Strategy Objective: The Rivkin Low Volatility Strategy aims to provide steady, stable returns, which have a low correlation to the broader equity market. The Strategy involves allocating equal weighting to four different asset classes, via ASX listed ETFs.

31 August 2020 Equivalent Unit Price – A$1.3053

Welcome investors to the monthly update for the Rivkin Low Volatility (LV) Strategy for August 2020. The LV strategy added modest gains in August, with the Equivalent Unit Price gaining 0.94% to finish the month at 1.3053. After eight months of 2020, the LV strategy is up 7.7% after all fees, which compares to the ASX200 Accumulation Index which has declined 7.4% over the same time.

Monthly Commentary

We have made a couple of tweaks to our investment strategy over the course of the month, to improve the overall investment outcome. Before we discuss, we wish to reiterate that the broad investment framework, being an equal weighting to cash, bonds, gold, and equities remains unchanged. If we take the 25% equity allocation, up until now we have held a single ETF (ASX:IVV), which aims to track the performance of the S&P500. Going forward, this 25% bucket will be split into 3 portions. The first portion (8.33% of the total portfolio) will continue to hold ASX:IVV. The remaining two portions will also be allocated to broad equity ETFs, however we will utilise a rotational momentum approach across a pool of 10 possible ETFs, meaning that the portfolio will be able shift exposure to the strongest performing ETFs. At present, the top two ETFs are ASX:NDQ, which tracks the Nasdaq100, and ASX:IAA, which tracks the S&P500 Asia 50 Index. To reiterate, two thirds of the equity allocation now has the potential to change monthly.

We have also made a slight change to the bond allocation, which has previously been fully allocated to VAF, which tracks a portfolio of Australian Government Bonds. Going forward, one third of this will now be allocated to investment grade corporate ETF (ASX:CRED), which offers a slightly higher risk reward profile.

For the month of August, it was the rally in US equities (+6.23%) will was responsible for the bulk of the portfolio gains, while the cash ETF lifted marginally as expected, while both Gold and bonds declined by 2.23% and 0.34% respectively.

If you have any questions regarding the above or your investments with Rivkin in general, please call us on 02 8302 3605.

Monthly Returns

Performance

NAV Price Chart

Portfolio Composition

Asset Class Weighting

Strategy Description and Information

The low volatility strategy invests in listed ASX securities (ETFs) that represent multiple asset classes: cash, US equities, bonds and gold. We target asset classes that have a low or negative correlation to each other, with the benefit being a history of lower volatility and higher risk-adjusted returns than equities alone. While the expected return of this strategy will be lower than the long-term average of equity returns, the superior return per unit of volatility makes this an excellent tool to offset some of your more volatile investments. Both the gold and US equity ETF are unhedged, meaning that approximately half the portfolio has exposure to a short AUD/USD position. Given the nature of the AUD as a growth currency to decline during periods of equity market declines, this exposure is advantageous to cushioning the portfolio during periods of equity market weakness.

Important Disclaimer

The Rivkin Low Volatility Strategy is available to wholesale investors only. Past performance is not a reliable indicator of future performance. The value of your investment may rise and fall, and you may not receive the amount originally invested.

Contact

Thomas Silitonga – Director, Rivkin Asset Management

thomas.silitonga@rivkin.com.au –  +612 8302 3605