InvestSMART Diversified Growth vs Intelligent Investor Growth Fund

What is the relationship between the IIGF share fund about to be listed and the Invest Smart Growth Fund. I note that the IIG Share fund advertises a 5 yr performance of 7.2% - Submitted by Bruce

Hi Bruce,

This is a good question. The two investment options are very different. Let's start with the InvestSMART Diversified Growth portfolio. 

The InvestSMART Diversified Growth portfolio invests in multiple asset classes. It is invested in Australian shares, international shares, property, infrastructure, bonds and cash.To get this exposure the portfolio uses exchange-traded funds (ETFs) to get an index return for each asset class e.g. for Australian shares we use iShares S&P/ASX 200 ETF IOZ so we get the ASX 200 return for that component of the portfolio.

The aim of the InvestSMART Diversified Growth portfolio is to provide diverse exposure with a higher percentage allocated to those growth asset classes like Australian shares and international shares for a low cost. Having a diversified portfolio aims to provide protection from a single asset class experiencing volatility. 

The Intelligent Investor Growth Fund (ASX: IIGF) which is in its initial offer phase at the moment will be listed on the ASX and investors will be able to invest in it like an ETF. The portfolio will invest in one asset class, Australian shares. It will also hold cash but the aim is to be putting most of the cash to work in stocks. Instead of getting the ASX 200 return like the ETF mentioned above, the portfolio will use the expertise of the Intelligent Investor analyst team headed by Portfolio Manager, Nathan Bell to handpick individual stocks they believe will be able to grow quicker than the market. Their aim is to beat the market, whereas the InvestSMART portfolios Australian equity exposure is designed to get the market return. Of course, there is no guarantee the fund will beat the market, if you open yourself up to outperforming the market you also open yourself up to underperform the market.

There is also a difference in structure too. With IIGF it will be a listed managed fund on the ASX. You will buy units in the fund via either the initial offer or once it is listed through your broker. The InvestSMART Diversified Growth portfolio is a professionally managed account. Investors open an account with us and we buy the holdings on your behalf and you own all the underlying investments to get the exposure across various asset classes and our team manages it ongoing for you.

I hope this explains the difference between the two investments. They are designed to do different things and because of that, it doesn't have to be a one or the other decision.

Regards,

Mitchell Sneddon