or alternative investments to balance the portfolio and provide a buffer against market downturns, especially if seeking a more stable return profile.

Sectors Info

  • Technology
    29%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Health Care
    8%
  • Consumer Staples
    5%
  • Energy
    5%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is diverse, with a significant focus on technology (28.71%), followed by financial services (15.35%) and consumer cyclicals (10.03%). This sectoral distribution reflects a growth-oriented approach, with technology stocks often leading in performance but also being more volatile. Balancing sector exposure can mitigate risks associated with sector-specific downturns. Evaluate if the current sector mix aligns with your risk tolerance and consider rebalancing if certain sectors become overly concentrated relative to your investment strategy.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%

Geographically, the portfolio is predominantly exposed to North America (86.26%), with limited exposure to other regions. This heavy North American focus offers familiarity and stability but may miss opportunities in emerging markets, which can provide diversification and growth potential. Diversifying geographically can reduce region-specific risks and capture global growth trends. Consider increasing exposure to international markets to enhance diversification and potentially improve risk-adjusted returns.

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 allocation could be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. By adjusting the weightings between existing assets, you can potentially enhance returns for a given level of risk. It's worth noting that optimization focuses on improving efficiency rather than diversification. Regularly review and rebalance the portfolio to maintain its alignment with the Efficient Frontier, ensuring that you are maximizing returns relative to the risk you are willing to take.

Dividends Info

  • Vanguard All-Equity ETF Portfolio 1.50%
  • Vanguard S&P 500 Index ETF 0.70%
  • iShares NASDAQ 100 (CAD Hedged) 0.30%
  • Weighted yield (per year) 1.08%

The portfolio's total dividend yield is relatively low at 1.08%, with the Vanguard All-Equity ETF Portfolio contributing the highest at 1.5%. Dividends can provide a steady income stream, especially in volatile markets, but the current yield suggests a focus on capital appreciation rather than income. If income generation is a priority, consider reallocating to higher-yielding investments or dividend-focused funds. Assess how dividend income fits into your overall financial plan and adjust accordingly to meet your income needs.

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