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Which portfolio is more conservative, InvestSMART Diversified Conservative or InvestSMART Interest Income?


Hi As a general rule, of the two, which InvestSMART investment option "Interest Income Portfolio" or "Conservative" would you consider the most conservative and a reasonable place for an investor to park some cash as an alternative to the banks.Thank you and Regards - Submitted by Dianne


Hi Dianne, 

Great question! 

If we define ‘more conservative’ as ‘less volatile’, then the Interest Income portfolio is the more conservative of the two. Since inception, the conservative portfolio has been 2x as ‘volatile’ as the interest income portfolio.

This is due to the difference in asset allocation between the two. The interest income portfolio is an Australian bond portfolio, while the conservative portfolio holds Australian equities, International equities and property securities. These asset classes are generally more volatile than bonds over time. 

However, if you are seeking income, then conservative portfolio has delivered a yield of 3.6% since inception while the interest income portfolio has only delivered 2.6%. Similarly, the conservative portfolio has delivered an annualised return since inception of 4.1% while the interest income has seen 3.3%.

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Mitch Datson
Mitch Datson