Innova Active Balanced Portfolio (S)

January 2025

Performance Table

1MTH3MTH6MTH1YR3YR (PA)5YR (PA)INCEPTION (PA)
Innova Active Balanced Portfolio (S)1.72%3.42%4.95%10.34%--9.97%
FE Peer Group Balanced1.75%3.25%4.60%10.10%4.95%4.58%9.51%
Excess Returns-0.03%0.17%0.35%0.24%--0.46%

Portfolio Performance

2025 began with renewed optimism surrounding capital markets, particularly equities in the United States. The S&P500 began the year on a tear, up over 4% to January 23rd. However, the announcement around the surfacing of DeepSeek raised questions about the bull markets stability. Nvidia dropped approximately 17% in a day – the largest single-stock loss in one trading period. The losses partially recovered at an index level over subsequent days, but the market has been in a volatile sideways moving pattern as tariff announcements leave uncertainty about the outcome.

Global equities rose over 3.5% before currency effects and 2.7% after accounting for the AUD rally. The domestic equity market did particularly well, up almost 4.5%. Our global equity positioning mostly benefitted over the month. Gold Miners via the GDX ETF were a particular standout, generating over 14% in January alone. They remain a fantastic performer over the year, with rising gold prices boosting their share price, yet they still trade at a significant discount to both the gold price and production costs.

Debt and fixed income markets all had a positive month, as fixed rate bonds benefitted from a slight drop in yields, and floating rate credit continued to generate attractive income yields. Our overall defensive positioning did not act as a drag on performance, as our factor allocations within asset classes as well as asset allocation generated excess returns to make up for less risky assets in the portfolio.

Asset Allocation Exposure

Breakdown pie chart
Fixed Interest29.54%
Global Shares26.67%
Australian Shares22.48%
Real Assets7.43%
Alternatives6.20%
Cash7.68%

Top Portfolio Holdings

Colonial First State Wholesale Index Global Share
13.12%
Western Asset Wholesale Australian Bond
12.92%
DNR Capital Wholesale Australian Equities High Conviction
10.85%
Perpetual Wholesale Diversified Income
10.09%
First Sentier Wholesale Strategic Cash
7.68%
Realindex Wholesale Australian Share
7.60%
Realindex Wholesale Global Share
7.50%
Resolution Capital Wholesale Global Property Securities
5.58%
CFS Index Australian Share
4.03%
GQG Partners Global Equity - Hedged
3.55%

Growth of $100,000 since inception

ResetPerformance line chart
1YR
Powered by data from FE fundinfo

Please note Benchmark performance is priced daily.

Market Outlook

We anticipate 2025 will be marked by persistently high interest rates in the US, contrasting with significant divergence across global markets. The recent bull market fuelled by optimism surrounding anything A.I. related has not been broad reaching, with plenty of sectors, regions and companies trading at attractive levels with solid future outlooks for profitability and share price. At current valuations, the mega cap stocks in the US have all future growth priced in. This will be fine if they are able to meet those lofty expectations, however, as the DeepSeek announcement in late January showed, the market is vulnerable if shareholders realise they have not adequately priced in the risk of the plethora of events that could cause future results to fall short. Outside of these stocks, future returns look less susceptible to potential risks as much of this is already priced in. As earnings flow through, share prices should follow, and so the outlook still looks reasonable.

Domestically, we are concerned that productivity growth (or lack thereof) and high realised costs to the household will continue to be a headwind to the economy, and therefore future earnings growth of certain businesses. The big banks have had a stellar run, particularly CBA, but one has to ask how much further they can go. Instead, we prefer to be allocated to strategies more focussed on reasonable valuations and more defensive sectors, not as economically linked to the domestic economy. This strategy is yet to pay off, as the rally to date seems to be divorced from fundamentals and primarily momentum driven, which is the kind of environment we prefer to avoid as when reality hits, these areas are the hardest hit.

To navigate the macroeconomic volatility with changing correlations across asset classes, we are avoiding overweight positions in interest-rate sensitive government bonds, US mega caps on sky high valuations, and raw small-cap equities. Instead, investors should focus on companies with strong pricing power that can withstand higher interest rates and benefit from global cyclical growth.

Investment Objective

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

Key Information

Inception14/12/2022
Management Fee0.00%
Maximum Expected Volatility9.00%
Standard Risk MeasureMedium to High
BenchmarkRBA Cash Rate Target + 3.0%
Model CodeCFSFC008
Investment Timeframe6 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.

Contact Us

Download Privacy Policy

Download FSG