Spotlight: InvestSMART Balanced Portfolio

This year marks a decade since InvestSMART launched our investment portfolios, with six of our 10 ETF portfolios celebrating their 10th anniversary in 2024. We thought it would be a great opportunity to put our portfolios under the spotlight. Let's take a look at the fourth of our diversified portfolios to hit the market - the Balanced Portfolio - which has consistently outperformed the majority of its peers since it made its debut.

About the InvestSMART Balanced Portfolio

The Balanced Portfolio invests in a portfolio of five to 15 exchange-traded funds (ETFs) that provide a mix of regular income plus the potential for capital growth through equities, property and infrastructure assets.

It is best suited to Aussies saving for medium to long-term goals, including school education expenses, as the minimum suggested investment timeframe is three to five years.

Here are a few quick facts about the Balanced Portfolio: 

• Inception date: 29 December 2014
• Suggested timeframe: 3-5 years
• Risk: Medium
• Minimum initial investment: $10,000 (or $4,000 with Fundlater)
• Management fee: 0.55% p.a. capped at $550 p.a.
• Benchmark Index: Morningstar® Australia Balanced Target Allocation NR AUD

Where does the InvestSMART Balanced Portfolio invest?

The Balanced Portfolio has a pretty even mix of growth assets (47.15%) and defensive (52.85%). The growth assets are split between international equities (24.25%), Australian equities (17.6%) and property and infrastructure (5.3%) as at 31 July 2024. The Portfolio also has 38% invested in fixed interest and 14.85% in cash.

The ETFs that InvestSMART currently includes in the Balanced Portfolio are:

• Betashares Australian High Interest Cash ETF (ASX: AAA)
• iShares Core Composite Bond ETF (ASX: IAF)
• VanEck FTSE Global Infrastructure (Hedged) ETF (ASX: IFRA)
• iShares Core S&P/ASX 200 ETF (ASX: IOZ)
• Vanguard Australian Property Securities Index ETF (ASX: VAP)
• Vanguard Global Aggregate Bond Index (Hedged) ETF (ASX: VBND)
• Vanguard MSCI Index International Shares ETF (ASX: VGS)

Some of the top underlying ETF holdings include Commonwealth Bank, BHP, Goodman Group, Microsoft, Apple and NVIDIA.

What are the fees?

InvestSMART's management fee is 0.55% a year. So, on a $10,000 investment (which is the minimum) that equates to $55 a year. The management fee is capped at $550 a year, which means that even if you have an investment worth more than $100,000 the most you'll pay is $550 a year.

Transaction costs, which cover InvestSMART's costs of buying and selling investments, also apply. This is mainly brokerage which is the greater of $4.40 per trade or 0.088% of the value of the trade and is paid entirely to a third-party broker.

There are also indirect costs charged by the underlying ETFs and for the Balanced Portfolio that's estimated to be 0.14% a year.

How has the InvestSMART Balanced Portfolio performed?

The Balanced Portfolio has provided a solid return for investors, averaging 5.43% a year since its inception in December 2014. So what does that mean in dollar terms? Well, if you had invested $10,000 in the Balanced Portfolio when it first launched, your investment would have been worth $16,770 at the end of July 2024 - that's a total increase of 67.7%.

In the 12 months to the end of July 2024, the Balanced Portfolio returned an impressive 10.10%. The Vanguard MSCI Index International Shares ETF (ASX: VGS) was the star performer in the Balanced Portfolio in that period.

InvestSMART Balanced Portfolio performance

Returns to 31 July 2024. ¹Since inception on 29 December 2014.

How does the InvestSMART Balanced Portfolio compare to its peers?

The Balanced Portfolio has outperformed the majority of its peers both over the short and long term. As you can see from the table below, the Balanced Portfolio has returned 4.36% p.a. over five years. The average annualised returns of the peer funds in this category was 3.27% over that same period.

Balanced Portfolio performance vs peers

Returns to 31 July 2024. ¹Since inception on 29 December 2014.

And at 0.55% a year (capped at $550 a year) the Balanced Portfolio's management fee is lower than the average fee of its peer funds, which is sitting at 0.9% a year.

Key takeouts

The InvestSMART Balanced Portfolio is a great option if you are saving for the medium to long term and are comfortable with a degree of volatility as there's roughly a 50% allocation to growth assets.  

The management fee is very competitive and the portfolio's long-term returns have been strong, with the portfolio outperforming the majority of its peers over one, three and five years as well as since its inception almost 10 years ago.