InvestSMART's Performance for the month of August

The InvestSMART diversified portfolios delivered between 3.56% - 12.82% positive returns for clients for the year to 31 August 2023.

By Mitchell Sneddon · 18 Sep 2023

By Mitchell Sneddon ·
18 Sep 2023 · 5 min read

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Diversified ETF Portfolios

Investors looking for a mix of asset classes in one portfolio.

Portfolio	Description	More Info
Conservative Portfolio	Designed for investors looking for a better return than cash or saving for the short-term.	More info
Balanced Portfolio	Designed for investors who seek a balanced investment solution between defensive & growth assets.	More info
Growth Portfolio	Designed for investors who are looking to build their wealth over the medium-term.	More info
High Growth Portfolio	Designed for investors who are looking to build their wealth over the longer-term.	More info
Ethical Growth Portfolio	A simple, cost-effective way to invest in a diversified ethical portfolio without the usual high fees	More info

Single Asset Class ETF Portfolios

Investors looking to gain access to a sector specific asset class.

Portfolio	Description	More Info
International Equities Portfolio	Designed to provide investors the ability to tap into the high potential growth of global markets and aid in portfolio diversification.	More info
Property and Infrastructure Portfolio	Designed for investors looking to diversify their property exposure or tap into the income & capital growth potential from the commercial property market generally inaccessible to the public.	More info
Hybrid Income Portfolio	Designed for investors an opportunity to diversify their income stream, with a portfolio of predominantly ASX-listed hybrid securities.	More info

The latest GDP figures were announced in September with a ‘soft landing’ being the verdict for the performance of the Australian economy. For those of us who are not economists it means that the economy has started to slow down. This is due to the higher interest rates and inflation we’re all experiencing, which has led to a fall in consumer spending.

So, what does this mean for you as an investor?

If you’re a regular reader of our Insights articles, you’ll know we don’t place a whole lot of weight on short-term market movements. For example: the ASX lost 0.8% on the announcement of the GDP figures, but if you look back over the past 12 months the ASX had a total return of 9.56%.

Our philosophy for investing is to ensure your mix of investments (i.e. your asset allocation) matches your risk tolerance and your investment timeline.

Returns don’t happen in a straight line. No one can predict what will happen with markets here in Australia or abroad. Your one job as an investor is (as stated above) to ensure your portfolio matches your risk profile and then simply hold on to your investments and not interrupt your compounding.

Minor fluctuations in the share market really only affect short-term traders and stock pickers on a day-to-day basis. Most investors who get into trouble are those who are constantly chasing returns.

Plan for the worst, expect the best

We manage our portfolios for ‘systematic risks’ like inflation and higher interest rates through correct asset allocation. If shares fall, your portfolio should be less impacted as it holds bonds and cash.

Diversification is central to managing risk. The beauty of a diversified investment approach is you’re exposed to all corners of the investing world. When one asset class is underperforming, another is likely to be firing. This is why your portfolio holds international and Australian share ETFs, as well as bonds. International and Australian shares represented by ASX:VGS and ASX:IOZ in your portfolio had a total return of 21.83% and 9.26% respectively in the 12 months to 31 August.

InvestSMART Professionally Managed Accounts

The InvestSMART diversified portfolios delivered between 3.56% - 12.82% positive returns for clients for the year to 31 August 2023.

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For more information on the companies discussed in this article, please click on the company of interest... BetaShares Australian High Interest Cash ETF (AAA) | SPDR Dow Jones Global Real Estate ESG Fund (DJRE) | iShares Asia 50 ETF (IAA) | VanEck FTSE Global Infrastructure (Hedged) ETF (IFRA) | Ishares Treasury ETF (IGB) | iShares Core S&P/ASX 200 ETF (IOZ) | iShares S&P 500 ETF (IVV) | BetaShares S&P 500 Yield Maximiser Fund (UMAX) | Vanguard Australian Property Securities Index ETF (VAP) | Vanguard Global Aggregate Bond Index (Hedged) ETF (VBND) | Vanguard FTSE Europe Shares ETF (VEQ) | Vanguard Australian Government Bond Index ETF (VGB) | Vanguard MSCI Index International Shares ETF (VGS)

Frequently Asked Questions about this Article…

What is a diversified ETF portfolio and why should I consider it?

A diversified ETF portfolio is a collection of exchange-traded funds that include a mix of asset classes, such as stocks, bonds, and cash. This approach helps manage risk by spreading investments across different sectors and regions, ensuring that when one asset class underperforms, another may perform well. It's ideal for investors looking to balance risk and return over various time horizons.

How does the current economic climate affect my investment strategy?

The current economic climate, characterized by higher interest rates and inflation, has led to a slowdown in consumer spending. As an investor, it's important to focus on long-term goals and ensure your portfolio aligns with your risk tolerance. Short-term market fluctuations are less impactful if your investments are diversified and aligned with your financial objectives.

What is the difference between a conservative and a high growth portfolio?

A conservative portfolio is designed for investors seeking better returns than cash or short-term savings, focusing on stability and lower risk. In contrast, a high growth portfolio targets long-term wealth building, accepting higher risk for potentially greater returns. The choice depends on your investment goals and risk tolerance.

Why is diversification important in managing investment risk?

Diversification is crucial because it spreads your investments across various asset classes and regions, reducing the impact of any single underperforming investment. By holding a mix of international and Australian shares, bonds, and other assets, you can better manage risks like inflation and interest rate changes, ensuring more stable returns over time.

What are the benefits of investing in international equities?

Investing in international equities provides access to global markets, offering potential high growth opportunities and aiding in portfolio diversification. It allows investors to tap into different economic cycles and sectors not available in the domestic market, potentially enhancing overall portfolio performance.

How do InvestSMART's professionally managed accounts perform?

InvestSMART's professionally managed accounts have delivered positive returns between 3.56% and 12.82% for the year ending 31 August 2023. These accounts are designed to align with your risk profile and investment timeline, focusing on long-term growth through diversified asset allocation.

What role do bonds play in a diversified investment portfolio?

Bonds play a crucial role in a diversified investment portfolio by providing stability and income. They tend to perform well when stocks are underperforming, helping to balance overall portfolio risk. Including bonds can mitigate the impact of market volatility and contribute to more consistent returns.

How should I react to short-term market fluctuations?

Short-term market fluctuations are normal and primarily affect day-to-day traders. As a long-term investor, it's important to stay focused on your investment goals and not react impulsively to market changes. Ensure your portfolio matches your risk tolerance and investment timeline, and allow your investments to compound over time.