Innova Moderately Conservative Portfolio

July 2025

Performance Table

1MTH3MTH6MTH1YR3YR (PA)5YR (PA)INCEPTION (PA)
Innova Moderately Conservative Portfolio0.83%3.58%3.06%6.29%6.70%5.67%4.85%
FE Peer Group Moderately Conservative0.41%2.72%2.58%5.79%5.12%3.86%3.57%
Excess Returns0.42%0.86%0.48%0.50%1.58%1.81%1.28%

Portfolio Performance

A key theme over the past month has been the impact of tariffs on inflation and earnings growth, which remains contested. Evidence suggests producers (US businesses) are facing pressure through higher-than-expected producer prices (import costs etc), yet growth and spending continue to hold up. Significant non-farm payroll revisions shook markets, sending yields lower and underscoring the effects of Trump’s deportation policy on labour market growth. In contrast, Q2 U.S. earnings came in stronger than expected, with early signs of resilience also emerging domestically. The RBA cut rates in August as expected, lowering the cash rate to 3.60%—its third cut this year.

In July, Innova portfolios mildly underperformed benchmarks, primarily due to relative weakness in our global equity allocations and real assets. Global equities returned 3.11%, while domestic equities lagged at 2.42%. Growth stocks outpaced value, and overall market breadth has remained robust in recent months. Domestic credit significantly outperformed Government bonds, which was a key contributor alongside our heavy underweight to CBA which had a correction in price.

U.S. yields were volatile but ended higher (bond prices lower) through July. However, in early August, labour market revisions shifted expectations toward further rate cuts, sparking optimism for rate-sensitive assets. Precious metals performed well, with gold and silver ETFs rising 2.1% and 2.44% respectively. The AUD/USD slipped slightly in July, moving from 0.653 to 0.643, before recovering to 0.652 as of August 18th.

Asset Allocation Exposure

Breakdown pie chart
Fixed Interest34.97%
Global Shares19.93%
Australian Shares15.30%
Real Assets6.06%
Alternatives5.95%
Cash17.79%

Top Portfolio Holdings

Realm Short Term Income Ordinary
13.53%
Global X Us Treasury Bond
9.79%
Janus Henderson Conservative Fixed Interest
7.31%
Vanguard Australian Government Bond Index ETF
7.20%
Macquarie True Index Cash Fund
5.83%
DNR Capital Aus Eq High Conviction
5.66%
VanEck Vectors MSCI International Value ETF
5.01%
Quay Global Real Estate Fund - Hedged
4.73%
Invesco Wholesale Australian Share Fund
4.70%
Capital Group New Perspective Fund Hedged (AU)
3.78%

Growth of $100,000 since inception

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Market Outlook

Recent US inflation reports show a mixed picture: in sectors like cars and apparel, producers are absorbing tariff costs, while housing goods and furniture have seen noticeable consumer price increases. Foreign-born labour growth, which has driven much of labour market participation since 2021, has slowed significantly, raising concerns of tighter labour supply and upward wage pressure. Job creation is also diverging, with strength in healthcare and government roles while private sector hiring lags. Although markets are optimistic on US rate cuts, macroeconomic volatility means the policy path remains uncertain.

Global equity markets are testing all-time highs, but much of the optimism rests on expectations of rate cuts and heavy investment in AI and data centres rather than lower uncertainty. Despite materially higher effective tariff rates, risk assets are not pricing this risk.

In Australia, recent RBA cuts have supported consumer spending, with CBA reporting stronger discretionary spending among younger cohorts—a positive sign for growth. However, the RBA remains cautious given persistent government-sector labour strength and still-low unemployment. Equity market valuations remain elevated across most sectors, keeping us selective in our domestic positioning.

Investment Objective

To achieve returns after the managed account fee that on average exceed RBA Cash Rate by 2.5%p.a. over periods of five years or more. The portfolio aims to provide investors with a diversified mix of defensive and growth assets.

Key Information

Inception03/08/2015
Management Fee0.36%
Maximum Expected Volatility7.00%
Standard Risk MeasureMedium
BenchmarkRBA Cash Rate Target + 2.5%
Model CodeCFSINNAMC
Investment Timeframe5 years
PlatformCFS Edge

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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