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        New Model, Same Make – Boosting our Portfolio Range with a High Growth Investment Option

        3 min read

        We are addressing changing market needs by expanding our range of risk-based ETF model portfolios. Advisers can now choose our new high growth investment option for their clients, which has nearly 90% of its holdings exposed to growth assets.

        There is an increasing demand among Australian financial advisers for cost-effective solutions that cater to a diverse range of investors, including younger individuals in the accumulation phase of their investment journey. This surge is partly underpinned by approximately $1.9 trillion of high net-worth (HNW) inter-generational wealth transfers that are due to take place. Indeed, 33% of HNW investors are already passing their wealth on to the next generation1.

        These market participants have a potentially greater tolerance towards risk and, crucially, longer investment horizons that allow time to build wealth. Furthermore, younger investors often enter the market with limited capital and financial experience. This makes an ETF-based portfolio an ideal vehicle, given its comprehensive mix of competitive fees, elevated liquidity, and ability to access multiple areas of the investment universe.

        The structure and use of managed accounts have also seen rapid growth over recent years, with investors continuing to fuel demand. The SPDR ETFs / Investment Trends 2024 Managed Accounts Report noted that the number of Australian financial advisers employing managed accounts has tripled in a decade to a record high of 56%. With a further 19% of advisers viewed as potential users, the managed account market could touch 75% in just a few years2.

        To meet this increasing need, State Street Global Advisors’ Investment Solutions Group has designed and structured a new High Growth ETF model portfolio to sit alongside our three existing risk-based Moderate, Balanced and Growth models.

        Harnessing the Skills of our Investment Solutions Group

        With the High Growth portfolio, we utilise a strategic asset allocation framework to invest in high-conviction ETF ideas spanning a broad range of sectors and asset classes. This framework focuses on risk tolerance, long-term return expectations, and, in the case of the High Growth option, relatively low turnover while managing risk exposure. Furthermore, the data we use to determine model allocation is assessed annually, and any changes are clearly communicated to our investors.

        The asset allocation process assesses a mix of holdings encompassing SPDR ETFs and those administered by other managers to ensure the High Growth portfolio is not constrained by sector, asset class or provider. Ultimately, we aim to deliver a low-cost, tax-efficient solution that maximises expected return for a given level of risk.

        Platform Availability

        The High Growth option can be accessed as a separately managed account (SMA) and is now available to financial advisers on the Praemium, Hub24 and Netwealth platforms. With 80% of advisers using SMAs, this is the most popular structure on any given platform3. Interestingly, over 64% of managed account users have harnessed growth strategies in the past 12 months, especially for investors with balances below $500,000. Our High Growth portfolio, which can be viewed as a standalone investment vehicle or blended with other portfolios, can be used in various ways in portfolio construction, such as its suitability as a low-cost core holding. This, of course, depends on the investor’s desired asset allocation or diversification needs.

        Contact the State Street Global Advisors team to learn more about the High Growth portfolio and how it could be a launchpad for your clients’ investment journeys.

        More on Model Portfolios

        - For financial advisers / wholesale clients only – Not for distribution to retail - clients –

         

        The recipient warrants by receipt of this material that they are a wholesale client, as defined under the Australian Corporations Act 2001 (Cth).

         

        State Street Global Advisors, Australia Limited (AFSL Number 238 276, ABN 42 003 914 225) (“SSGA, AL”) is the investment manager for the State Street ETF Model Portfolios and State Street Global Advisors, Australia Services Limited (AFSL number 274900 ABN 16 108 671 441) is the Responsible Entity and issuer of units in the State Street SPDR ETFs which are Australian registered managed investment schemes quoted on the AQUA market of the ASX or listed on the ASX. State Street ETF Model Portfolios may include State Street SPDR ETFs and other third party ETFs.

         

        This material is general information only and does not take into account your or your client’s individual objectives, financial situation or needs and you should consider whether it is appropriate for you or your client. You should ensure that your clients consider the product disclosure statement and target market determination of the underlying ETFs, available at www.ssga.com or the third party ETFs website, before deciding whether to acquire or continue to hold units in an ETF.

         

        General Risks: ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETF’s net asset value. ETFs typically invest by sampling an index, holding a range of securities that, in the aggregate, approximates the full index in terms of key risk factors and other characteristics. This may cause the fund to experience tracking errors relative to performance of the index.

         

        Investing involves risk including the risk of loss of principal. Diversification does not ensure a profit or guarantee against loss. Asset Allocation is a method of diversification which positions assets among major investment categories. Asset Allocation may be used in an effort to manage risk and enhance returns. It does not, however, guarantee a profit or protect against loss.

         

        An investment in the model portfolio carries a number of standard investment risks; these risks are outlined in each Provider’s PDS which should be read in full and understood by the potential investors.

         

        Implementation Risk: State Street does not manage the accounts of retail investors pursuant to the model portfolio strategies and the strategies are only available to retail investors through various Providers that offer account management and other services to retail investors. The actual results of accounts managed by a Provider that receives access to the strategies may differ substantially from the hypothetical results of the State Street ETF Model Portfolios for a variety of reasons, including but not limited to:

        • the fees assessed by the Provider and other third parties;

        • the Provider’s decision to exercise its discretion to implement a given strategy in a way that differs from the information provided by State Street;

        • the timing of the Provider’s implementation of strategy updates; and

        • investor imposed investment restrictions; and the timing and nature of investor initiated cash flow activity in the account.

         

        “SPDR” is a trademark of Standard & Poor’s Financial Services LLC (“S&P”) and has been licensed for use by State Street Corporation. No financial product offered by State Street Corporation or its affiliates is sponsored, endorsed, sold or promoted by S&P or its affiliates, and S&P and its affiliates make no representation, warranty or condition regarding the advisability of buying, selling or holding units/shares in such products.

         

        The trademarks and service marks referenced herein are the property of their respective owners. Third party data providers make no warranties or representations of any kind relating to the accuracy, completeness or timeliness of the data and have no liability for damages of any kind relating to the use of such data.

         

        The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA, AL’s express written consent. 

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