Balanced Canadian Portfolio with Moderate Diversification and Strong Historical Performance

Report created on Dec 2, 2024

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

The portfolio is composed of three equally weighted ETFs, each contributing approximately one-third to the overall allocation. This structure offers a balanced approach with exposure to a broad market index, a multi-sector covered call strategy, and a core equity portfolio. Having a diversified mix of ETFs helps in spreading risk and capturing growth from different market segments. However, the allocation could be more diversified across additional asset classes to further mitigate risk. Consider reviewing the portfolio periodically to ensure it aligns with long-term investment goals and adjusts for any market changes.

Growth Info

The historical performance of the portfolio shows a solid compound annual growth rate (CAGR) of 13.68%, indicating strong returns over time. The portfolio experienced a maximum drawdown of -16.89%, which reflects the potential downside risk. The returns are concentrated in a few days, with 20 days making up 90% of the returns, highlighting the importance of staying invested for the long term. This performance suggests that the portfolio has been resilient, but investors should be prepared for periods of volatility. Maintaining a disciplined approach can help in achieving long-term financial objectives.

Projection Info

Using a Monte-Carlo simulation with a hypothetical initial investment, the portfolio's future performance was projected. The simulation ran 1,000 scenarios to estimate potential outcomes, with the 50th percentile showing an end portfolio value of 507.46%. The annualized return across all simulations is 14.53%, with 999 simulations yielding positive returns. This suggests a favorable outlook, but it's crucial to remember that projections are not guarantees. Monte-Carlo simulations provide a range of possible outcomes, helping investors understand potential risks and rewards. Regularly review and adjust the portfolio to stay aligned with financial goals.

Asset classes Info

  • US Equity
    56%
  • Stocks
    32%
  • Other
    13%

The portfolio's asset class allocation is heavily weighted towards equities, with US Equity making up 55.87% and general Equity 31.63%. There's minimal exposure to bonds at 0.41%, which may not offer sufficient downside protection during market downturns. The "Other" category comprises 13.32%, adding some diversification. While the equity-heavy allocation can drive growth, it also increases volatility. To balance risk and return, consider increasing exposure to fixed-income assets or alternative investments. This can provide more stability and potentially enhance long-term performance.

Sectors Info

  • Financials
    30%
  • Technology
    23%
  • Telecommunications
    8%
  • Consumer Discretionary
    7%
  • Industrials
    7%
  • Health Care
    6%
  • Energy
    6%
  • Utilities
    5%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Real Estate
    2%

Sector allocation in the portfolio is quite concentrated, with Financial Services and Technology sectors dominating at 29.86% and 22.62%, respectively. Other sectors like Communication Services, Consumer Cyclicals, and Industrials also have notable allocations. While having exposure to multiple sectors can reduce sector-specific risks, the high concentration in a few sectors may lead to increased volatility. To achieve better sector diversification, consider redistributing investments across a broader range of sectors. This can help mitigate risks associated with sector-specific downturns and capitalize on growth opportunities in other areas.

Regions Info

  • North America
    91%
  • Europe Developed
    5%
  • Japan
    2%
  • Asia Emerging
    1%
  • Asia Developed
    1%
  • Australasia
    1%

The geographic composition of the portfolio is predominantly focused on North America, accounting for 90.63% of the allocation. This heavy weighting towards a single region could expose the portfolio to regional risks. There is limited exposure to other regions, such as Europe Developed, Japan, and Asia Emerging. While a North American focus can benefit from local market familiarity, adding more international diversification could reduce risk and capture global growth opportunities. Consider gradually increasing exposure to other regions 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 optimization chart suggests that there is room for improvement in terms of risk and return balance. Moving along the efficient frontier can help achieve a more optimal portfolio. For those seeking higher returns, increasing equity exposure may be beneficial, albeit with increased risk. Conversely, adding more fixed-income assets can lead to a more conservative portfolio, reducing volatility. Before making changes, it's essential to assess current financial goals and risk tolerance. Consider consulting with a financial advisor to explore options and ensure the portfolio remains aligned with long-term objectives.

Dividends Info

  • Hamilton Enhanced Multi-Sector Covered Call ETF 10.70%
  • Vanguard S&P 500 Index ETF 1.00%
  • iShares Core Equity Portfolio 1.80%
  • Weighted yield (per year) 4.50%

The portfolio has a notable dividend yield of 4.5%, driven mainly by the Hamilton Enhanced Multi-Sector Covered Call ETF, which offers a high yield of 10.7%. The Vanguard S&P 500 Index ETF and iShares Core Equity Portfolio contribute smaller yields of 1.0% and 1.8%, respectively. A healthy dividend yield can provide a steady income stream, enhancing total returns. However, relying too heavily on high-yield assets may increase risk. It's essential to balance income generation with growth potential. Regularly review the dividend strategy to ensure it aligns with income needs and risk tolerance.

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