Fundlater's Performance for the month of April

Learn the five reasons to include Australian equities in a diversified portfolio from a recent InvestSMART Bootcamp webinar and their impact on performance.

5 min read

Diversified ETF Portfolios

Investors looking for a mix of asset classes in one portfolio.

Portfolio	Description	More Info
Growth Portfolio	Designed for investors who are looking to build their wealth over the medium-term.	More info
High Growth Portfolio	Designed for investors who are looking to build their wealth over the longer-term.	More info
Ethical Growth Portfolio	A simple, cost-effective way to invest in a diversified ethical portfolio without the usual high fees	More info

In April 2023, all Fundlater portfolios, delivered positive returns. This performance was driven by our holdings iShares Core S&P/ASX 200 ETF (IOZ) and Vanguard MSCI Index International Shares ETF (VGS), which delivered total returns for the month of 1.87% and 3.43% respectively. This brings us to an interesting topic about the allocation of Australian equities, such as IOZ, in diversified portfolios.

During a recent weekly Bootcamp webinar I hosted, an interesting question was asked:

"Why do your diversified portfolios have a specific allocation to Aussie equities? Shouldn't I be diversified across equities generally and not just specifically Australian equities?"

For those who have yet to hear of InvestSMART's Bootcamp, it's a fantastic course to kickstart your investment journey with confidence. Designed for novices and experienced investors alike, this comprehensive course covers essential topics like investment planning, asset types, investment strategies, and investor psychology, all for just $49.50.

Now, let me address the question about Australian equities in a straightforward and easy-to-understand manner, just like in Bootcamp.

Here are five simple reasons for this allocation:

Familiarity: We're naturally more comfortable with what we know. Australian investors often lean towards local stocks. InvestSMART understands this and allocates a portion to Aussie equities.
Tax perks: Australian stocks can offer tax benefits, such as dividend imputation credits. This makes Aussie equities more attractive than international ones, so we include them in our portfolios.
Currency stability: Investing locally helps reduce currency risk from international investments. Exchange rate fluctuations can affect foreign returns. By including Australian equities, InvestSMART helps clients minimise this risk.
Sector variety: The Australian market features companies across diverse sectors. By investing in a wide range of Aussie stocks, we achieve solid diversification within this asset class, protecting your portfolio from sector-specific risks.
Tailored options: InvestSMART offers various portfolios and strategies to choose from, empowering you to make informed decisions based on your preferences and requirements. We cater to a wide variety of client needs without providing tailored financial advice.

Australian equities in a diversified portfolio offer familiarity, tax perks, currency stability, sector variety, and tailored options. They also grant access to a mature market with strong governance and consistent returns, contributing to overall portfolio performance. Investors can capitalise on local growth opportunities by including Australian equities while maintaining diversification with other assets or international markets.