Stockspot Themes is available to clients investing over $50,000 and is designed to allow them greater control over the assets that they want to gain exposure to in their existing portfolios.
That could be specific countries, such as the US or China, or specific sectors, such as tech or healthcare, or even specific market factors such as dividends or small companies.
Themes uses our core portfolio asset class of exchange traded funds (ETFs) and adds a level of personalisation that gives choice to investors while maintaining diversification, daily liquidity and tax efficiency.
How does Stockspot Themes work?
Stockspot Themes can be used two ways: either via specific ETFs or through curated bundles that correspond to specific asset classes.
When you select a Theme, we sell down a portion of your existing portfolio and allocate this portion to your chosen theme.
If your rebalancing status is set to ‘Buy Only’, the themes will be funded once the minimum investable amount is reached in your Stockspot cash account rather than drawing down your existing portfolio.
Each theme will typically contribute between 5% and 10% of your overall portfolio once fully implemented.
Exposure is limited to ensure that your investment strategy stays balanced based on your goals and investment time horizon.
Themes are broken down into growth and defensive strategies. Growth themes tend to have higher potential return but come with more volatility, whereas defensive themes tend to reduce the risk of your portfolio.
Our core Stockspot portfolios are designed to provide sufficient diversification to help you achieve your goals, with Themes adding another layer for clients who wish to take greater control.
How will Stockspot Themes impact my portfolio?
By choosing to implement a Stockspot Theme as part of your investment allocation, there may be an impact to your overall portfolio in relation to:
- Returns: Some themes may underperform/outperform the market at different periods in time, meaning there may be differences to the returns of the core ETFs used in the Stockspot Model Portfolios. This can be primarily driven by country and sector allocations, as well as underlying shares.
- Risk: Themes can both increase and decrease the risk profile of your portfolio. For example, emerging market regions tend to be more volatile than global international bonds.
- Asset allocation and diversification: Allocating themes may change the weighting of your portfolio to a particular sector, region or country. For example, adding US shares will decrease your Australian share exposure, but give you more access to the American market.
- Cost: All ETFs charge a management fee, which is an indirect cost deducted directly from the daily ETF price. The ETFs offered through Stockspot Themes charge between 0.04% to 0.74% per year.
Depending on your chosen rebalancing strategy, selecting themes may trigger a rebalance of your portfolio by selling down existing holdings (such as Australian shares and bonds) to fund the new purchases of your Stockspot Themes.
Many Stockspot clients use themes to reduce their exposure to Australian shares given the stronger home country bias.
How many Themes can I select?
Stockspot clients can have up to three themes in their portfolio at any one time including a maximum number of growth and defensive themes based on your investment strategy.
Which Theme is best for me?
There are plenty of options within Themes, so here are some ideas to consider to help you with the selection process.
Increase specific country exposure
Owning global shares allows you to benefit from companies like Apple, Nestle and Nike that are listed on other share markets. The Stockspot Model Portfolios have an allocation to global developed markets (such as the US and Europe), and global emerging markets (such as China and India).
You may want to increase your exposure to certain countries or regions such as:
- US – access the largest 500 companies in the US (i.e. S&P 500)
- Global (non-US) – access the world’s largest companies listed in major developed and emerging countries outside of the US
- Europe – access the largest 350 companies in European countries such as the UK, Switzerland, France and Germany.
- Japan – access over 300 companies listed on the Tokyo Stock Exchange
- China – access the largest 50 companies that trade on the Hong Kong Stock Exchange
- Asia – access the largest 50 companies from Asian countries like China, Hong Kong, Singapore and South Korea.
Top 10 holdings per geographic theme
| GLOBAL (NON-US) | US | EUROPE | JAPAN | CHINA | ASIA |
| JSC VTB Bank | Microsoft | Novo Nordisk | Toyota Motor | Tencent | Tencent |
| Taiwan Semiconductor | NVIDIA | ASML | Mitsubishi UFJ Financial | Alibaba | Alibaba |
| Federal Grid Company | Apple | Nestle | Tokyo Electron | Meituan | Taiwan Semiconductor |
| Novo Nordisk | Amazon | AstraZeneca | Sony Group | China Construction Bank | Samsung |
| ASML | Meta | Shell | Hitachi | Industrial and Commercial Bank | SK Hynix |
| Tencent | Alphabet (A) | Lvmh Moet Hennessy | Keyence | Bank of China | Infosys |
| Nestle | Alphabet (C) | Novartis | Sumitomo Mitsui Financial | JD.COM | Hon Hai Precision Industry |
| Toyota | Berkshire Hathaway | BlackRock Cash Funds | Recruit Holdings | Xiaomi | NetEase |
| Samsung | Eli Lilly | SAP | Shin-Etsu Chemical | Ping An | MediaTek |
| Shell | Broadcom | Roche | Tokio Marine | Netease | JD.COM |
Increase sector exposure
All share markets are made up of companies from different sectors. The Australian share market is heavily reliant on a couple of key sectors and just a few companies.
Financial services (CBA, ANZ, NAB and the like) and materials (think BHP and RIO) collectively make up half of the Australian share market.
That’s why it can be helpful for Australians to invest in companies that are operating in other sectors of the global economy to increase diversification.
Enhance your growth
Stockspot themes have many global sectors that are usually under-represented in client portfolios including:
- Tech: Access the leading innovative and technological focused companies in the USA (such as Apple, Nvidia and Tesla) or the Asian market (such as Alibaba, Tencent and Baidu)
- Healthcare: The largest healthcare stocks across the world including pharmaceutical, biotechnology and medical devices.
- Consumer staples: The largest global companies that produce essential consumer products such as food and household items.
- Infrastructure: Companies involved in activities such as utilities, transportation, railways and telecommunications.
- Gold miners: Exposure to over 50 of the largest global gold mining companies.
Enhance your income
- Sustainable and Ethical shares: Australian companies that have demonstrated positive environmental, social and governance (ESG) characteristics without significant involvement in activities such as tobacco, alcohol and weapons.
- Australian dividend shares: Companies that have paid higher dividends relative to other listed companies.
- Large companies: The top 50 blue chip companies in the Australian market
- Australian property: Real estate investment trusts (REITs) listed on the ASX across the retail, office and industrial sectors.
- Global property: Real estate investment trusts (REITs) and real estate investment companies (REICs) listed on the global markets such as the USA, Japan and UK.
However, seeking the highest paying dividend options may not always be the best strategy to maximise your total return.
We suggest a total return approach which seeks to hold a diversified portfolio aiming at maximising the total overall return (i.e. both income and growth), rather than solely preferring income.
Diversify into bonds
Bonds have two main benefits: providing stable income and helping cushion returns should share markets fall.
Global bonds have historically tended to be less risky than Australian bonds and may improve geographical diversification.
A popular option as a way to add diversification is to buy inflation bonds, which – as the name suggests – are designed to protect against rising inflation.
They are are issued by the Australian government to provide an income stream (known as coupons) and have their price indexed to inflation.
This means that as the cost of goods rises, the price of the inflation bond will rise too (as will the coupons). Other types of bonds, like government bonds, can fall during rising inflation (as was seen in the 1970s).
Inflation bonds have traditionally had lower correlation to stocks and government bonds and can help retain purchasing power by matching your assets to your liabilities that are indexed to inflation.
Corporate bonds are issued by the big four Australian banks, offshore financial institutions and other leading corporations.
They work like a government bond, but with companies borrowing money from investors. These types of bonds can provide regular income that can be more attractive than cash or term deposits and can help cushion share market bumps.
Stockspot’s chosen themes
Global shares
| THEME | ETF TICKER | ETF NAME | COST | 1 YEAR RETURN | 3 YEAR RETURN (P.A.) | 5 YEAR RETURN (P.A.) |
| US shares | IVV | iShares Core S&P 500 ETF | 0.04% | 26.48% | 14.77% | 16.30% |
| Global (non-US) shares | VEU | Vanguard All-World ex-US Shares Index ETF | 0.07% | 12.28% | 4.54% | 6.79% |
| European shares | IEU | iShares Europe ETF | 0.59% | 12.96% | 7.87% | 8.31% |
| Japanese shares | IJP | iShares MSCI Japan ETF | 0.50% | 12.41% | 5.72% | 7.18% |
| Chinese shares | IZZ | iShares China Large-Cap ETF | 0.60% | -0.80% | -12.05% | -6.35% |
| Asian large companies | IAA | iShares Asia 50 ETF | 0.50% | 15.51% | -4.15% | 4.92% |
Australian shares
| THEME | ETF TICKER | ETF NAME | COST | 1 YEAR RETURN | 3 YEAR RETURN (P.A.) | 5 YEAR RETURN (P.A.) |
| Australian dividend shares | VHY | Vanguard Australian Shares High Yield ETF | 0.25% | 13.48% | 8.53% | 8.50% |
| Australian large companies | SFY | SPDR S&P/ASX 50 Fund | 0.20% | 12.80% | 6.99% | 6.94% |
| Australian small companies | VSO | Vanguard MSCI Australian Small Companies Index ETF | 0.30% | 8.15% | 2.00% | 6.91% |
| Australian socially responsible shares | RARI | Russell Australian Responsible Investment ETF | 0.45% | 13.97% | 5.24% | 5.07% |
| Australian property | VAP | Vanguard Australian Property Securities Index ETF | 0.23% | 23.14% | 5.23% | 4.34% |
Bonds (fixed income)
| THEME | ETF TICKER | ETF NAME | COST | 1 YEAR RETURN | 3 YEAR RETURN (P.A.) | 5 YEAR RETURN (P.A.) |
| Global bonds | VIF | Vanguard International Fixed Interest Index (Hedged) ETF | 0.20% | 1.20% | -3.39% | -1.45% |
| Australian corporate bonds | VACF | Vanguard Australian Corporate Fixed Interest Index ETF | 0.20% | 5.94% | -0.24% | 0.94% |
| Australian inflation bonds | ILB | iShares Government Inflation ETF | 0.18% | 2.88% | -0.97% | 0.78% |
