by Patrick Garrett

Six Park is pretty proud of its Investment Advisory Committee – and for good reason.

Our committee’s members have been responsible for Australia’s finances through the realms of politics and superannuation – they’re smart; they’re eminently qualified; and they’re highly knowledgeable about the sorts of factors and events that might affect the performance of our portfolios.

Six Park doesn’t make changes to the asset allocations of our portfolios very often – investments move up and down over time, and part of the reason for robo-advice is that it avoids emotion-driven decision-making. So when we do make changes, it’s under the guidance of the committee, who understand not just the day-to-day markets but the way whole asset classes are moving over time. And when we do make changes, it’s because we see a long-term benefit to our clients, even if it costs the company to do the right thing.

In December 2016, after months of analysis, Six Park decided to swap out VAP (Australian listed property) and replace it with DJRE (international listed property), while adding IFRA (global infrastructure).  We made this change to improve the diversification and prospective return profile of our model portfolios.

Why did this cost us money? Well, Six Park doesn’t charge brokerage fees, which means that any time your portfolio is rebalanced, we pay the brokerage fee on your behalf. As a result of the change to the model portfolios, we had to rebalance every single account. But it was the right thing to do for our clients. We’re also reaping the rewards of a strong partnership with Open Markets that is helping keep brokerage costs low, which is good for the company and good for clients.

Six months later is a nanosecond in investment-terms but, since the move, DJRE has performed about the same as VAP, which have both performed about the same at the ASX.  But IFRA has outperformed as the demand for infrastructure assets has increased. So our clients have reaped the benefit of the investment decision and should continue to do so.

The change demonstrates the important difference our Investment Advisory Committee and its knowledge can make. We think it’s a good thing that some very smart people are reviewing market conditions and ETF products on a regular basis to make sure Six Park’s portfolios are in the best possible position to provide optimal investment returns. We don’t see this level of oversight and involvement at other robo-advisors and think it’s what makes our service so unique.

And we are the low-cost provider at the same time. Pretty cool.

Published July 10, 2017