Aegis Equity Research has included an exchange traded fund (ETF) in a model portfolio for the first time.

Aegis added an ETF from State Street Global Advisers (SSgA), the streetTRACKS S&P/ASX200 Index Fund, to a portfolio of 10 equities, including high-conviction equities, to form the Aegis Australian Share IndexPlus Portfolio (AASIP), which it claims combines broad market exposure with a potential for outperformance. Prior to AASIP, Aegis portfolios were more concentrated, usually comprised of between 10 and 12 individual stocks. “The (AASIP) portfolio is more balanced, with a combination of growth and income stocks and is not an out-and-out alpha play,” David Heather, Aegis Group Executive, said. “Planners want access to direct equity without volatility. The feedback says they’re looking for this,” he said. The model adopts a “core and satellite” approach, in which the streetTRACKS ETF is expected to perform in line with the ASX/200 benchmark while the 10 accompanying equity stocks “might generate additional growth or above-market income,” Heather said. “We’ve created a core and satellite model. There is nothing to stop this being used across a range of different outcomes,” he said.

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