Illustrative Investment Portfolio – Conservative


The MoneyBrilliant Save and Invest tool uses a number of model portfolios constructed by BetaShares to illustrate possible investment returns and risk with saving and investing. 

We also use an example portfolio constructed entirely of cash. The expected returns of this portfolio are based on the Bloomberg Bank Bill Index and are consistent with the long run “neutral” RBA cash rate.

The BetaShares Strategic Asset Allocation portfolios are constructed using Exchange Traded Funds (ETFs). ETFs are typically a very cost effective investment product and they can be used to provide exposure to a variety of different asset classes and investments.

The BetaShares Strategic Asset Allocation model portfolios are based on the following long-term asset class assumptions. These assumptions are reviewed on an annual basis at the start of each calendar year.

Long term asset class assumptions

Asset ClassBenchmarkYieldCapitalTotal ReturnComment
CashBloomberg Bank Bill Index2.75%2.75%Assumes a gradual lift in official interest rates towards the ‘new neutral’ rate of 3% p.a.
Australian BondsBloomberg Australian Composite Bond Index2.75%2.75%Assumes a gradual rise in yields from low levels will constrain overall fixed-rate bond returns to broadly equal cash returns over the forecast horizon.
International BondsBloomberg Global Aggregate Bond Index2.50%2.50%Assumes a gradual rise in yields from low levels will constrain bond returns over the forecast horizon.
Australian PropertyS&P/ASX200 Listed Property Index5.00%2.00%7.00%Assumes income of around 5% p.a. plus earnings growth close to inflation will be partly offset for a small valuation detraction as bond yields rise.
Australia EquitiesS&P/ASX200 Index4.50%5.00%9.50%Assumes income of around 4.5% p.a. plus earnings growth close to nominal GDP will be partly offset by a modest valuation detraction as bond yields rise.
International EquitiesMSCI All World Equity Index2.50%5.00%7.50%Assumes income of around 2.5% p.a. plus earnings close to nominal GDP. A narrowing in the still relatively high equity-to bond yield gap will allow valuations to withstand a modest increase in bond yields.
GoldGold bullion spot price in $US2.50%2.50%Gold is expected to grow at close to global expected inflation of around 2.5% p.a.


Annual Return Standard Deviation and Correlation Matrix

Asset ClassStandard DeviationCashAustralian BondsInternational BondsAustralian PropertyAustralian EquitiesInternational EquitiesCommodities
Australian Bonds3.5%0.51
International Bonds3.0%0.50.751
Australian Property15.0%-
Australia Equities15.0%-0.25-0.5-0.250.51
International Equities15.0%-0.5-0.5-


APRA/FSC/ASFA Standard Risk Measure

Risk BandRisk LabelEst # negative returns every 20 years
2Conservative0.5 – 1
3Moderate1 – 2
4Balanced2 – 3
5Growth3 – 4
6High Growth4 – 6


Strategic Asset Allocation Model Portfolio

Asset ClassConservativeModerateBalancedGrowthHigh growth
Australian Bonds35%32.5%25%17.5%7.5%
International Bonds20%17.5%15%7.5%0%
Australian Property0%0%2.5%3.5%4.5%
Australia Equities10%17.5%22.5%31.5%40.5%
International Equities10%17.5%25%35%45%
Total Return3.75%4.75%5.50%6.75%7.75%
Std Dev2.50%4.00%6.00%8.50%11.50%
# negative years in 20 years1.
Probability of negative returns5%10%15%20%25%

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