Innova Aspiration Portfolio - Flagship

April 2025

Performance Table

1MTH3MTH6MTH1YR3YR (PA)5YR (PA)INCEPTION (PA)
Innova Aspiration Portfolio - Flagship-0.09%-2.92%0.83%5.30%5.47%9.11%6.56%
FE Peer Group Growth0.65%-2.51%1.33%7.71%5.91%8.10%6.38%
Excess Returns-0.74%-0.41%-0.50%-2.41%-0.44%1.01%0.18%
RBA Cash Rate Target + 5%1.03%2.81%4.82%9.34%8.65%7.23%6.94%

Portfolio Performance

Since April 22nd, there has been a notable shift in risk sentiment, following a ~15% drawdown in global equities (AUD terms). Recession risks and broader uncertainty have eased, largely driven by progress in US-China trade negotiations and resilient Q1 earnings results from US corporates. Tariff rates remain at 10% for most countries, with China now seeing reduced tariffs of 30%—a sharp decline from the peak of 145%. Nonetheless, risks remain elevated. US 10-year government bond yields have climbed back above 4.5%, and with the “tariff lever” now effectively exhausted, tariff cuts are no longer available to ease bond market stress.

The Innova portfolios underperformed benchmarks during April, with stronger relative performance in the more defensive-oriented strategies. Global equities (in AUD) declined by 1.82%, while Australian equities rose by 3.60%. Our global equity exposure slightly outperformed its benchmark; however, our underweight to Australian banks detracted from performance in the domestic equity sleeve. Within fixed income, being overweight domestic government bonds relative to international government bonds was a contributor as yields fell (prices up). Credit markets and the AUD faced turbulence during the sharp risk-off episode on Liberation Day but recovered meaningfully thereafter.

Gold extended its rally, managed futures lagged, and the USD weakened sharply – A common index used for the USD, the DXY, dropping from 104 to 99 over the month.

Asset Allocation Exposure

Breakdown pie chart
Global Shares46.79%
Australian Shares27.26%
Fixed Interest9.21%
Alternatives8.20%
Real Assets7.32%
Cash1.22%

Top Portfolio Holdings

VanEck Vectors MSCI International Value ETF
10.09%
DNR Capital Aus Eq High Conviction
9.70%
Capital Group New Perspective Fund Hedged (AU)
8.29%
Betashares Ftse 100 ETF
7.59%
Invesco Wholesale Australian Share Fund
7.17%
Schroders Equity Opportunities
6.65%
Quay Global Real Estate Fund - Hedged
6.01%
BetaShares S&P 500 Equal Weight ETF
5.18%
VanEck MSCI International Small Companies Quality ETF
5.02%
GQG Partners Emerging Markets Equity Fund
4.75%

Growth of $100,000 since inception

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Market Outlook

While risk appetite has clearly improved and the surface narrative appears benign, several key risks continue to loom over the US economy and broader financial markets. Even a modest 10% tariff could reduce US economic growth by more than 1%. Government bond yields have returned to levels last seen 5 weeks ago when investors were pricing in heightened inflation risks from his reciprocal tariffs, highlighting renewed pressure. Elevated yields pose a growing risk—not only to consumers, who are now beginning to feel the delayed effects of tight monetary policy—but also to the US government, which faces substantial refinancing needs in 2025 and 2026.

Beyond these challenges, market participants may be underestimating the uncertainties surrounding Trump’s potential return to power. Recent developments, such as Moody’s downgrading the US’ credit rating from AAA to Aa1 due to widening deficits and rising interest costs, underscore the growing fiscal strain.

The Federal Reserve once again finds itself in a difficult balancing act. Inflation remains persistent, yet downside risks to growth and tighter financial conditions threaten to weigh on employment. Meanwhile, the S&P 500 trades at nearly 23x forward earnings, with double-digit growth expectations for 2025 and 2026—sentiment that warrants caution.

Australia has more rate cuts predicted than the US, even after global uncertainty has begun to fade. Despite this, valuations are still high and real disposable income is relatively strained. Given this backdrop, we continue to steer clear of the more richly valued segments of equity markets—such as US mega caps—and maintain an overweight position in areas like international value, emerging markets, and UK equities.

Investment Objective

The portfolio aims to provide a return exceeding the RBA Target Cash Rate +5% p.a., before fees, over rolling 10 year periods.

Key Information

Inception01/09/2017
Management Fee0.36%
Maximum Expected Volatility15.00%
Standard Risk MeasureHigh
BenchmarkRBA Cash Rate Target + 5.0%
Model CodeINR014
Investment Timeframe10 Years
PlatformHUB24

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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