Diversification - getting the right mix

Creating a diversified portfolio with the right mix of assets is the key to maximising your returns while keeping risk under control

The major asset classes at a glance

Defensive assets

Cash

Highly secure, with lower-return potential.

Fixed interest

Predictable, regular income, with limited potential for capital growth.

Growth assets

Property and infrastructure

Some income, with moderate capital growth potential.

Australian and international shares

High long-term growth potential, but with more volatility.

What is asset allocation?

Asset allocation is simply the process of dividing up your capital among different kinds of assets, from cash to shares. It can have a huge influence on both investment performance and risk.

In general, the higher an asset's growth potential over the long term, the greater the short-term risk. That's why it can make sense to combine high-growth assets with more secure investments, reducing your overall risk.

By creating a mix of growth and defensive assets suited to your investment risk profile, you can achieve a better balance between risk and return. That's where InvestSMART Diversified Portfolios can help.

Why it works

Numerous studies have shown that asset allocation is a key driver of investment returns, playing a much larger role than individual asset selection.* In other words, the proportion of capital invested in shares or property can be much more important than the individual shares or property investments it holds.

Diversification across asset classes can also help you take advantage of the higher return potential of growth assets while still keeping overall risk low. Done well, diversification can help you smooth out returns and reduce risk without sacrificing growth.

Get the right mix with an InvestSMART Diversified Portfolio

InvestSMART Diversified Portfolios have been designed by strategic asset allocation specialists to create the right balance between risk and return for your preferred risk profile. By choosing the strategy that matches your goals, you can create a diversified global portfolio through a single transaction, with the added advantage of automated rebalancing to maintain your asset mix over time.

How we allocate your investment

InvestSMART Diversified Portfolios Asset Allocation Ranges (%)

	Income		Conservative		Balanced		Medium Growth		High Growth		International Equities
	Min	Max	Min	Max	Min	Max	Min	Max	Min	Max	Min	Max
Australian Equities	5	30	10	40	15	45	20	55	20	60	-	-
International Equities	0	25	5	30	5	30	5	40	10	50	90	100
Listed Property and Infrastructure	0	15	0	20	0	25	0	30	0	30	-	-
Fixed Interest	25	60	15	50	10	35	0	25	0	10	-	-
Alternatives	0	20	0	25	0	30	0	30	0	30	-	-
Cash	10	50	5	40	0	30	0	25	0	20	0	10

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