Innova Active Conservative Portfolio

September 2025

Performance Table

1MTH3MTH6MTH1YR3YR (PA)5YR (PA)INCEPTION (PA)
Innova Active Conservative Portfolio0.66%2.09%4.38%6.11%6.78%-4.06%
FE Peer Group Conservative0.45%1.55%3.54%5.68%5.90%3.32%3.01%
Excess Returns0.21%0.54%0.84%0.43%0.88%-1.05%

Portfolio Performance

Markets held a risk-on tone through most of the month, lifted by enthusiasm around artificial intelligence, with major corporate deals and optimism about its long-term growth impact. That momentum reversed sharply after Donald Trump retaliated against China’s tighter rare-earth export controls by announcing a 100% tariff on Chinese imports, rattling risk assets, particularly AI-linked stocks.

Even so, investor sentiment remains resilient. Global equities extended gains despite fewer expected rate cuts (now about 4½ by December 2026) and lingering concerns over a potential U.S. government shutdown. Short-dated government bond yields were largely unchanged, while 10-year yields declined (prices rose) through the month, following the Federal Reserve’s September rate cut. Overall, recent economic data has been mixed, giving no definitive indication for the future direction of the U.S. economy.

In September, most Innova portfolios outperformed their benchmarks, driven primarily by tactical global equity positions such as Korea and emerging market overweights. Developed market equities gained 2%, while domestic equities fell 0.65%. Within real assets, global REITs (hedged) increased 0.89% and infrastructure (hedged) was up 0.29%.

Within fixed income, US government bonds outperformed floating-rate instruments as yields continued to fall globally, though Australian government bonds underperformed domestic credit. The AUDUSD was up another 1.1% on continued USD weakness, supporting hedged exposures including USTB, and global equity hedges. Precious metals continued their rise with our silver ETF gaining 17.48%, outpacing the gold ETF rising 10.12%.

Asset Allocation Exposure

Breakdown pie chart
Fixed Interest45.93%
Global Shares12.01%
Australian Shares9.08%
Real Assets6.90%
Alternatives5.00%
Cash21.07%

Top Portfolio Holdings

Realm Short Term Income Ordinary
16.31%
Macquarie True Index Cash Fund
12.74%
Global X Us Treasury Bond
11.47%
Vanguard Australian Government Bond Index ETF
10.28%
Pendal Enhanced Cash Fund
6.94%
Vaneck Vectors Australian Floating Rate ETF
5.13%
Quay Global Real Estate Fund - Hedged
4.37%
DNR Capital Aus Eq High Conviction
3.59%
Invesco Wholesale Australian Share Fund
3.35%
VanEck Vectors MSCI International Value ETF
2.89%

Growth of $100,000 since inception

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Market Outlook

The global economic outlook for 2026 remains uncertain despite progress on tariff deals and rate cuts. Tariffs have delivered substantial revenue to the US government, but it’s still unclear who will ultimately bear the cost, as these have yet to flow through to consumers. Corporate profit margins remain at risk, and with consumers already showing strain, particularly in auto loans and credit cards, it will be far harder for companies to pass on higher costs than in 2022.

The AI spending cycle is extraordinary, but it may be overstating the true state of the underlying US economy. Recent data shows AI-related capital expenditure accounted for over 70% of US growth, with 14% of investment-grade debt now tied to AI. This “arms race” between the US and China is unlikely to slow soon, yet richly valued AI assets could face trouble if returns fail to meet expectations.

Geopolitical uncertainty, loose monetary policy amid 3% inflation, and rising global debt have driven central banks and investors into precious metals. Gold and silver are hitting new highs even as credit spreads sit near multi-year lows and equity valuations appear stretched.

Domestically, growth expectations have improved modestly, though rate-cut forecasts are more restrained given the still-tight labour market. We continue to see selective opportunities in risk assets with higher expected returns, maintaining a balanced stance between growth and defensives while positioning equity exposure to remain resilient in any market correction.

Investment Objective

To deliver a total investment return in line with the benchmark, after fees, over a rolling three year period.

Key Information

Inception31/03/2021
Management Fee0.36%
Maximum Expected Volatility5.50%
Standard Risk MeasureLow to Medium
BenchmarkRBA Cash Rate Target + 1.5%
Model CodeINN001CON
Investment Timeframe3 years
PlatformBT Panorama

About the Manager

Innova is a boutique portfolio management firm with institutional-grade capabilities that specialises in risk-focused portfolio solutions. Co-founded by Dan Miles and Dinyar Irani in 2010, Innova’s objective is to provide robust investment solutions that work with investor behaviour, rather than against it.

Innova has a comprehensive understanding of investment risk and has developed a proprietary risk management framework based on rigorous academic research to support their investment process. Their quantitative framework acts as the compass, with their experienced investment team determining the best approach to execute this outcome. Innova's systematic approach to portfolio construction has enabled them to navigate global markets successfully, even during challenging market cycles.

Innova has consistently adhered to their investment process across all market regimes. They have rigorously tested their process and analysed hundreds of historical data sources to ensure they always have conviction in their investment decision making. As a result, Innova is able to consistently manage portfolio risk during market downturns and their performance track record is a testament to the effectiveness of their approach.

Important Information

This document has been prepared by Innova Asset Management Pty Ltd (Innova), ABN 99 141 597 104, Corporate Authorised Representative of Innova Investment Management, AFSL 509578 for provision to Australian financial services (AFS) licensees and their representatives, and for other persons who are wholesale clients under section 761G of the Corporations Act.
To the extent that this document may contain financial product advice, it is general advice only as it does not take into account the objectives, financial situation or needs of any particular person. Further, any such general advice does not relate to any particular financial product and is not intended to influence any person in making a decision in relation to a particular financial product. No remuneration (including a commission) or other benefit is received by Innova or its associates in relation to any advice in this document apart from that which it would receive without giving such advice. No recommendation, opinion, offer, solicitation or advertisement to buy or sell any financial products or acquire any services of the type referred to or to adopt any particular investment strategy is made in this document to any person.
All investment involves risks, including possible delays in repayments and loss of income and principal invested. Any discussion of risks contained in this document with respect to any type of product or service should not be considered to be a disclosure of all risks or a complete discussion of the risks involved. Past performance information provided in this document is not indicative of future results and the illustrations are not intended to project or predict future investment returns.
The performance reporting in this document is a representation only. Innova has used a calculation methodology to simulate the performance of the relevant Investment Program since commencement, net of all fees and commissions at the fund/security level, and gross of other fees and commissions. Simulated performance does not reflect the performance of any specific account. Each account will have its own unique performance history, due to factors including varied methods of implementation, fee and tax structures. Therefore, simulated performance may vary significantly compared to that of any specific account. The out of sample backtested performance data has been simulated by Innova and is for illustrative purposed only, and is not representative of any investment or product, Results based on simulated performance results have certain inherent limitations as these results do not represent actual trading. No representation is being made that any account will or is likely to achieve profits or losses similar to those being shown.
Although non-Fund specific information has been prepared from sources believed to be reliable, we offer no guarantees as to its accuracy or completeness. Any performance figures are not promises of future performance and are not guaranteed. Opinions expressed are valid at the date this document was published and may change. All dollars are Australian dollars unless otherwise specified.

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