Diversified growth strategies

Australians looking to increase their super fund’s annual returns may benefit from shifting to a diversified growth strategy.

A diversified growth strategy is a multi-asset program that invests in a range of traditional and non-traditional return sources to achieve a defined outcome.

A recent study has shown that including a 15% allocation to a diversified growth strategy in a typical super portfolio could increase the fund’s realised returns, lower its overall volatility and improve its risk-adjusted returns.

The role that a diversified growth strategy could play within a fund depends on the nature of the investor. For example, super funds with a high level of control may not necessarily need for the strategy as a portfolio diversifier. However, these kinds of super funds may benefit from idea sharing with an investment manager to facilitate more agile management of the portfolio.

Some investors have recognised the role that diversified growth strategies can play in helping to meet their objectives, with the market now attracting around $230 billion of funds globally.

Diversified growth strategies have sparked some interest from some Australian super funds and could be well placed to meet growth return objectives while also providing investors with the confidence that they can achieve desired outcomes.