Core Growth Portfolio - Adjustment April 2018

We have made some changes to the Core Growth Portfolio

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17 Apr 2018 · 2 min read

The objective of the Core Growth Portfolio is to deliver returns greater than the RBA cash rate 3% over a five-year rolling period by investing in a diverse mix of asset classes. At the time of writing, this implies an annualised return objective of around 4.50%.

We achieve this by constructing a portfolio with a ‘growth’ risk profile. That is, one with a greater allocation toward equities as opposed to bonds.

While also aiming to keep costs lows, we constantly scan the market for new securities that allow us to achieve our performance objectives at a lower cost than our peers.

The changes

Bonds

We are selling the relatively expensive Macquarie Income Opportunities Fund (MAQ0277AU) and reinvesting into the Vanguard Global Aggregate Bond ETF (Hedged) (ASX: VBND). VBND is comprised of a range of international fixed rate bonds.

Equities

To simplify our International Equity exposure, we have elected to switch into the Vanguard MSCI Index International Shares ETF (ASX: VGS). This ETF is designed to track the MSCI World ex Australia index, providing large and mid-cap equity exposure to 22 developed market countries.

The outcomes

  1. Maintain our alignment of asset classes to the standard benchmark
  2. A drop in the portfolios indirect cost ratio from 22bp to 19bp
  3. Reduction in expected transaction fees

You’ll see these changes occur over the next few days.


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