Introduction

Where you invest should match your attitude to risk and expectations of the amount of growth and income you need.

Modern portfolio theory says that 90% of a portfolio performance is investing the right percentage in the right asset sectors at the right time.

This can be best seen in the chart on Page 4 of this Vanguard Investments  presentation, which shows the returns of each asset sector over the past 20 years: (Download Chart)

The final 10% of your portfolio performance should come from investing in the right managers (ie, those that outperform the index, or add value). They are generally “active” managers, rather than the “passive” managers who seek returns equal to their respective benchmarks.

Model Portfolio

We commenced our model portfolio on 1 January 2011 using research supplied by external research companies and AMP Financial Planning. We use a “core and satellite” approach in each asset sector (a core fund uses a multi-manager neutral investment style, blended with individual managers with opposite active styles) which give the ideal “negative” correlation. In other words, these managers are unlikely to hold similar investments and their performance (and risk) in any market condition will unlikely be the same.

We have added new Managers added over time (as noted) but replaced very few, as one of the major reasons for selection is outperformance of their respective “indexes”. Short term under-performance can and does happen for all managers, but the better companies are continually reviewing their investment processes to ensure major under-performance is limited both in time and percentage.

The level of performance to 31 December 2016 (and in particular, outperformance of their respective benchmarks) shows the benefit of having active managers in your portfolio:

Returns – Superannuation to 31 December 2016

Fixed Interest

Core Manager

 Specialist Diversified Fixed Interest

Performance (%)

1 year

3 years p.a.

5 years p.a.

Fund return

  2.22

       n/a       n/a
Bloomberg AusBond Comp Bond & BB Ind

 2.51

Outperformance     -0.29

 

Satellite Managers

AMP Capital Corporate Bond

Performance (%)

1 year

3 years p.a.

5 years p.a.

Fund return

2.43

2.27

3.74
Bloomberg AusBond Comp Bond & BB Ind

2.51

3.71

3.87

Outperformance

 -0.08

-1.44

-0.13

 

Bentham Global IncomeNew Manager added to panel 1/7/2015

Performance (%)

1 year

3 years p.a.

5 years p.a.

Fund return

  6.21

       n/a       n/a
Bloomberg AusBond Comp Bond & BB Ind

 2.51

Outperformance      3.70

# No allocation for investors with 70% Growth strategy and above

 

BlackRock Global BondNew Manager added to panel 1/7/2015

Performance (%)

1 year

3 years
p.a.

5 years

p.a.

Fund return

  2.96

  4.29

4.49
Bloomberg AusBond Comp Bond & BB Ind

2.51

3.71

3.87

Outperformance

0.45

0.58

0.62

# No allocation for investors with 70% Growth strategy and above

 

PIMCO Diversified Fixed InterestNew Manager added to panel 1/7/2015

Performance (%)

1 year

3 years
p.a.

5 years
p.a.

Fund return

3.02

4.07

n/a

Bloomberg AusBond Comp Bond & BB Ind

2.51

3.71

Outperformance 0.51 0.36

# No allocation for investors with 70% Growth strategy and above

Performance shown in all tables is after fees and before tax and assumes returns are reinvested

Australian Equities

Core Managers

Specialist Australian Shares

Performance (%)

1 year

3 years
p.a.

5 years
p.a.

Fund return

10.78

5.62

10.58

S&P/ASX 300 Accumulation Index 11.8

6.6

11.6
Outperformance -1.02 -0.98 -1.02

 

Satellite Managers

Perennial Value Australian Shares Trust

Performance (%)

1 year

3 years
p.a.

5 years

p.a.

Fund return

9.31

6.05

10.60
S&P/ASX 300 Accumulation Index 11.8

6.6

11.6
Outperformance

 -2.49

 -0.55

    -1.0


Plato Australian Share Income
New Manager added to panel 1/7/2015

Performance (%)

1 year

3 years
p.a.

5 years
p.a.

Fund return

   8.08

       5.53

   6.20

S&P/ASX 300 Accumulation Index

11.8

 6.6

11.6

Outperformance      -3.72      -1.07       -5.4


Alphinity Australian Equity
New Manager added to panel 1/7/2015

Performance (%)

1 year

3 years
p.a.

5 years
p.a.

Fund return

    8.06

  4.75

11.57

S&P/ASX 300 Accumulation Index

11.8

6.6

    11.6
Outperformance       -3.74

 -1.85

 -0.03

# only for investors with 50% Growth strategy and above

Schroders Australian Equity

Performance (%)

1 year

3 years
p.a.

5 years
p.a.

Fund return

15.92

  4.37

   10.29
S&P/ASX 300 Accumulation Index 11.8

6.6

   11.6
Outperformance       4.12

 -2.23

    -1.31

# only for investors with 70% Growth strategy and above

Specialist Geared Australian Equity

Performance (%)

1 year

3 years
p.a.

5 years

p.a.

Fund return    14.11

  8.45

   16.45
S&P/ASX 300 Accumulation Index    11.8

6.6

   11.6
Outperformance      2.31

1.85

     4.85

# only for investors with 70% Growth strategy and above

Perpetual Industrial FundNew Manager added to panel 1/7/2015

Performance (%)

1 year

3 years
p.a.

5 years
p.a.

Fund return

4.87

       6.52    13.40
S&P/ASX 300 Accumulation Index 11.8 6.6 11.6
Outperformance     -6.93     -0.08      1.8

# only for investors with 85% Growth strategy and above

 

Performance shown in all tables is after fees and before tax and assumes returns are reinvested

International Equities

Core Managers

 

Specialist International Shares (Unhedged)

Performance (%)

1 year

3 years
p.a.

5 years
p.a.

Fund return

  6.44

     10.24

16.05

MSCI All Countries World Index (AUD)

  8.38

     10.67

17.24

Outperformance      -1.94      -0.43     -1.19  

 

OR

Specialist International Shares (Hedged)

Performance (%)

1 year

3 years p.a.

5 years p.a.

Fund return

8.25

       7.70

13.24

MSCI All Countries World Index (AUD)

8.38

     10.67

17.24

Outperformance     -0.13       2.97     -4.00

 

Satellite Managers

Fidelity Global Equities

Performance (%)

1 year

3 years p.a.

5 years p.a.

Fund return

  4.70

9.14

15.40
MSCI All Countries World Index (AUD)

  8.38

 10.67

17.24

Outperformance      -3.68      -1.53     -1.84

 

Magellan Global EquitiesNew Manager added to panel 1/7/2015

Performance (%)

1 year

3 yearsp.a.

5 years p.a.

Fund return

  2.78

       9.00      n/a
MSCI All Countries World Index (AUD)

  8.38

     10.67
Outperformance      -5.60      -1.67

 

Alternative Assets – Infrastructure

RARE Infrastructure

Performance (%)

1 year

3 years p.a.

5 years p.a.

Fund return

  5.62

      6.17 9.07
OECD G7 Inflation Index (+5.5%)

  6.50

      6.40

6.70

Outperformance      -0.88     -0.23      2.37

# only for investors with 70% Growth strategy and above

 

AMP Capital Global Infrastructure Securities (Hedged)New Manager added to panel 1/7/2015

Performance (%)

1 year

3 years
p.a.

5 years
p.a.

Fund return

  6.39

      5.94      n/a
OECD G7 Inflation Index (+5.5%)

  6.50

      6.40
Outperformance      -0.11     -0.46

# only for investors with 50% Growth strategy and above

 

 

Property Securities

Core Managers

Specialist Property & Infrastructure

Performance (%)

1 year

3 years
p.a.

5 years
p.a.

Fund return

    4.42

       9.18

10.86

S&P / ASX 300 A-REIT

  13.18

     17.96

18.51

Outperformance       -8.76      -8.78     -7.65  

# only for investors with 50% Growth strategy and above

 

Satellite Managers

AMP Listed Property

Performance (%)

1 year

3 years
p.a.

5 years

p.a.

Fund return

  11.20

14.04

14.78
S&P / ASX 300 A-REIT

  13.18

     17.96

18.51

Outperformance      -1.98      -3.92     -3.73

# only for investors with 70% Growth strategy and above

 

Super Easy PropertyNew Manager added to panel 1/7/2015

Performance (%)

1 year

3 years
p.a.

5 years
p.a.

Fund return

  10.74

     14.77 15.09
S&P / ASX 300 A-REIT

  13.18

     17.96

18.51

Outperformance      -2.44      -3.19      -3.42

Performance shown in all tables is after fees and before tax and assumes returns are reinvested

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