Model Portfolio Service


Wise Owl Financial model portfolios are unique to us, reviewed and reported on by our in-house investment committee on a regular basis.

The key benefits of using index funds as the “Core” of a portfolio

  • Cost advantages: Lower management costs.
  • Diversification: A broad spread of securities which means less exposure to the performance fluctuations of single investment or managed fund.
  • Ease of management: Indexing provides consistent performance resulting in greater stability of your portfolio, making on-going portfolio management much easier.

  • Tax efficiencies: Index fund managers typically turn their portfolios over less often than active managers.
  • Risk Control: Consistent returns mean a low level of volatility

Our model portfolios are based on a Core-Satellite approach to investing which combines the benefits of index funds - lower cost, broader diversification, tax efficency and lower portfolio turnover - with actively managed funds offering potential to generate market beating returns. Wholesale investment options available means lower investment costs so more of your funds work towards providing you with better returns compared to many retail options.

CORE-SATELLITE APPROACH TO INVESTING

Investment markets can move significantly in unpredictable ways and experience tells us that selecting managers that consistently outperform the market is a challenge. The Core-Satellite approach to portfolio construction uses index funds as the “Core” of the portfolio, with carefully selected lowly correlated active investments as the “Satellites”. Core-Satellite portfolio construction is designed to balance costs, tax liability and returns while providing an opportunity to outperform the broader markets as a whole.

The core of the portfolio consists of passive investments that track major market indices, such as the ASX 200 and Standard & Poor’s 500 Index (S&P 500). Additional positions, known as satellites, are added to the portfolio in the form of actively managed investments.

SUMMARY

The Core-Satellite approach to portfolio construction approach used to combine actively managed funds with index funds in a single diversified investment portfolio. The appeal of this approach is that it seeks to establish a balance between risk and return while also securing some prospects of outperformance. The conventional view of the Core-Satellite methodology suggests it is prudent to use index funds for markets that are deemed efficient and to use active managers in areas considered to be inefficient.

At Wise Owl Financial, we conclude that indexing is a powerful strategy in most segments of the market, and that the active/index decision should therefore be predicated on an investor’s ability to identify talented managers at a reasonable cost and not on the indiscriminate selection of active managers in market areas perceived to be inefficient

Model Portfolios are a series of ready-made wealth management packages that are the culmination of 15 years of experience working with a diverse range of investment funds. We will tailor fit you a model portfolio with a track record of success that meets your needs and goals in a structured and transparent manner.

By sticking to a tried and tested Model, we minimise the cost compared to more traditional investment methods, and have access to a range of high quality investment managers. Our Model Portfolios draw their success from the Core Satellite approach to portfolio construction. This approach involves blending passive, indexed investments, with carefully selected active managers who seek to outperform the index returns of the Core.

With a high level of diversity and lower costs, we will find you a Model Portfolio to match your desired risk profile. Our Model Portfolios have solid track record with both large and small balances, whether you are risk averse or looking at being aggressively invested. They are also tailored for different life stages with portfolios designed to accumulate wealth, and help you retain wealth.

OUR STEPS To DEVELOPING A MODEL PORTFOLIO

STEP 1

FOUNDATION

Each of our Model Portfolios are built from the ground up to meet a particular demographics needs. We do this by conceptualising a strategy that defines the portfolios objectives and how it will operate. You can be confident that your portfolio has been created with over a decade’s worth of experience and with this high level of consistency

STEP 2

BUILDING

The goal of the Core Satellite approach, is to outperform the index fund over an economic cycle, however depending on the Models strategy we will select different managers and funds that suit the needs, life stage and desired risk. Our team meticulously researches and analyses funds, managers and performance to achieve the desired goal for the Model.

A Model Portfolio can be built using both Australian and International assets. Our Portfolios draw from all manner of investments including Technology, Resources, Emerging Markets and Managed Futures. Not only do we vary the markets, but the types of investment styles and strategies different managers use.

This blending and diversification allows for the inherent risk mitigation that comes from a diversified portfolio, while providing a dynamic platform that can be adjusted to match the risk adjusted rate of return.

The current economic climate and trends has a huge effect on the investment market and the shape and form of a Model Portfolio. With 30 years in the financial planning industry and over a decade using our Model Portfolios, we have the benefit of years of data that aids us in blending different funds, managers and assets.

Our Model Portfolios are reviewed and efficiently adjusted. The success comes from our Core Satellite approach and setting our sights beating index returns over time. Wise Owl Financial has established an Investment Committee that meets regularly to discuss the portfolios and whether any changes are required. Once you are invested in one of our portfolios, you will receive regular emails giving you updates on any Investment committee decisions, and if an urgent change needs to be made an adviser will contact you directly.

Our Model Portfolio Investment Committee meets quarterly to review each model portfolio and the investments within those models with particular focus on satellite components.

This investment committee ensures that the performance of each of our Model Portfolios is reviewed over the short, medium and long terms. Part of this process is to benchmark our fund and mangers to ensure that expectations are being met. Changes to the Portfolio are made in an efficient and precise manner to ensure it is also performing at its best.

Contact Us to learn more about our Model Portfolio services