Innova Lifestyle Preservation Portfolio

August 2025

Performance Table

1MTH3MTH6MTH1YR3YR (PA)5YR (PA)INCEPTION (PA)
Innova Lifestyle Preservation Portfolio0.95%3.12%5.37%8.62%6.75%4.02%4.02%
FE Peer Group Conservative0.47%1.67%2.99%5.77%5.07%3.20%3.20%
Excess Returns0.48%1.45%2.38%2.85%1.68%0.82%0.82%

Portfolio Performance

The US economy is showing clearer signs of slowing, mainly due to recent job market data. Payroll figures (the number of people employed) have been revised down, and unemployment claims have climbed back to levels last seen in 2022. Interestingly, unless the slowdown turns into a full recession, this could actually support parts of the share market that haven’t kept up with the recent rally, because expected interest rate cuts would help improve financial conditions.

Bond markets have already reacted strongly to this. The 10-year US government bond yield has fallen to around 4%, down from 4.3% at the start of September. Concerns about US government spending have been put to the side, with investors instead focusing on the growing chance of rate cuts as the job market weakens.

In August, most Innova portfolios performed better than their benchmarks. The main reason was that “value” companies (those trading at cheaper prices relative to their fundamentals) outperformed “growth” companies (those expected to grow earnings quickly). Global shares had a mixed month overall, but the developed market benchmark rose 0.92%, while Australian shares gained 3.17%. In Australia, Commonwealth Bank continued to fall, while more cyclical sectors (companies linked to the ups and downs of the economy) bounced back.

In fixed income, government bonds, which are more sensitive to interest rate changes, did better than floating-rate bonds as yields fell around the world. The Australian dollar strengthened by 1.8% against the US dollar, which helped some of our hedged positions in global shares and bonds. In commodities, silver rose 5.34%, performing better than gold, which gained 2.23%.

Asset Allocation Exposure

Breakdown pie chart
Fixed Interest37.51%
Global Shares16.53%
Australian Shares10.16%
Alternatives5.31%
Real Assets2.30%
Cash28.19%

Top Portfolio Holdings

Macquarie True Index Cash Fund
16.76%
Realm Short Term Income Ordinary
11.98%
Vanguard Australian Government Bond Index ETF
7.59%
Global X Us Treasury Bond
7.29%
VNGD INTL SHARES H ETF UNITS
7.23%
Vaneck Vectors Australian Floating Rate ETF
6.44%
Janus Henderson Conservative Fixed Interest
5.93%
Macquarie True Index Australian Shares Fund
5.10%
Western Asset Bond Fund
4.21%
Franklin K2 Athena Fund
3.65%

Growth of $100,000 since inception

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Market Outlook

One unusual feature of this cycle is that company profit margins (the difference between revenues and costs) haven’t fallen back to their long-term averages as they usually do. Because of this, job losses and broader pressure on the labour market have taken longer to show up. Companies have been able to absorb risks such as tariffs instead of passing them directly onto consumers. Even though profit margins and earnings have stayed strong, there are now clear signs of weakness in the job market: about 25% of the unemployed have been out of work for more than six months, and surveys show that lower- and middle-income households are under the most financial stress.

The US Federal Reserve is expected to start cutting interest rates in September and keep doing so through to 2026. Markets are already pricing this in, and the weaker US dollar reflects it to some degree. While lower rates usually support share markets, the challenge this time is that valuations across most regions, sectors, and investment styles are already at very high levels. This suggests that future returns may be lower than average.

Globally, government debt pressures are becoming more obvious. France, Britain, and Japan—all with high debt levels—are showing signs of strain. In September, Fitch downgraded France’s credit rating to A+ due to political instability, sparking a sell-off in French government bonds. In Japan, the prime minister resigned, while in Britain 30-year government bond yields reached their highest levels of the century.

In Australia, falling inflation and a more supportive interest rate environment are helping heavily indebted households, especially mortgage holders. As a result, growth forecasts have been revised higher.

Investment Objective

The portfolio aims to to provide a return exceeding the RBA Target Cash Rate +1.5% p.a., before fees, over rolling 5 year periods.

Key Information

Inception01/08/2020
Management Fee0.36%
Maximum Expected Volatility4.00%
Standard Risk MeasureLow to Medium
BenchmarkRBA Cash Rate Target + 1.5%
Model CodeCFSINNALP
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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