Innova Active High Growth Portfolio

February 2025

Performance Table

1MTH3MTH6MTH1YR3YR (PA)5YR (PA)INCEPTION (PA)
Innova Active High Growth Portfolio-1.68%-0.05%4.56%9.09%6.45%8.25%9.29%
FE Peer Group High Growth-1.30%0.47%5.57%11.59%8.09%8.59%9.02%
Excess Returns-0.38%-0.52%-1.01%-2.50%-1.64%-0.34%0.27%
RBA Cash Rate Target + 5%1.77%2.66%5.03%9.57%8.59%7.21%7.19%

Portfolio Performance

Late February and early March witnessed increased market volatility driven by persistent policy uncertainty, economic growth concerns, and the implementation of further tariffs by the Trump administration. This period resulted in highly divergent equity performance, with a notable rotation away from US mega-cap stocks towards European and emerging market equities.

Global equities were down -0.42% in AUD terms, with domestic equities down -3.79%. Our global equity positioning was mixed but overall outperformed, with international value equities continuing to serve as a beneficiary with the rotation away from US mega caps. Detractors in the asset class included global quality small caps. Our underweight to A-REITs proved beneficial given it was down 5.5% for February.

Our fixed-income sleeve outperformed its benchmark, with selective curve and regional positioning being a contributor in our government bond allocation. Overall, the Innova portfolios had strong performance in February, particularly in growthier risk profiles where relative positioning within equities contributed positively to performance.

Asset Allocation Exposure

Breakdown pie chart
Global Shares47.01%
Australian Shares36.11%
Real Assets7.91%
Alternatives4.39%
Fixed Interest3.71%
Cash0.86%

Top Portfolio Holdings

DNR Capital Aus Eq High Conviction
13.33%
VanEck Vectors MSCI International Value ETF
10.57%
Invesco Wholesale Australian Share Fund
9.17%
Schroders Equity Opportunities
8.80%
Capital Group New Perspective Fund Hedged (AU)
8.19%
QUS
7.30%
Betashares Ftse 100 ETF
5.33%
VanEck MSCI International Small Companies Quality ETF
5.16%
Quay Global Real Estate Fund - Hedged
5.05%
Macquarie True Index Australian Shares Fund
4.81%

Growth of $100,000 since inception

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Market Outlook

Our investment thesis, established in 2024, anticipated a shift from overvalued AI-driven equities towards US domestic and international value sectors, projected to materialize in 2025. This forecast has proven accurate. As of March 18th, 2025, the Magnificent 7 have declined by 16%, while the MSCI World Enhanced Value index, our largest overweight, has gained 10%.

Despite recent market volatility fuelled by recession anxieties, tariff concerns, and weaker-than-expected economic data, we maintain a constructive outlook. While acknowledging the softer economic indicators, we believe US recession fears are overstated. The reported government job reductions, approximately 100,000, represent a negligible impact on the robust labour market. Initial jobless claims remain stable, and private nonfarm payrolls continue to average 170,000 new jobs per month. However, we are monitoring declining consumer confidence and rising consumer inflation expectations.

We expect US economic outperformance to persist, although substantial fiscal stimulus in Europe and China has tempered our previous relative pessimism regarding their growth prospects.

Domestically, the Reserve Bank of Australia (RBA) lowered the policy rate by 25 basis points to 4.1% in February, aligning with market consensus. This decision reflects the observed deceleration of inflation, positioning Australia as the last major developed economy to adjust its policy rate. The Australian economy exhibits significant generational asymmetry in real disposable income and savings, with older demographics driving consumption and savings patterns.

Investment Objective

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

Key Information

Inception30/03/2012
Management Fee0.36%
Maximum Expected Volatility13.00%
Standard Risk MeasureHigh
BenchmarkRBA Cash Rate Target + 5.0%
Model CodeINR005
Investment Timeframe8 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.