In previous articles in the series (part I, part II, and part III) we covered setting up a diversified portfolio.
In this, the fourth and final article, we'll look at a sample portfolio. As a reminder, here's AustralianSuper's balanced fund asset class allocations.
| Asset Class | Fund weighting | Target band |
| Australian shares | 31% | 20–45% |
| International shares | 31% | 10–40% |
| Direct property | 9% | 0–30% |
| Infrastructure | 13% | 0–30% |
| Private equity | 3% | 0–10% |
| Fixed interest | 10% | 0–25% |
| Cash | 3% | 0–15% |
Source: AustralianSuper
For our own portfolio, we're going to tweak it a bit for simplicity. We're not going to allocate any funds to private equity at this stage, and we're going to move the weightings around to give us easier numbers to work with.
Now assuming we have a $100,000 portfolio, here's how we invest it.
Australian shares – 35%
Here we've gone for half the allocation (17.5%) to an index fund and the other half split between three listed investment companies (LICs). You'll note that we don't have any direct investments in companies here. This simply makes it easier, but investors could easily choose to invest half in shares, or all of it in shares, depending on how comfortable you are.
| Vanguard Australian Shares Index (ASX: VAS) | $17,500 |
| Milton Investment Co (ASX: MLT) | $3,000 |
| Australian Foundation Investment Co (ASX: AFI) | $3,000 |
| Contango MicroCap (ASX: CTN) | $11,500 |
| Total | $35,000 |
International shares – 30%
A slightly lower allocation to the international sector, we're still focused on overall exposure to the sector, while increasing exposure to two sectors with nice tailwinds, Telcos and Healthcare.
| Vanguard All-World ex-US (ASX: VEU) | $10,500 |
| Vanguard Total US (ASX: VTS) | $10,500 |
| iShares Global Healthcare (ASX: IXJ) | $4,500 |
| iShares Global Telecom (ASX: IXP) | $4,500 |
| Total | $30,000 |
Property – 5%
Here, we've plumbed for $5,000 in the Vanguard Australian Property Securities Index ETF (ASX: VAP), giving us exposure to most of the real estate trusts listed on the ASX.
Infrastructure – 15%
For exposure to infrastructure, we've gone with equal investments ($5,000) in 3 direct Australian companies, Sydney Airport Holdings Ltd (ASX: SYD), Transurban Group (ASX: TCL) and APA Group (ASX: APA) for exposure to airports, tollroads and pipelines.
Fixed Interest – 10%
For simple exposure to different bonds, we've gone for around $3,330 in each of Russell Australian Government Bond ETF (ASX: RGB), Russell Australian Semi-Government Bond ETF (ASX: RSM) and Russell Australian Corporate Bond ETF (ASX: RCB).
Cash – 5%
The remaining funds ($5,000) we've decided to leave in our cash management account.
Foolish takeaway
While extremely simplified, the only thing you need to invest in all these asset classes is an online brokerage account – preferably one charging very low rates of brokerage – and a cash management account linked to the brokerage account.
No financial adviser's fees, no managed funds or expensive management fees and you can set and virtually forget about. All of which should generate you decent long-term returns, making sure you add to your investment regularly over time, including reinvesting the dividends and interest payments you'll receive.
