Innova Moderately Conservative Model

June 2025

Performance Table

1MTH3MTH6MTH1YR3YR (PA)5YR (PA)INCEPTION (PA)
Innova Moderately Conservative Model1.02%3.02%3.90%7.96%6.86%5.92%4.73%
FE Peer Group Moderately Conservative1.01%2.96%3.19%7.24%5.86%3.93%3.58%
Excess Returns0.01%0.06%0.71%0.72%1.00%1.99%1.15%

Portfolio Performance

Whilst policy uncertainty continues to be the driving theme throughout 2025, equity market participants have begun to treat it as old news, whereas bond and currency markets still have it front of mind. Mass government spending both domestically and in the US have increasingly been driving a larger proportion of economic growth and labour market activity. Trump announced a 30% tariff on European and Mexican imports on the 14th of July, effective from August 1st, whilst also entertaining a 200% tariff on Australian pharmaceuticals.

In June, the Innova traditional series underperformed benchmarks, whilst the Risk-defined series outperformed due to minor active limits and capabilities . Global equities delivered 2.48% whilst domestic equities lagged slightly with 1.42% for the month. Korean equities were the primary differentiator between the suites (where traditional does not hold Korean equities), surging ~16% for the month, contributing approximately 0.50% single handedly to the Aspiration portfolios.

U.S. yields declined, boosting government bond prices as markets priced in further rate cuts amid softer economic data. Despite this, the U.S. dollar fell ~1.7% against the AUD, benefiting our AUD-hedged U.S. duration exposure. The risk-on tone also supported credit and hedged global equities. Silver rose 6.75%, outperforming gold, which fell 1.5%.

Asset Allocation Exposure

Breakdown pie chart
Fixed Interest34.81%
Global Shares19.84%
Australian Shares16.31%
Real Assets6.29%
Alternatives5.96%
Cash16.79%

Top Portfolio Holdings

Realm Short Term Income Ordinary
13.57%
Vanguard Australian Government Bond Index ETF
8.80%
Pendal Enhanced Cash Fund
7.99%
Global X Us Treasury Bond
7.67%
Macquarie True Index Cash Fund
5.54%
DNR Capital Aus Eq High Conviction
5.47%
VanEck Vectors MSCI International Value ETF
5.05%
Quay Global Real Estate Fund - Hedged
4.88%
Schroders Equity Opportunities
4.84%
Invesco Wholesale Australian Share Fund
4.51%

Growth of $100,000 since inception

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Market Outlook

The narrative around tariffs and the U.S. fiscal trajectory remains highly unpredictable and volatile, shaping sentiment and disrupting USD-linked assets such as Treasury bonds. While policy-driven uncertainty persists, it is also laying the groundwork for higher nominal growth which is supportive for certain risk assets but creates inflation risk. A potential motive for the U.S. government is to inflate away its massive debt burden through continued issuance of new debt, which can be used to pay off old debts which are now worth less due to inflation. The hope is that nominal growth will eventually outpace the liabilities of the past.

In response, our portfolios remain tilted toward assets more resilient in such an environment—favouring shorter-duration equities, hard assets supported by nominal growth, quality small caps, global cyclicals, and S&P 500 Equal-Weighted exposure, which benefits mid-caps like industrials and financials. We’re naturally underweight assets that are heavily USD denominated and which are likely to stay volatile amid fiscal uncertainty. Ultimately, either consumers or businesses will bear the cost of tariffs, reflected in lower S&P 500 profit margins or softer consumer spending and labour data (or both). Earnings forecasts for the S&P 500 in 2025 continue to drift lower, as analysts factor in the potential drag from tariffs and broader deglobalization trends.

Domestically, we saw a pause in the cutting cycle as the RBA communicated their lack of confidence in the disinflation trend and unemployment staying relatively stable in recent months around 4%.

Our largest underweight relative to benchmarks remains US mega-caps, which carry risks we are not comfortable being exposed to. As nominal growth holds up in the US and regions like Europe and emerging markets begin to catch up, we expect our active positions to benefit most through multiple expansion.

Investment Objective

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

Key Information

Inception30/11/2015
Management Fee0.36%
Maximum Expected Volatility7.00%
Standard Risk MeasureMedium
BenchmarkRBA Cash Rate Target + 2.5%
Model CodeMACC000033
Investment Timeframe5 years
PlatformNetwealth

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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