Financial Keys - A member firm of Genesys Wealth Advisers


Key Balanced Model - Portfolio Change

  • Redeem UBS Short Term Fixed Income Fund (previously UBS Cash Plus Fund)

  • Redeem UBS Diversified Fixed Income Fund

  • Introduce Ardea Real Outcome Fund

  • Rebalance across existing fixed interest holdings


Redeem UBS Short Term Fixed Income Fund (previously UBS Cash Plus Fund)

Returns from cash and cash-like products are likely to be low for some time, especially on an after-fee basis, given the Reserve Bank of Australia (RBA) will anchor the cash rate very low to support an economic recovery. As such, the Investment Committee believes there are better risk/return opportunities from bond and fixed interest funds.

Redeem UBS Diversified Fixed Income Fund

In light of government bond yields being anchored at very low levels by virtue of central bank policy, which is likely to remain the case for some time, the expected returns and level of portfolio insurance (i.e. downside protection to equity market falls) from owning government bonds is likely to be very low going forward and potentially result in added risk to the portfolio. As such, we have re-configured the allocation within the Bond/Fixed Interest part of the portfolio to favour those funds with low to zero exposure to government bonds and those funds who very actively manage their exposure to government bonds. As such, this re-allocation has resulted in the removal of UBS Diversified Fixed Income from the portfolio. We have retained some exposure to government bonds through PIMCO Diversified Fixed Interest as we still believe a defensive element is required within the portfolio in the case of a significant equity market correction; and are comforted by PIMCO's best in class ability to manage government bonds and other bond securities over more than a decade. 

Introduce Ardea Real Outcome Fund

We have introduced the Ardea Real Outcome Fund. The fund is unique in the Australian market in that it takes no government bond interest rate risk and no corporate bond risk. It does this via the specialised skillset of relative value investing where it seeks out mispricing within developed government bond markets that it can take advantage of, whilst negating the interest rate risk that comes with investing in government bonds. In this way, the return provided by the fund is significantly made up by manager skill as opposed to market exposure, which means it can produce returns in any market environment. Ardea have a large and seasoned team of professionals with various skillsets and have produced strong returns since their inception. 

Rebalance across existing fixed interest holdings

The remainder of the proceeds from the above two redemptions have been allocated across existing fixed interest holdings.

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