While accepting that all investments involve an element of risk, you wish to minimise any volatility (variation in the value of your overall capital) and you seek to maintain the nominal (dollar) value of the sum saved. You accept that lower levels of investment risk are associated with lower rates of return and that the sum invested may not keep pace with inflation.
A Defensive portfolio may comprise 95% income assets (e.g. cash and fixed interest) and 5% growth assets (e.g. Australasian, global and property equities).
The following sample asset allocation, based on data sourced from Melville Jessup Weaver, an actuarial consultant to the Summer KiwiSaver scheme, can be used as a guide in constructing a Defensive portfolio.
|Asset type||Sample allocation %|
|New Zealand Equities||1.00%|
|Total growth assets||5.00%|
|New Zealand Fixed Interest||35.00%|
|Global Fixed Interest||35.00%|
|New Zealand Cash||25.00%|
|Total income assets||95.00%|
|Asset sector||Risk Indicator|
|Cash||1||Very low volatility|
|Fixed interest (New Zealand)||2||Low volatility|
|Fixed interest (Global)||3||Low to medium volatility|
|New Zealand equities and listed property||4||Medium to high volatility|
|Global equities||5||High volatility|
|Australian equities||6||Very high volatility|
Check out the performance information for each fund, which is updated online monthly.
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