The year has started with a rush with the stock market adding over 6% in January. Ten out of the 11 industry sectors are in the green, with consumer discretionary, materials, real estate and information technology leading the way. Our model portfolios have also enjoyed solid gains.
In January, we updated our model portfolios for 2023. There are two portfolios – an income-oriented portfolio and a growth-oriented portfolio. The objectives, methodology, construction rules and underlying economic assumptions can be referenced here: (see: https://switzerreport.com.au/our-portfolios-for-2023/
These are long-only model portfolios, and as such, they are assumed to be fully invested at all times. They are not “actively managed”, although adjustments are made from time to time.
Performance in January 2023
The income portfolio to 31 January has returned 5.22% and the growth-oriented portfolio has returned 6.67% (see tables at the end). Compared to the benchmark S&P/ASX 200 Accumulation Index (which adds back income from dividends), the income portfolio has underperformed by 1.01% and the growth portfolio has outperformed by 0.45%.
Income Portfolio
The objective of the income portfolio is to deliver tax advantaged income whilst broadly tracking the S&P/ASX 200.
The income portfolio is forecast to deliver an income return of 5.0% (based on its opening value at the start of the year), franked to 80.3%.
In the month of January, the income portfolio returned 5.22%. This underperformed the benchmark index by approximately 1.01%. The portfolio is moderately overweight financial stocks and underweight the more growth orientated sectors such as information technology and health care.
In a strong bull market, the income portfolio will typically lag the market, and in a bear market, it is likely to outperform.
The income biased portfolio per $100,000 invested (using prices as at the close of business on 31 January 2023) is as follows:
Growth Portfolio
The objective of the growth portfolio is to outperform the S&P/ASX 200 market over the medium term, whilst closely tracking the index.
In January, the growth portfolio outperformed the benchmark index by approximately 0.45% to deliver an overall return of 6.67%. The portfolio is moderately overweight financials, health care and information technology. It is moderately underweight industrials, real estate and utilities. Overall, the sector biases are not strong.
Our growth-oriented portfolio per $100,000 invested (using prices as at the close of business on 31 January 2023) is as follows:
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
