Innova Lifestyle Preservation Portfolio

December 2025

Performance Table

1MTH3MTH6MTH1YR3YR (PA)5YR (PA)INCEPTION (PA)
Innova Lifestyle Preservation Portfolio0.48%1.56%4.50%9.93%7.26%4.21%4.25%
FE Peer Group Conservative0.10%0.23%1.78%4.88%5.33%2.77%3.13%
Excess Returns0.38%1.33%2.72%5.05%1.93%1.44%1.12%

Portfolio Performance

Equity markets experienced mixed outcomes in December, with value-oriented sectors and select regional exposures outperforming broader developed markets as valuation concerns around the tech-heavy S&P 500 increased. The US Federal Reserve continued its easing cycle with a 25 bps rate cut, taking the policy rate to 3.5–3.75%, reinforcing the prevailing bullish narrative. Ongoing evidence points to a cooling US labour market, increasing the likelihood employment conditions remain a priority for the Fed. Domestically, rising inflation expectations have reduced the probability of the RBA easing in 2026, with markets instead pricing in the risk of further rate hikes.

In December, Innova portfolios outperformed their benchmarks, driven primarily by global value outperforming global growth, alongside strong contributions from select regional exposures. Developed markets declined 0.9% and emerging markets fell 1.56% . Global value and UK equities were notable contributors, while domestic equities gained 1.42%. Listed Property (REITs) underperformed broadly, while commodities extended their strong momentum, led by precious metals.

Within fixed income, interest-rate-sensitive assets such as government bonds underperformed floating-rate instruments, which benefited as yields moved higher (Government Bonds are mostly fixed rate, so prices going down causes yields to rise). The AUD/USD appreciated from 65.4 to 67.0, reflecting a sharp divergence in central bank policy guidance and ongoing US dollar weakness.

Asset Allocation Exposure

Breakdown pie chart
Fixed Interest36.04%
Global Shares17.95%
Australian Shares11.80%
Alternatives5.69%
Real Assets3.03%
Cash25.50%

Top Portfolio Holdings

Macquarie True Index Cash Fund
16.35%
Realm Short Term Income Ordinary
11.62%
Global X Us Treasury Bond
8.17%
Vanguard Australian Government Bond Index ETF
7.40%
Janus Henderson Conservative Fixed Interest
5.78%
Vaneck Vectors Australian Floating Rate ETF
4.79%
Western Asset Bond Fund
4.07%
Vanguard FTSE Emerging Markets Shares ETF
3.69%
Franklin K2 Athena Fund
3.58%
VNGD INTL SHARES H ETF UNITS
3.55%

Growth of $100,000 since inception

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5YR3YR1YR
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Market Outlook

We enter 2026 with a constructive outlook for growth and liquidity, which should continue to support asset prices. Most developed economies remain in an expansive fiscal and monetary stance, while geopolitical risks remain elevated. We expect AI investment to continue, though concerns around debt financing, circular funding structures, and depreciation assumptions warrant caution. At the same time, the US labour market is showing early signs of softening, and the economy continues to show a clear divide (“K-shaped”), where lower- and middle-income households rely more on government support, while higher-income earners benefit from rising asset values.

In the US, the introduction of the “One Big Beautiful Bill,” alongside further rate cuts and an end to quantitative tightening, should improve liquidity conditions and support spending. That said, indiscriminate exposure to the most expensive segments of the market can skew risk-reward outcomes unfavourably, even where earnings growth is strong. We therefore continue to favour areas with reasonable earnings growth and more attractive starting prices (valuations), including UK equities, global value, emerging markets, and quality small caps. The experience of the Magnificent 7 in 2025 highlights how elevated valuations can limit how much they can rise further.

Overall, expected returns across many asset classes have moderated as the rotation into more reasonably priced assets (our base case from the last 2 years) is in the process of playing out. We remain neutral across growth and defensive allocations, with greater selectivity within equities and other risk assets. We also maintain a short-to-mid level of interest rate sensitivity (duration) given fiscal concerns, while capturing close to 5% yield through domestic floating-rate notes.

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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