InvestSMART's Performance for the month of January
International Equities Portfolio
Property and Infrastructure Portfolio
January was a month that demonstrated why timing the market is a fool’s game. Despite the doom and gloom, the ASX 200, represented by the ETF IOZ in our portfolios, jumped 6.29% in the month. It’s the best start to a calendar year in the history of the ASX 200. Importantly, January’s increase saw the losses on the ASX 200 in 2022 recover.
This is an excellent example of sequencing risk. Sequencing risk is the order in which returns happen. We do not know when these exuberant months will occur, nor the negative ones, but we do know markets revert to their long-term averages over time. So by jumping in and out of the market, you’re more likely to miss out on these good months to buy back in at higher prices.
The aim of the InvestSMART Investment Committee, Chaired by Paul Clitheroe, is not to predict market movements and avoid the negative. Instead, it is to ensure our portfolios remain in line with the stated risk profile and, with the benefit of industry-low fees, exceed the average return of each portfolio’s peer group. Plainly put, we want our performance to beat the average return of your other investment options in each category.
How can you tell if we do what we say we will?
Look at the performance chart of each portfolio, and you’ll see our performance compared to the peer group average. It takes time for our capped fee difference to compound, but when it does you see the gap grow.
You’ll also see ups and downs, but you’ve got to take the good with the bad to achieve the long-term returns. So stay focused on your goal, don’t let the bumps deter you and reach out to the team if you need a hand.
Frequently Asked Questions about this Article…
Sequencing risk refers to the order in which investment returns occur. It can significantly impact your portfolio, especially if you withdraw funds during a downturn. By staying invested, you can avoid missing out on positive months that help balance out the negative ones over time.
Timing the market is risky because it's nearly impossible to predict when the market will rise or fall. As seen in January, the ASX 200 had a significant jump, which could have been missed by those trying to time their investments. Staying invested helps capture these gains.
InvestSMART focuses on maintaining portfolios in line with their risk profiles and aims to exceed the average return of each portfolio's peer group. By keeping fees low, they allow the fee difference to compound over time, enhancing performance.
It's important to stay focused on your long-term goals and not be deterred by short-term market fluctuations. The market naturally experiences ups and downs, but maintaining your investment strategy can help achieve desired returns over time.
You can track your portfolio's performance by looking at the performance chart provided by InvestSMART. This chart compares your portfolio's returns to the peer group average, helping you see how well your investments are doing.
The InvestSMART Investment Committee, chaired by Paul Clitheroe, ensures that portfolios remain aligned with their risk profiles and strive to outperform the average returns of their peer groups, without attempting to predict market movements.
Staying invested during market fluctuations is crucial because it allows you to benefit from positive market movements that can offset negative ones. Jumping in and out of the market can lead to missing out on gains and buying back at higher prices.
InvestSMART offers industry-low fees, which over time, allow the fee difference to compound. This compounding effect can lead to a growing gap in performance compared to other investment options, benefiting investors in the long run.
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