MPC Markets · Portfolio insights
More investments.
Still the same risk?
Your portfolio can hold dozens of investments and still rely heavily on shares. Adding different sources of return can help reduce that dependence.
Explore Diversified GrowthThe question is simple: if sharemarkets fall, how much of your portfolio is exposed to the same shock?
An Australian share fund, bank shares and an international equity ETF may look different on a statement. They offer exposure to different companies and regions, but each still carries sharemarket risk. An equity-linked structured investment may add another layer of exposure to those same markets.
Shares remain an important source of long-term growth and dividends. The opportunity is to complement them with investments whose returns depend on something else.
Different holdings
One dominant driver
Different names and structures can still leave you heavily exposed to equity prices.
Different return sources
A broader set of drivers
Adding other drivers may help reduce reliance on shares continuing to rise.
Conceptual illustration, not an asset allocation recommendation. Different drivers can still produce losses at the same time.
The idea behind correlation
Different behaviour matters.
Correlation measures how investment returns move relative to each other over a particular period. A lower correlation can make an investment a useful portfolio diversifier, even when that investment has risks of its own.
A correlation near zero does not mean an investment is safe, independent in every sense, or certain to rise when shares fall. Correlations change with the measurement period, currency and market conditions.
Look beyond the label. “Alternative”, “absolute return” and “long/short” describe a category or approach. They do not establish how a fund will behave when your existing holdings are under pressure.
The diversification toolkit
What can complement a share portfolio?
Each of these has a different role. The right mix depends on the risk you are trying to reduce, your need for income and when you may need access to your money.
| Investment | Potential contribution | What to watch |
|---|---|---|
| Government bonds | Interest income and exposure to interest rates rather than company earnings. | Bond prices can fall as rates rise. Inflation shocks can hurt both bonds and shares. |
| Gold | Exposure to a monetary asset with different drivers from corporate profits. | No income, price volatility and currency exposure. Gold can fall alongside shares. |
| Broad commodities | Exposure to energy, metals and agricultural prices; potentially useful during some inflation shocks. | Demand shocks can hurt prices. Futures costs and the investment structure matter. |
| Managed futures / trend following | Strategies that may take long or short positions across several markets. | Sudden reversals and directionless markets can cause losses. Results depend on the rules and costs. |
| Market-neutral / relative-value strategies | Seek returns from differences between investments while limiting broad market exposure. | Residual market exposure, leverage, liquidity and manager risk remain. |
| Cash / term deposits | Liquidity and stability for near-term spending and opportunities. | After-tax interest may not keep pace with inflation. Term deposits restrict access. |
Potential roles only. No asset class provides reliable protection in every downturn. Product fees, currency treatment and implementation affect results.
Long/short does not automatically mean market-neutral.
A fund can short some shares and still retain substantial exposure to a rising or falling equity market. Net exposure is a useful starting point, but it is not the same as market sensitivity: the securities held, their volatility, gross exposure and hedging also matter.
Ask for the fund’s current exposures, its measured equity beta, and its performance during relevant sell-offs. Assess the investment itself rather than assuming its name tells you the answer.
The other risk
A stable balance can still buy less.
Cash has a valuable role in a portfolio. But preserving a dollar balance and preserving purchasing power are different objectives. If your return after tax and fees is below inflation, your money buys less over time.
What does inflation do to $100,000?
If it earns no return and inflation averages 2.5% a year:
Illustrative assumption, not a forecast or a term deposit example. Calculation: $100,000 ÷ 1.025⁵, rounded to the nearest dollar. Interest, tax and fees are excluded.
A broader investment mix can pursue growth from several sources rather than depend entirely on shares. Commodities and some other assets may help in certain inflation environments, but no diversified strategy is automatically inflation-proof.
A practical portfolio check
Four questions before adding anything.
What drives the return?
Identify whether it depends on equity prices, rates, credit, commodities or a specific trading strategy.
What happens under stress?
Look at equity sell-offs, inflation shocks and liquidity squeezes. A long-term average can hide difficult periods.
What are the full costs?
Include management fees, performance fees, financing, spreads and any early-exit costs.
Does it fit your circumstances?
Match the term, liquidity, downside exposure and complexity to your objectives and cash-flow needs.
Putting the idea into practice
Discover Diversified Growth.
If your portfolio already holds plenty of shares, the next investment could broaden your sources of return.
Diversified Growth provides exposure to government bonds, commodities and specialist alternative funds alongside equities through a multi-asset strategy. It aims to complement an existing share portfolio and pursue growth over its investment term.
The investment uses a limited-recourse loan to create a larger exposure from a smaller upfront commitment. Leverage increases sensitivity to investment performance, and financing costs affect the outcome. Limited recourse does not mean your upfront commitment is protected.
Want to invest? Explore Diversified GrowthReturns are not guaranteed. You may lose your upfront investment and incur costs. Review the current Product Disclosure Statement and Target Market Determination, where applicable, for the payoff, term, financing, issuer and counterparty risks, fees and exit conditions. Consider whether it suits your circumstances.
Common questions
Before you invest.
What does “non-equity correlated” mean?
It refers to investments or strategies whose returns have a low relationship with equity returns over a measured period. It is a useful research concept, not a permanent property or a promise of protection. Low correlation does not mean low risk.
Can a diversified portfolio still lose money?
Yes. Different assets can fall together, particularly when inflation, interest rates or liquidity conditions change sharply. Diversification seeks to reduce concentration; it does not eliminate losses.
Are gold shares the same as holding gold?
No. Gold miners are companies with operating costs, management decisions and sharemarket exposure. Their returns can differ substantially from the gold price. Check the underlying exposure of any gold investment.
Are structured products automatically diversifiers?
No. A structured product is a way to package exposure and a payoff. Its diversification benefit depends on the underlying assets and strategy. Equity-linked products may add to equity risk; a multi-asset product still needs careful assessment.
Do I need a structured investment to diversify?
No. Diversification can also be implemented through direct holdings, ETFs and managed funds. Compare each route’s costs, liquidity, risks and complexity. The underlying exposure matters more than the wrapper.
Does Diversified Growth guarantee an inflation-beating return?
No. Growth and diversification are objectives, not guaranteed outcomes. Inflation, strategy performance, fees and financing costs all affect the real return on your upfront commitment.
- ASIC Moneysmart: investment diversification
- ASIC Moneysmart: bonds
- ASIC Moneysmart: complex investment products
- ASIC Moneysmart: borrowing to invest
These resources explain general investment principles; they do not endorse Diversified Growth.
