Quarterly Investment Portfolio Update


Changes to your Australian shares
Inclusion of a completion fund
Plans for 2022

As many of you will note, the AAN Investment Committee have long maintained the policy of rebalancing models on a quarterly basis, and this was actioned last Friday. This process involves trimming positions that have performed well, topping up those that haven’t and as part of this rebalance a number of changes were made to the Core, Growth and Australian models, and we wanted to share those with you.

The changes implemented were done with a view to;

  1. Reduce risk and volatility in Australian equities
  2. Professional management for the defensive portion of the AAN Growth Model

Changes to your Australian shares

In both the AAN Core and AAN Growth Models we have reduced your exposure to Hyperion, Bennelong and VanEck, and have added an allocation to the BlackRock Index – Top 20. The Investment Committee have noted that over the last several quarters the correlation between Bennelong and Hyperion has increased (which means they are owning more of the same businesses) and the recent pullback allowed for us to provide you with access to some larger businesses via the BlackRock Model. The decision was made to reduce exposure to the VanEck Australian Equal Weighted ETF to ensure we maintained our policy of equal weighting our managers, and removing possible style bias.

Whilst you won’t see the names Bennelong, Hyperion or BlackRock on your screens or reports, it is worth noting that the Australian shares in your portfolio have been purchased by one of these three managers. The allocation to BlackRock will have the effect of increasing your allocation to some of the largest businesses in the Australian market such as ANZ, BHP, CBA, Transurban, Wesfarmers and other major companies. It is the view of the AAN Investment Committee that this should lead to a reduction in the volatility in the Australian equities portion of your portfolio, greater diversification and an increase to your dividend income.

For investors in the AAN Australian Model, we have sold down the BetaShares A200 ETF and added an allocation to the BlackRock Index – Top 20. This will ensure consistency across each of our models in terms of how Australian shares are managed and the level of transparency each model offers.

Inclusion of a completion fund

Sitting inside the AAN Growth Model is an allocation to a series of index based investments administered by BetaShares and Vanguard. What that means is that as the market moves, so does the value of your portfolio. This low cost approach has served investors well for much of the last several years. Whilst the AAN Investment Committee remains comfortable with some index allocation for your equities investments, we have been seeking alternatives that will allow us to reduce your index exposure to fixed income markets for some time now.

With this in mind we have allocated 10% of the AAN Growth Model to the Perpetual Diversified Real Return Fund. What this means for investors in the AAN Growth Model is that this allocation will now act as what we call a completion fund, as this allocation will be actively managed by professional managers. In a rising interest rate environment this is an important step as Perpetual will be able to move more into, and out of, assets as they see fit, which adds an additional layer of protection and opportunity.

Investors in the AAN Core Model have long held a 20% exposure to the Perpetual fund and have been rewarded with the exposure, as have Perpetual who recently won the Morningstar Multi Asset Manager of the Year Award.  We expect that this change will allow all investors to be rewarded with a modest fee reduction.

Plans for 2022

Over the coming months we intend to add a completion fund to the AAN Sustainable Growth Model, and are currently doing due-diligence on several managers.

We have made no formal changes to the international sector, however a review of active managers is underway, as we would like to add an additional manager to complement those that are currently managing international shares within your portfolio (Franklin Templeton, VanEck and Vanguard) for the reasons outlined in the Australian shares above.

As always, if you have any questions about these changes, please don’t hesitate to reach out to your adviser, or send me an email.


Marshall Brentnall, and the AAN Investment Committee




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