Model portfolios: 3rd quarter changes
Key Points
- Allocations to International Shares remain higher than target
- Cochlear and Abacus sold from Moderate and Aggressive portfolios
- Aveo also sold from Aggressive portfolio
With the third quarter of the 2015 financial year drawing to a close, Super Advisor’s Investment Committee recently reviewed the three model portfolios.
Target asset allocations
Table 1 shows the portfolios as they stood on 30 March before any changes.
ASSET CLASS/INVESTMENT | CONSERVATIVE | MODERATE | AGGRESSIVE | |||
---|---|---|---|---|---|---|
$ | % | $ | % | $ | % | |
CASH AND DEBT SECURITIES (AUST) |
(Target 45%) | 43.9% | (Target 35%) | 33.9% | (Target 20%) | 19.7% |
ING Direct Business Optimiser | 4,532.64 | 0.7% | 10,577.85 | 1.7% | 12,983.89 | 2.0% |
UBank SMSF Usaver | 28,192.17 | 4.7% | 20,973.56 | 3.3% | 25,957.12 | 3.9% |
Income declared but not paid | 292.87 | 0.0% | 483.17 | 0.1% | 632.92 | 0.1% |
Schroder Fixed Income | 62,583.56 | 10.3% | 67,809.09 | 10.8% | 59,970.80 | 9.1% |
RaboDirect 4.4% TD (May 2016) | 20,744.99 | 3.4% | - | 0.0% | - | 0.0% |
RaboDirect 4.4% TD (Jun 2016) | - | 0.0% | 10,362.85 | 1.6% | - | 0.0% |
RaboDirect 4.5% TD (May 2017) | 20,761.92 | 3.4% | - | 0.0% | - | 0.0% |
RaboDirect 4.5% TD (Jun 2017) | - | 0.0% | 10,371.10 | 1.6% | - | 0.0% |
RaboDirect 4.1% TD (Jul 2017) | - | 0.0% | 20,581.86 | 3.3% | 10,290.93 | 1.6% |
RaboDirect 4.7% TD (May 2018) | 20,795.78 | 3.4% | - | 0.0% | - | 0.0% |
RaboDirect 4.7% TD (Jun 2018) | - | 0.0% | 15,581.38 | 2.5% | - | 0.0% |
RaboDirect 4.4% TD (Jul 2018) | 25,780.55 | 4.3% | - | 0.0% | - | 0.0% |
RaboDirect 5.0% TD (Sep 2018) | 20,509.59 | 3.4% | - | 0.0% | - | 0.0% |
RaboDirect 4.7% TD (Apr 2019) | 15,677.96 | 2.6% | 20,903.95 | 3.3% | - | 0.0% |
RaboDirect 4.4% TD (Jul 2019) | 25,816.03 | 4.3% | - | 0.0% | - | 0.0% |
RaboDirect 4.6% TD (Jul 2019) | - | 0.0% | 20,652.82 | 3.3% | 10,326.41 | 1.6% |
RaboDirect 3.9% TD (Jan 2020) | 20,160.27 | 3.3% | 15,120.21 | 2.4% | 10,080.14 | 1.5% |
CASH AND DEBT SECURITIES (INT) |
(Target 10%) | 8.9% | (Target 10%) | 8.5% | (Target 5%) | 4.1% |
Pimco EQT Wholesale Global Bond Fund | 53,785.85 | 8.9% | 53,785.85 | 8.5% | - | 0.0% |
Templeton Global Bond Plus Fund | - | 0.0% | - | 0.0% | 26,726.11 | 4.1% |
AUSTRALIAN SHARES |
(Target 20%) | 20.2% | (Target 25%) | 25.1% | (Target 28%) | 27.7% |
Ainsworth Game Technology | - | 0.0% | 3,157.00 | 0.5% | 4,190.20 | 0.6% |
Amalgamated Holdings | 7,187.50 | 1.2% | 7,187.50 | 1.1% | 7,187.50 | 1.1% |
ASX Limited | 7,243.25 | 1.2% | 7,243.25 | 1.1% | 7,243.25 | 1.1% |
Austbrokers Holdings | - | 0.0% | - | 0.0% | 3,283.20 | 0.5% |
Cochlear | - | 0.0% | 5,399.40 | 0.9% | 7,199.20 | 1.1% |
Computershare | 6,300.00 | 1.0% | 7,560.00 | 1.2% | 9,135.00 | 1.4% |
Carsales.com | - | 0.0% | - | 0.0% | 2,752.75 | 0.4% |
Fleetwood | - | 0.0% | - | 0.0% | 2,070.00 | 0.3% |
M2 Group | - | 0.0% | - | 0.0% | 5,005.00 | 0.8% |
Origin Energy | 2,520.00 | 0.4% | 2,520.00 | 0.4% | 2,520.00 | 0.4% |
Resmed Inc | - | 0.0% | 6,907.50 | 1.1% | 9,210.00 | 1.4% |
Santos | 1,930.50 | 0.3% | 1,930.50 | 0.3% | 1,755.00 | 0.3% |
Washington H Soul Patts | 4,500.00 | 0.7% | 5,250.00 | 0.8% | - | 0.0% |
SPDR S&P/ASX 200 Fund ETF | 24,669.00 | 4.1% | 8,223.00 | 1.3% | - | 0.0% |
Telstra | 7,548.00 | 1.2% | 7,548.00 | 1.2% | 7,548.00 | 1.1% |
The Reject Shop | - | 0.0% | 5,494.00 | 0.9% | 3,350.00 | 0.5% |
Vanguard Aust Shares Index ETF | 37,415.00 | 6.2% | 37,415.00 | 5.9% | 29,932.00 | 4.5% |
Vision Eye Institute | - | 0.0% | - | 0.0% | 3,375.00 | 0.5% |
Woolworths | 6,780.40 | 1.1% | 6,780.40 | 1.1% | 6,780.40 | 1.0% |
Aberdeen Aust Small Cos Fund | - | 0.0% | - | 0.0% | 24,558.56 | 3.7% |
Allan Gray Australia Equity Fund | - | 0.0% | 29,651.61 | 4.7% | 29,651.61 | 4.5% |
Ganes Value Growth Fund | 16,066.06 | 2.7% | 16,066.06 | 2.5% | 16,066.06 | 2.4% |
INTERNATIONAL SHARES |
(Target 15%) | 16.6% | (Target 20%) | 21.8% | (Target 30%) | 32.0% |
Templeton Global Growth Fund Ltd | - | 0.0% | 16,980.00 | 2.7% | 25,470.00 | 3.9% |
GS Epoch Global Sh Yield Unhedged Fund | 33,069.40 | 5.5% | 33,069.40 | 5.2% | 33,069.40 | 5.0% |
IFP Global Franchise Fund | 27,822.28 | 4.6% | 27,822.28 | 4.4% | 41,733.43 | 6.3% |
Magellan Global Fund | - | 0.0% | 27,377.01 | 4.3% | 47,307.19 | 7.2% |
Platinum International Fund | 39,630.76 | 6.5% | 32,321.83 | 5.1% | 63,291.59 | 9.6% |
PROPERTY AND INFRASTRUCTURE |
(Target 10%) | 10.5% | (Target 10%) | 10.6% | (Target 15%) | 15.0% |
Abacus Property Group | - | 0.0% | 2,880.00 | 0.5% | 6,048.00 | 0.9% |
Aveo Group | - | 0.0% | - | 0.0% | 8,461.53 | 1.3% |
BWP Trust | 5,229.00 | 0.9% | 5,229.00 | 0.8% | 6,972.00 | 1.1% |
Hotel Property Investments | 5,480.00 | 0.9% | 4,110.00 | 0.7% | 5,480.00 | 0.8% |
ALE Property Group | 7,296.00 | 1.2% | 5,376.00 | 0.9% | 7,296.00 | 1.1% |
SPDR S&P/ASX 200 Listed Property ETF | 11,830.00 | 2.0% | 11,830.00 | 1.9% | 11,830.00 | 1.8% |
Sydney Airport | 6,721.00 | 1.1% | 10,340.00 | 1.6% | 14,993.00 | 2.3% |
CFS Wsale Global Listed Infra Fund |
27,219.93 | 4.5% | 27,219.93 | 4.3% | 38,120.03 | 5.8% |
OTHER |
(Target 0%) | 0.0% | (Target 0%) | 0.0% | (Target 2%) | 1.5% |
Basket of Gold Stocks | - | 0.0% | - | 0.0% | 9,632.50 | 1.5% |
TOTAL | 606,092.26 | 100.0% | 630,092.36 | 100.0% | 659,485.72 | 100.0% |
As you can see from the table, the allocations to International Shares are above their targets in each portfolio. We intend to rectify this but are prepared to wait a little, with an eye to further interest rate cuts by the Reserve Bank of Australia putting further downward pressure on the Australian dollar. That dynamic, if it were to continue, would likely benefit our International Share funds.
We’ll publish an article in the coming months re-examining our holdings in this asset class to determine which fund or funds to reduce, as well as reviewing potential alternatives for this part of the portfolios.
Australian shares
A number of companies whose shares have appreciated significantly were sold from the Moderate and Aggressive portfolios. Cochlear and Abacus Property were sold from both portfolios and Aveo was also sold from the Aggressive portfolio.
The sales reflect changes to these stocks’ recommendations by the analysts at Intelligent Investor Share Advisor.
There were no changes to the Conservative portfolio.
Gold stock portfolio
Northern Star Resources has been the sole bright spot within our mini-portfolio of gold stocks in the Aggressive portfolio. Due to the significant rise in its share price since it was purchased, we considered selling it after reviewing the change in recommendation by the analysts at Share Advisor. However, due to the riskiness of individual gold stocks, we have decided to keep the mini-portfolio intact. Our intention is to hold or sell these stocks as a group.
Cash and fixed interest
What to do with the proceeds of these sales? The committee considered whether to keep the proceeds from these sales in cash or lock them away in term deposits.
Term deposit rates have continued to decline after the Reserve Bank reduced its target cash rate to 2.25% in February 2015. We expect this trend to continue should the Reserve Bank cut its target rate further in coming months.
However, having opened additional term deposits in all three portfolios in the previous quarter, the committee decided to keep the proceeds in cash for the time being.
We hope to deploy the excess cash in the Aggressive portfolio by purchasing additional Australian Shares or Property and Infrastructure holdings should suitable opportunities arise.
We’ll discuss these changes and more in the coming quarterly report.