Spotlight: InvestSMART Conservative 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 third of our diversified portfolios to hit the market - the Conservative Portfolio.

About the InvestSMART Conservative Portfolio

The Conservative Portfolio invests in a portfolio of five to 15 exchange-traded funds (ETFs) with an emphasis on investments that deliver regular, reliable income such as bonds and cash. It still has some exposure to equities to help beat inflation.

It suits those looking for a defensive allocation with lower exposure to growth assets. The Conservative Portfolio is an ideal option for saving for shorter-term goals such as a car or holiday. The minimum suggested investment timeframe is two years or more.

Here are a few quick facts about the Conservative Portfolio: 

• Inception date: 29 December 2014 
• Suggested timeframe: 2-plus years
• Risk: Low to 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 Moderate Target Allocation NR AUD

Where does the InvestSMART Conservative Portfolio invest?

The Conservative Portfolio has a high allocation of defensive assets, with 47% invested in fixed interest and 24% in cash as at 30 June 2024. The remaining 29% is in international equities (13%), Australian equities (11.5%) and property & infrastructure (4.5%). 

The ETFs that InvestSMART currently includes in the Conservative 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 Australian government bonds, Goodman Group, BHP and Commonwealth Bank.

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 Conservative Portfolio that's estimated to be 0.14% a year.

How has the InvestSMART Conservative Portfolio performed?

The Conservative Portfolio has provided a steady return for investors, averaging 3.6% 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 Conservative Portfolio when it first launched, your investment would have been worth $13,997 at the end of June 2024.

In the 12 months to the end of June 2024, the Conservative Portfolio returned 6.81%. 

InvestSMART Conservative Portfolio performance

Returns to 30 June 2024. ¹Since inception on 29 December 2014.

How does the InvestSMART Conservative Portfolio compare to its peers?

The Conservative Portfolio has outperformed the majority of its peers. As you can see from the table below, the Conservative Portfolio has returned 3.60% p.a. over five years. The average annualised returns of the peer funds in this category was 2.11% over that same period.

Conservative Portfolio performance vs peers

Returns to 30 June 2024. ¹Since inception on 29 December 2014.

And at 0.55% a year (capped at $550 a year) the Conservative Portfolio's management fee is lower than the average fee of its peer funds, which is sitting at 1.07% a year.

Key takeouts

The InvestSMART Conservative Portfolio is a great option if you are saving for a short-term goal and prefer a lower exposure to volatile growth assets. 

The management fee is very competitive and the portfolio's long-term returns have been solid, 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.