InvestSMART portfolio performance for the month of August
It is the mantra of the InvestSMART Diversified and Single Asset Class Portfolios and we point to these because:
- we know they work,
- we know they are in investors best interest,
- and we know that your long-term returns will benefit.
Part of why we use these strategies is so we can capture the returns markets give us across all asset classes. And the month of August was another pleasing month for the InvestSMART portfolios.
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Our core Australian equities holding in all InvestSMART diversified portfolios is the iShares ASX 200 ETF (IOZ) and over August this holding captured the following:
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Record all-time high in the ASX 200 of 7632.8
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The 11th consecutive month of rising markets – the previous record was 10 months in 2006-2007. Something IOZ has taken full advantage of.
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Record all time high dividend payouts from ASX 200 companies which is passed through for the benefit of IOZ investors.
ASX 200 companies delivered a record all time high dividend in August. The August to-date dividend total is over $31 billion. The previous record was in 2019 when companies returned $27.4 billion in dividends. This will be paid to shareholders (which includes InvestSMART Diversified Portfolio investors) in September and October.
If we then think about that amount of money being reinvested back into the ASX 200 two things become clear.
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It should support the equity markets as people will reinvest most of the $31 billion in this low interest rate environment
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The compounding effect from reinvesting means over time they should outperform those that don't reinvest.
If we look at our international equities holdings – the Vanguard MSCI Index of International Share (VGS) and the iShares S&P 500 (IVV) – August was as impressive.
VGS added 3.9 per cent in August while IVV added 4.5 per cent. International equities have outperformed domestic peers for the past 10 years. It is why they are in all our diversified portfolios and form a central part of our diversification strategy.
August was a month of records and confirmed our strategy is working continues to capture the performance you expect.
Frequently Asked Questions about this Article…
The InvestSMART portfolio strategy focuses on diversified and single asset class portfolios, which are designed to capture returns across all asset classes. This approach is beneficial for investors as it aims to maximize long-term returns by taking advantage of market opportunities.
In August, the InvestSMART portfolios had a pleasing performance. The core Australian equities holding, iShares ASX 200 ETF (IOZ), benefited from a record all-time high in the ASX 200 and record dividend payouts. International equities holdings like Vanguard MSCI Index of International Share (VGS) and iShares S&P 500 (IVV) also performed well, adding 3.9% and 4.5% respectively.
The record dividend payouts from ASX 200 companies, totaling over $31 billion, are passed through to IOZ investors, including those in the InvestSMART Diversified Portfolio. This reinvestment is expected to support equity markets and enhance long-term performance through compounding.
Reinvesting dividends is crucial for long-term investment success because it supports equity markets and leverages the compounding effect. Over time, reinvested dividends can lead to outperforming those who do not reinvest, enhancing overall portfolio growth.
International equities, such as those in the Vanguard MSCI Index of International Share (VGS) and iShares S&P 500 (IVV), have outperformed domestic peers over the past 10 years. They are a central part of InvestSMART's diversification strategy, contributing to the strong performance of the portfolios.
The key components of the InvestSMART diversified portfolios include Australian equities, international equities, interest income, property and infrastructure, and hybrids. These components are strategically selected to capture market returns and enhance portfolio diversification.
The current low interest rate environment encourages reinvestment of dividends into equity markets, as it offers a more attractive return compared to traditional savings. This environment supports the InvestSMART strategy of capturing market returns and leveraging compounding for long-term growth.
In August, the ASX 200 reached a record all-time high of 7632.8 and achieved a record all-time high in dividend payouts, totaling over $31 billion. These records highlight the strong performance of the Australian equities market, benefiting investors in the InvestSMART portfolios.
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