InvestSMART's Performance for the month of April

Learn the five reasons to include Australian equities in a diversified portfolio from a recent InvestSMART Bootcamp webinar and their impact on performance.

By Tom Wilson · 9 May 2023

By Tom Wilson ·
9 May 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
Interest Income Portfolio	Designed for investors looking for a stable portfolio with regular income, the mix of Australian and international fixed securities means reliable income with low risk.	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

In April 2023, all InvestSMART capped fee managed portfolios, except for the Interest Income portfolio, delivered positive returns. This performance was particularly noticeable in the InvestSMART diversified portfolios holding iShares Core S&P/ASX 200 ETF (IOZ) and Vanguard MSCI Index International Shares ETF (VGS), which delivered total returns for the month of 1.87% and 3.43% respectively. This brings us to an interesting topic about the allocation of Australian equities, such as IOZ, in diversified portfolios.

During a recent weekly Bootcamp webinar I hosted, an interesting question was asked:

"Why do your diversified portfolios have a specific allocation to Aussie equities? Shouldn't I be diversified across equities generally and not just specifically Australian equities?"

For those who have yet to hear of InvestSMART's Bootcamp, it's a fantastic course to kickstart your investment journey with confidence. Designed for novices and experienced investors alike, this comprehensive course covers essential topics like investment planning, asset types, investment strategies, and investor psychology, all for just $99.

Now, let me address the question about Australian equities in a straightforward and easy-to-understand manner, just like in Bootcamp.

Here are five simple reasons for this allocation:

Familiarity: We're naturally more comfortable with what we know. Australian investors often lean towards local stocks. InvestSMART understands this and allocates a portion to Aussie equities.
Tax perks: Australian stocks can offer tax benefits, such as dividend imputation credits. This makes Aussie equities more attractive than international ones, so we include them in our portfolios.
Currency stability: Investing locally helps reduce currency risk from international investments. Exchange rate fluctuations can affect foreign returns. By including Australian equities, InvestSMART helps clients minimise this risk.
Sector variety: The Australian market features companies across diverse sectors. By investing in a wide range of Aussie stocks, we achieve solid diversification within this asset class, protecting your portfolio from sector-specific risks.
Tailored options: InvestSMART offers various portfolios and strategies to choose from, empowering you to make informed decisions based on your preferences and requirements. We cater to a wide variety of client needs without providing tailored financial advice.

Australian equities in a diversified portfolio offer familiarity, tax perks, currency stability, sector variety, and tailored options. They also grant access to a mature market with strong governance and consistent returns, contributing to overall portfolio performance. Investors can capitalise on local growth opportunities by including Australian equities while maintaining diversification with other assets or international markets.

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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) | BetaShares Australian Investment Grade Corporate Bond ETF (CRED) | 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 are the benefits of including Australian equities in a diversified portfolio?

Including Australian equities in a diversified portfolio offers several benefits such as familiarity with local stocks, tax perks like dividend imputation credits, currency stability by reducing exchange rate risks, sector variety, and tailored investment options. These factors contribute to a mature market with strong governance and consistent returns.

How did InvestSMART's diversified portfolios perform in April 2023?

In April 2023, all InvestSMART capped fee managed portfolios, except for the Interest Income portfolio, delivered positive returns. Notably, the iShares Core S&P/ASX 200 ETF (IOZ) and Vanguard MSCI Index International Shares ETF (VGS) in the diversified portfolios achieved total returns of 1.87% and 3.43% respectively.

What is the purpose of InvestSMART's Bootcamp?

InvestSMART's Bootcamp is designed to kickstart your investment journey with confidence. It is a comprehensive course covering essential topics like investment planning, asset types, investment strategies, and investor psychology, suitable for both novices and experienced investors.

Why should I consider a diversified ETF portfolio?

A diversified ETF portfolio offers a mix of asset classes, providing a balanced investment solution between defensive and growth assets. It helps in building wealth over the medium to long term while offering cost-effective and ethical investment options.

What are the different types of portfolios offered by InvestSMART?

InvestSMART offers various portfolios including Conservative, Balanced, Growth, High Growth, and Ethical Growth portfolios. Each is designed to cater to different investment goals, from short-term savings to long-term wealth building.

How does the Interest Income Portfolio differ from other portfolios?

The Interest Income Portfolio is designed for investors seeking a stable portfolio with regular income. It includes a mix of Australian and international fixed securities, offering reliable income with low risk, unlike other portfolios that focus on growth or diversification.

What is the advantage of the Ethical Growth Portfolio?

The Ethical Growth Portfolio provides a simple and cost-effective way to invest in a diversified ethical portfolio. It allows investors to align their investments with their values without incurring the usual high fees associated with ethical investing.

Why is currency stability important in a diversified portfolio?

Currency stability is important because it helps reduce the risk associated with exchange rate fluctuations in international investments. By including local equities, such as Australian stocks, investors can minimize this risk and protect their portfolio's returns.