Joint Statement by Baillieu Limited Chairperson David Trude and Managing Director Gavin Powell

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Australian Managed Funds & ETFs – Preferred Australian equity funds

In this note, we present three equity fund approaches to Australian equity investing, designed as a complement to existing individual security portfolios for some investors and as an attractive starting point for new investors. For many investors, a solid risk-management strategy is to complement existing direct holdings with active and passive strategies. Below are three examples of how these funds may be used:

  1. The mini-asset allocation solution: In our multi-asset portfolios, one of the six core asset classes is Australian equities. In these portfolios, we express our Australian equities exposure through a combination of index tracking ETFs and active managers (Figure 1). The active managers could be substituted for others, such as the Fidelity Australian Equities fund, or investors may choose just to have one, in which case we would have a preference for the Greencape Broadcap fund.
  2. Diversify outside the top 20: Many investors hold a good portion of the top 20 (even top 50) companies listed on the ASX directly. An easy way to diversify these holdings across the broader parts of the Australian market is to include an ETF such as EX20 and/or a small/mid cap active manager such as the Fidelity Future Leaders Fund.
  3. Core passive exposure complemented by a concentrated direct security portfolio: For investors seeking a core-satellite portfolio solution, the core may include low-cost ETFs complemented by a satellite concentrated direct security portfolio. Strong core options include A200, IOZ or VAS, depending on the preferred index. All are attractively priced at an annual fee of 0.07%, 0.09% and 0.10% respectively.

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