Innova Active Moderately Conservative Portfolio (S)

March 2026

Performance Table

1MTH3MTH6MTH1YR3YR (PA)5YR (PA)INCEPTION (PA)
Innova Active Moderately Conservative Portfolio (S)-2.28%-0.03%0.77%5.72%6.26%-6.66%
FE Peer Group Moderately Conservative-2.42%-0.92%-0.47%4.60%5.00%3.13%5.55%
Excess Returns0.14%0.89%1.24%1.12%1.26%-1.11%

Portfolio Performance

March brought significant volatility to financial markets, driven by the escalation of the Iran–US conflict in the Middle East. Markets tend to overreact to geopolitical events; however, uncertainty surrounding this conflict has been particularly elevated due to the unpredictability of the US administration and the potential scale of retaliation across the region. Importantly, while market prices moved significantly, expectations for company earnings did not change much. This, alongside oil futures pointing to lower prices by year-end and inflation expectations remaining range-bound, suggests that markets are pricing the conflict as relatively short-lived. Higher growth-focused and interest rate sensitive sectors were hit hardest, as inflation expectations initially surged on the back of oil price spikes. However, markets have since recovered somewhat, supported by emerging peace talks.

Innova portfolios outperformed over the month, largely due to having lower exposure to some of the more volatile areas of the market that experienced the sharpest selloffs, including silver, gold and Asian equities. Diversification across equity factors such as low volatility, quality, momentum and value, along with an underweight to duration, also supported performance.

Domestic equities significantly underperformed global equities, declining 7.3% compared to a 2.5% fall in global markets. Domestic floating rate credit performed strongly relative to broader fixed income benchmarks and other asset classes. Our defensive alternatives position in K2 Athena delivered a positive return of 0.5% for the month. Currency remained volatile, with AUD/USD declining approximately 3.7%.

Asset Allocation Exposure

Breakdown pie chart
Fixed Interest33.88%
Global Shares18.35%
Australian Shares17.88%
Alternatives7.47%
Real Assets6.92%
Cash15.50%

Top Portfolio Holdings

First Sentier Wholesale Strategic Cash
15.50%
Perpetual Wholesale Diversified Income
11.97%
Western Asset Wholesale Australian Bond
11.75%
Realindex Wholesale Australian Share
6.49%
Realindex Wholesale Global Share
6.35%
Colchester Wholesale Global Government Bond
5.51%
Acadian Wholesale Defensive Income
5.21%
Resolution Capital Wholesale Global Property Securities
5.18%
GQG Partners Global Equity - Hedged
4.83%
PM Capital Wholesale Enhanced Yield
4.65%

Growth of $100,000 since inception

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Please note Benchmark performance is priced daily.

Market Outlook

Markets are still digesting the implications of higher-for-longer oil prices, which could feed into higher core inflation. This type of supply-side inflation is difficult to address through central bank interest rate policy. If the conflict escalates, the impact is likely to vary by region, with areas more reliant on energy imports such as Europe, Asia and Australia likely to be more adversely affected.

The path of the conflict remains highly uncertain. Rather than attempting to predict outcomes, our approach is to remain well diversified and limit exposure to regions that may be more vulnerable in a prolonged scenario.

We entered 2026 with a neutral positioning, but with a constructive outlook on growth and liquidity. Our expectation has been for a rotation away from expensive high beta names toward more cyclical and under-owned areas of the market. Manufacturing and industrial data had been improving materially prior to the conflict, and if this normalisation resumes, we expect continued re-rating across cyclicals, particularly in small caps, value and selected emerging markets.

Our overweight in the low volatility factor gives us protection in volatility moments like those we’ve been seeing in markets. Following strong performance in international value and UK equities, we are considering rebalancing toward core factor exposures and broader market beta. With elevated US fiscal spending and a weakening USD, maintaining exposure to assets remains important despite near-term uncertainty.

Domestically, conditions remain challenging, with persistent inflation, weak consumer confidence and the risk of further rate hikes. Australia’s reliance on energy imports and high household debt increases its sensitivity to the current conflict. That said, value has emerged in bond markets, which are likely to move in line with the US if rate cuts occur, albeit from a higher starting yield.

Investment Objective

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

Key Information

Inception14/12/2022
Management Fee0.00%
Maximum Expected Volatility7.00%
Standard Risk MeasureMedium
BenchmarkRBA Cash Rate Target + 2.5%
Model CodeCFSFC007
Investment Timeframe5 years
PlatformCFS FirstChoice

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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