Risk Profile – Defensive Investor
The investment objective of a Defensive investor is to place an emphasis on relatively stable returns with the potential for modest long term growth.
A Defensive portfolio looks to invest around 30% in growth assets (eg equities and property) and the remainder in defensive assets (eg cash and fixed income). The figure of 30% is a general benchmark; actual allocations over time will vary around this as investment conditions change and investment managers take opportunities to improve returns.
This portfolio suits investors who primarily seek income with some potential for capital growth. This portfolio also suits investors seeking a low level of investment value volatility, and who are therefore willing to accept lower potential investment returns.
Such a portfolio is suitable for investors with a short to medium term investment time frame. It is important to note that the value of your capital can move up and down over time, particularly in shorter time spans. Hence these investments should be considered with a minimum time frame of 3 years.
| Investment objectives – Defensive | |
| Minimum investment period | 3 years |
| Returns | |
| Forecast average annual return over 10 years | 5.0% |
| Risk | |
| Probability of a negative return over a single year | 12.0% |
| Expected negative years out of 20 | 2.4 |
| Forecast rate of returns | |
| 1 year | -3.5% to 10.9% |
| 5 years (per annum) | 1.6% to 7.0% |
| 10 years (per annum) | 3.0% to 7.0% |
| 20 years (per annum) | 4.4% to 7.4% |
| Asset allocation – Defensive | Target % | Minimum % | Maximum % |
| Defensive Fixed Income | 35 | 0 | 60 |
| Defensive Alternatives | 20 | 0 | 50 |
| Cash | 15 | 0 | 45 |
| Total defensive | 70 | 60 | 80 |
| Australian Equities | 8 | 0 | 35 |
| Global Equities | 9 | 0 | 35 |
| Property & Infrastructure | 6 | 0 | 30 |
| Growth Alternatives | 7 | 0 | 20 |
| Total growth | 30 | 20 | 40 |