Innova Wealth Creation Portfolio - Fundamental

May 2025

Performance Table

1MTH3MTH6MTH1YR3YR (PA)5YR (PA)INCEPTION (PA)
Innova Wealth Creation Portfolio - Fundamental2.85%2.22%3.25%10.30%7.50%7.37%6.15%
FE Peer Group Balanced2.36%1.18%1.89%8.65%6.30%6.28%5.37%
Excess Returns0.49%1.04%1.36%1.65%1.20%1.09%0.78%
RBA Cash Rate Target + 3%0.94%1.75%3.89%7.69%6.84%5.34%4.98%

Portfolio Performance

May brought a risk-on mood back to risk assets, though in early June we’ve started to see some consolidation as volatility continues to loom. The main story continues to revolve around policy uncertainty and the direction of fiscal deficits, which have implications for the path of monetary policy in the US. Trump claims that the US-China deal is done, landing on a 55% tariff rate for Chinese imports and 10% for US exports to China, as well as continued access to China’s rare earth minerals. Adding to this volatile environment is the conflict that has begun between Iran and Israel, causing spikes in volatility indices and oil prices.

Global equities were up 5.36% in AUD terms for May, while domestic equities were up 4.20%. US and Australian 10y government bond yields rose, though in Australia we received a rate cut which supported bond prices. Domestic credit again performed better due to the volatility in yields throughout the month, and a risk-on stance. The Innova portfolios performed broadly in line with benchmarks across the risk profiles, but outperformed in the defensive profiles. Given the broad recovery, there was not excessive dispersions across different equities, though Korea was a standout delivering 7.55% relative to the EM delivering 3.24%. Silver returned 2.02% while gold was down 1.35%, and the AUDUSD pair continued to be driven slightly higher on US fiscal concerns.

Asset Allocation Exposure

Breakdown pie chart
Global Shares34.69%
Fixed Interest24.38%
Australian Shares22.83%
Alternatives6.08%
Real Assets4.92%
Cash7.10%

Top Portfolio Holdings

Macquarie True Index Australian Shares Fund
11.41%
VanEck Vectors MSCI International Value ETF
7.74%
VNGD INTL SHARES H ETF UNITS
6.86%
BondAdviser Income Plus Portfolio
6.76%
Betashares Ftse 100 ETF
6.04%
Realm Short Term Income Ordinary
5.94%
Macquarie True Index Cash Fund
5.88%
Invesco Wholesale Australian Share Fund
5.82%
Betashares FTSE RAFI Australia 200 ETF
5.60%
Global X Us Treasury Bond
4.96%

Growth of $100,000 since inception

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Market Outlook

Tariff uncertainty has eased notably since Liberation Day, prompting a relief rally across markets. However, we aren’t yet convinced of any definitive deal between China and the US, despite investor optimism.

The “Big Beautiful Bill,” which outlines the Trump administration’s future budgetary plans, and in particular the extension of corporate and household tax cuts, has sparked significant concern—not only among Republicans but also from prominent public figures like Elon Musk. Once touted as a cost-cutting government, the administration now appears poised to further inflate the national deficit rather than reduce net spending, which is contrary to the initial agenda. It seems unlikely that Trump will keep mass tariffs as a recession in the US would likely force more fiscal stimulus, which goes against the cost cutting agenda.

A flare-up in the Israel-Iran conflict has reawakened risk aversion across global markets, most evident in the energy sector where WTI crude oil futures rose significantly, climbing approximately 23% to $74 a barrel between June 1st and June 16th. However, this period has been marked by an unusual divergence: classic safe-haven assets, including US Treasuries and the US dollar, have failed to attract typical inflows. This suggests that investor anxiety over US fiscal policy may be overriding geopolitical fears. Overall, soft data continues to look weak, though hard data such as employment figures continue to show a resilient labour market, complicating the economic picture. Our core view remains that the US economy is heading for a soft landing. Consequently, we continue to see value in allocations to resilient companies that are not priced for perfection and are built to withstand a sustained period of higher interest rates.

Investment Objective

The portfolio aims to provide a return exceeding the RBA Target Cash Rate +3% p.a., before fees, over rolling 7 year periods.

Key Information

Inception01/09/2017
Management Fee0.36%
Maximum Expected Volatility9.00%
Standard Risk MeasureMedium to High
BenchmarkRBA Cash Rate Target + 3.0%
Model CodeINR010
Investment Timeframe7 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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