How to Use Flexible Portfolios

20 June 2022

Flexible Portfolios allow you to build and customise your own portfolio.  Here’s how you can fit them into your investment strategy. 

With Flexible Portfolios, you can pick from more than 55 asset classes and adjust their allocations based on your investment objectives.

How do Flexible Portfolios work?

Here’s how you can create your Flexible Portfolios:

  1. Choose whether you want to build a portfolio from scratch or edit one of our core, globally-diversified template portfolios
  2. Edit or build your portfolio from more than 55 asset classes, and adjust their allocations
  3. Review your risk and set up your portfolio
  4. Invest any amount – there’s no minimum deposit or lock-in period!
  5. You can adjust your asset classes and allocations anytime

Editor's note: Once you decide on an asset allocation, we’ll calculate that portfolio’s potential downside. For example, if your Flexible Portfolio has a Moderate Risk Level, it means that there’s a 99% chance that it won’t lose more than 19% in a given year. We calculate the risk level by looking at long-term asset class returns and assumptions, and we update these calculations quarterly. Your portfolio's Risk Level could change for one of two reasons: in the case that the quarterly update calculates a new risk level, or in the case that our investment team replaces a particular ETF in favour of a more cost-efficient or preferred one in the same asset class.

How should you use Flexible Portfolios?

The possibilities are endless! You can use your Flexible Portfolio as:

  • a core portfolio, which is made up of broadly-diversified ETFs that represent your long-term investment strategy; or
  • a satellite portfolio, which is made up of investments into a specific asset class, theme, or sector. You should invest smaller amounts into your satellite portfolios than to your core portfolio because satellite portfolios can be less diversified and therefore carry higher risk.
Core - Satellite portfolios image

Customise your core portfolio

If you’re building a core portfolio, start by deciding your risk level. You can then pick a globally-diversified General Investing portfolio as a template to match your risk tolerance.

Using this portfolio as a base, you’re free to make any adjustments to suit your investment style or objectives. For example, you could:

  • Switch out your international equity exposure from Europe to Asia ex-Japan
  • Reduce your allocation to Precious Metals (Gold) in favour of more exposure to bonds
  • Add exposure to green bonds within your fixed income allocation

You’ll get to preview your Flexible Portfolio and its risk level before finalising your selections. Your final portfolio risk level may vary depending on your allocations, so check to make sure it’s something you’re comfortable with.

Create satellite portfolios to complement your existing investments

If you already have a well-diversified core portfolio, Flexible Portfolios allow you to get exposure to certain specific themes or asset classes. You can create as many satellite portfolios as you want.

Use satellite portfolios to add diversification to your existing investments or express your personal investment views. For example, you could:

  • Create an all-bond portfolio to reduce your portfolio risk
  • Add exposure to emerging markets if it isn’t already in your core portfolio
  • Invest in an asset class that reflects your personal convictions – like tech or sustainable investing

When creating satellite portfolios, remember to think about how they fit in your broader investment strategy. Keep your overall asset allocations in mind so you’re not overexposed to any single asset class.

When should you review your asset allocation?

While we automatically rebalance your Flexible Portfolio to maintain your target allocation, we won’t reoptimise it.

  • Rebalancing is when we maintain the original asset allocation that you chose for your portfolio. This occurs when an asset's value changes.
  • Reoptimisation is when we increase or decrease an asset's percentage in your portfolio, such as when economic conditions change. With Flexible Portfolios, you're in control of this.

(Read more about rebalancing and reoptimisation here.)

You should review your asset allocation when:

  • Your time horizon changes – for instance if you’re approaching retirement or if your financial goals change
  • There’s a change in the economic regime – for example, from inflationary growth to stagflation
  • Your risk tolerance changes

Otherwise, try to avoid switching up your asset allocation too often - your investment plan should be robust enough to withstand short-term market volatility.

If you’d prefer to have your portfolios managed by us, you can explore our General Investing, Responsible Investing or Thematic Portfolios.


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