Asset Allocation in Australia: The Right Portfolio Mix
In Australia, asset allocation is the split of your money between growth assets (Australian and international shares, property) and defensive assets (bonds and cash) — and for most people the biggest single allocation decision is the investment option their super fund holds, not what they buy outside it.
Research consistently shows asset allocation has more impact on long-term returns than which specific shares or funds you pick. For an Australian investor the building blocks are: Australian shares (which pay franked dividends), international shares (diversification beyond an ASX dominated by banks and miners), property, bonds and cash.
Super funds describe their options by the growth/defensive split rather than by asset class, and the labels are not standardised — one fund's 'balanced' option can hold noticeably more shares than another's. Read the option's asset allocation table in the PDS rather than trusting the name. The same disclosure carries a Standard Risk Measure: the expected number of negative annual returns over any 20-year period, which is a more honest guide to how bumpy an option will be than its label.
A common rule of thumb is 110 minus your age in growth assets, so a 30-year-old would hold about 80% growth and 20% defensive. Because super is locked until preservation age, a younger member's super can usually sit at the growth end of that range even if money needed sooner stays more defensive.
The most common mistake is adjusting allocation on emotion — switching super to cash after a sharp fall on the ASX and missing the recovery. A pre-committed allocation, reviewed annually and rebalanced when it drifts, removes that decision from the worst possible moment.
Look at your total allocation across every account. If your super's balanced option already holds a large share of Australian equities and you also own an ASX 200 ETF outside super, your real exposure to Australian shares may be much higher than either account suggests. Add in an investment property and the portfolio can be far less diversified than it looks.
Richify helps you define and maintain a personalised asset allocation across super, shares, and property — adapting as your life stage and goals change.
