Innova Lifestyle Preservation Portfolio

March 2025

Performance Table

1MTH3MTH6MTH1YR3YR (PA)5YR (PA)INCEPTION (PA)
Innova Lifestyle Preservation Portfolio0.11%1.86%2.24%5.88%3.96%-3.24%
FE Peer Group Conservative-0.08%1.06%2.07%4.09%3.00%3.50%2.82%
Excess Returns0.19%0.80%0.17%1.79%0.96%-0.42%

Portfolio Performance

On 2 April, markets were rattled by President Trump’s announcement of “reciprocal tariffs,” which led to a sharp sell-off. The S&P 500 dropped more than 10% over just two trading days. This added to the ongoing unease surrounding the Trump administration’s stance on global trade and foreign policy. Recession fears escalated, especially as bond markets began to show signs of stress—the yield on 10-year US government bonds jumped from 3.86% to 4.56% in just one week. This spike came after the administration implemented a 90-day tariff pause for most countries, excluding China, which instead saw a steep 145% tariff introduced.

Despite this challenging backdrop, Innova portfolios outperformed their respective benchmarks during March, with stronger relative performance in the more growth-oriented strategies. Global equities (measured in AUD) fell by 4.7%, while Australian shares declined by 3.34%. While risk assets broadly struggled, our tactical positioning within growth exposures helped deliver strong relative results. Just as in February, avoiding the US mega-cap sector and focusing on other markets proved beneficial. Notable contributors included gold miners, UK shares, and emerging markets.

In the fixed income space, the portfolios held up well. A focus on domestic credit added value, especially as global bond markets became more volatile. Gold continued its strong run, gaining 9.6% over the month. Our allocation to defensive risk premia also helped, providing meaningful downside protection and returning 2.5% in March while both shares and bonds came under pressure.

Asset Allocation Exposure

Breakdown pie chart
Fixed Interest39.23%
Global Shares17.14%
Australian Shares9.84%
Alternatives4.04%
Real Assets2.43%
Cash27.32%

Top Portfolio Holdings

Macquarie True Index Cash Fund
17.56%
Realm Short Term Income Ordinary
12.46%
Vanguard Australian Government Bond Index ETF
7.94%
Global X Us Treasury Bond
7.79%
Vaneck Vectors Australian Floating Rate ETF
6.67%
Janus Henderson Conservative Fixed Interest
6.19%
Macquarie True Index Australian Shares Fund
4.93%
VNGD INTL SHARES H ETF UNITS
4.59%
Western Asset Bond Fund
4.37%
Franklin K2 Athena Fund
4.04%

Growth of $100,000 since inception

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3YR1YR
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Market Outlook

Since the start of 2025, markets have become more uncertain, mainly due to trade tensions. After Trump’s re-election, tariffs introduced in late 2024 were first seen as inflationary, but now the bigger worry is slowing economic growth. Business and consumer confidence is falling, which could lead to weaker spending, less hiring, and slower global growth.

Surveys show growing nervousness across U.S. households and companies. Markets now expect 3–5 interest rate cuts in both the U.S. and Australia by the end of the year.

For the next 90 days, most countries face a 10% U.S. tariff—except China, which faces much higher rates. Trade talks may happen during this window, especially with key partners like Canada, Mexico, and Europe. China remains the biggest unknown in terms of how negotiations will unfold.

A full shift back to U.S. manufacturing is unlikely due to high labour costs and other challenges. It’s also uncertain if the government can cut the trade deficit or extend tax breaks. Meanwhile, the U.S. Federal Reserve has limited flexibility, as inflation remains stubborn. We remain cautiously positioned—diversified and focused on managing risk. While a U.S. recession isn’t expected, slower growth is likely through the rest of 2025.

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 First Wrap

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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