Spotlight: InvestSMART Growth Portfolio
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It's been a decade since InvestSMART launched our first investment portfolios. The Growth Portfolio was the first of our diversified portfolios to hit the market, making its debut on 24 October 2014. Here's what you need to know.
About the InvestSMART Growth Portfolio
The Growth Portfolio invests in a portfolio of five to 15 exchange-traded funds (ETFs) with an emphasis on growth assets such as Australian and international shares.
It is best suited to Aussies saving for longer-term goals, such as a child's education or building wealth for the future, as the minimum suggested investment timeframe is five years.
Here are a few quick facts about the Growth Portfolio:
- Inception date: 24 October 2014
- Suggested timeframe: 5 years or more
- Risk: Medium to high
- 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 Growth Target Allocation NR AUD
Where does the InvestSMART Growth Portfolio invest?
The Growth Portfolio has a high allocation of growth assets, with 28% invested in Australian equities, 31% in international equities and 7.30% in property and infrastructure as at 30 September 2024. The remaining 33.7% is in fixed interest (23.5%) and cash (10.2%).
The ETFs that InvestSMART currently includes in the Growth 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, CSL, Apple and Microsoft.
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 Growth Portfolio that's estimated to be 0.14% a year.
How has the InvestSMART Growth Portfolio performed?
The Growth Portfolio has provided stellar returns for investors, averaging 7.17% a year since its inception in October 2014. So what does that mean in dollar terms? Well, if you had invested $10,000 in the Growth Portfolio when it first launched, your investment would have been worth $19,899 at the end of September 2024 - that's almost double.
In the 12 months to the end of September 2024, the Growth Portfolio returned an impressive 17/35%. The strong run of international stock markets in 2023 played a significant role in this result. Of course, it's important to remember that past performance or not a guarantee of future returns.
InvestSMART Growth Portfolio performance
|
1 year |
3 yrs p.a. |
5 yrs p.a. |
SI p.a.1 |
|
|
Capital return |
13.36% |
2.49% |
3.31% |
4.41% |
|
Income return |
3.99% |
3.14% |
3.01% |
2.76% |
|
Total return |
17.35% |
5.63% |
6.32% |
7.17% |
Returns to 30 September 2024. 1Since inception on 24 October 2014.
How does the InvestSMART Growth Portfolio compare to its peers?
The Growth Portfolio has outperformed the majority of its peers both over the short and long term. As you can see from the table below, the Growth Portfolio has returned 6.32% p.a. over five years. The average annualised returns of the peer funds in this category was 4.50% over that same period.
Growth Portfolio performance vs peers
|
1 year |
3 yrs p.a. |
5 yrs p.a. |
SI p.a.1 |
|
|
Growth Portfolio |
17.35% |
5.63% |
6.32% |
7.17% |
|
Peers |
14.05% |
4.47% |
4.50% |
4.91% |
|
Excess to peers |
3.30% |
1.16% |
1.82% |
2.26% |
Returns to 30 September 2024. 1Since inception on 24 October 2014.
And at 0.55% a year (capped at $550 a year) the Growth Portfolio's management fee is lower than the average fee of its peer funds, which is sitting at 1.20% a year.
Key takeouts
The InvestSMART Growth Portfolio is a great option if you are saving for the long term - whether that's for your child's education or your own future nest egg - and are comfortable with a degree of volatility.
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. Remember, these aren't a guarantee of future returns.
If you'd like help selecting the right InvestSMART ETF portfolio for you check out our free statement of advice quiz. It will show you which one may best suit your goals and investment timeframe.
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