Each quarter the AAN model portfolios are reweighted back to their strategic benchmarks by the Investment Committee, however in our most recent end-of-quarter reweight some changes were also made to the underlying models. Some of these decisions were based on research that has been conducted over the last two quarters, and others were tactical and in response to market movements.
It has been well documented that global markets have fallen over the course of the last six weeks, which also includes movements in the value of the Australian dollar and corporate debt markets that have prompted the Investment Committee to make two tactical changes. Firstly, in the Growth and Core models the decision was made to move to a hedging level of 50%. This was to provide some downside protection to investors should the Australian dollar appreciate in value. In addition, the decision was made to de-risk some of the fixed income allocation within the Core model, by selling out of our corporate debt exposure, accessed through the BetaShares Cred ETF and allocating those monies to cash.
Continued falls in world equity markets also provided an opportunity to reduce costs across some of the index investments and that saw the Vanguard Australian Shares index replaced by the BetaShares A200. The investment in the Vanguard International Shares index fund was also split into two underly ETF’s. The primary driver behind this decision was to reduce costs, whilst providing investors with the same or very similar exposure.
Should you have any questions about your portfolio, I would encourage you to email or call your adviser 02 9232 6800.