Spotlight: InvestSMART Ethical Growth Portfolio
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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. This time we are looking at one of our newer portfolios - the Ethical Growth Portfolio - which was launched in November 2020.
About the InvestSMART Ethical Growth Portfolio
The Ethical Growth Portfolio invests in a portfolio of up to10 exchange-traded funds (ETFs) with an emphasis on ethical 'growth' assets such as Australian and international shares.
It's best suited to Aussies investing for longer-term goals as the minimum suggested investment timeframe is five years.
Here are a few quick facts about the Ethical Growth Portfolio:
- Inception date: 1 November 2020
- Suggested timeframe: 5 years
- Risk: Medium to high
- Minimum initial investment: $10,000
- Management fee: 0.55% p.a. capped at $550 p.a.
- Benchmark Index: Morningstar® Australia Growth Target Allocation NR AUD
Where does the InvestSMART Ethical Growth Portfolio invest?
The Ethical Growth Portfolio has a high allocation of growth assets, with 39% invested in international equities and 28% in Australian equities as at 31 August 2024. The remaining 33% is in fixed interest (22.5%) and cash (10.5%).
The ETFs that InvestSMART currently includes in the Ethical Growth Portfolio are:
- Betashares Australian High Interest Cash ETF (ASX: AAA)
- BetaShares Sustainability Leaders Dvrsfd Bond ETF - Cur Hdg (ASX: GBND)
- Vanguard Ethically Conscious International Shares Index ETF (ASX: VESG)
- Vanguard Ethically Conscious Australian Shares ETF (ASX: VETH)
Some of the underlying ETF holdings include Commonwealth Bank, Apple, CSL, Microsoft 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 Ethical Growth Portfolio that's estimated to be 0.17% a year.
How has the InvestSMART Ethical Growth Portfolio performed?
The Ethical Growth Portfolio has been a solid performer, averaging 8.12% a year since its inception in November 2020. In dollar terms, that means if you had invested $10,000 in the Ethical Growth Portfolio when it first launched, your investment would have been worth $13,492 at the end of August 2024%. In the 12 months to the end of August 2024, the Ethical Growth Portfolio provided a strong return of 13.33%.
InvestSMART Ethical Growth Portfolio performance
|
1 year |
2 yrs p.a. |
3 yrs p.a. |
SI p.a.1 |
|
|
Capital return |
10.39% |
8.65% |
1.29% |
5.74% |
|
Income return |
2.94% |
2.84% |
2.62% |
2.38% |
|
Total return |
13.33% |
11.49% |
3.91% |
8.12% |
Returns to 31 August 2024. 1Since inception on 1 November 2020.
How does the InvestSMART Ethical Growth Portfolio compare to its peers?
The Ethical Growth Portfolio has outperformed the majority of its peers. As you can see from the table below, it has returned 13.33% over 12 months. The average returns of the peer funds in this category was 9.82% over that same period.
Ethical Growth Portfolio performance vs peers
|
1 year |
2 yrs p.a. |
3 yrs p.a. |
SI p.a.1 |
|
|
Growth Portfolio |
13.33% |
11.49% |
3.91% |
8.12% |
|
Peers |
9.82% |
8.17% |
3.43% |
7.77% |
|
Excess to peers |
3.51% |
3.32% |
0.48% |
0.35% |
Returns to 31 August 2024. 1Since inception on 1 November 2020.
And at 0.55% a year (capped at $550 a year) the Ethical Growth Portfolio's management fee is lower than the average fee of its peer funds, which is sitting at 1.21% a year.
Key takeouts
The InvestSMART Ethical Growth Portfolio is ideal if you are looking for exposure to growth assets to diversify your investment portfolio and would like to focus on sustainable, responsible, and/or ethical investments. It's important to have a long-term view and be comfortable with a degree of volatility as there's a very high allocation to growth assets.
The management fee is very competitive and, while past performance is not a guarantee of future results, the portfolio's returns have been stronger than the majority of the competition.
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