Three consecutive days’ headlines from The Age Business section, from Tuesday March 24 to Thursday March 26. And regrettably, all too typical of the approach of the news media to financial reporting.
The problem here is the intense focus on short term – in this case daily – shifts in market prices. Something pretty much totally out of anyone’s control, subject to the whims of “Who said what” and the way the wind is blowing.
Unless you’re a day trader or market junkie, prices really only matter on two days – the day you buy, and the day you sell. Most people – certainly our investors – live primarily on the income produced by their portfolio – not daily prices. Selling need only be done to top up a shortfall between income generated and usual living costs, or to fund lumpy capital expenses, which can typically be planned for well in advance.
So daily prices and periods of volatility need not be a cause for concern or a prompt to “do something”. The problem with this intense focus on price movements is that it promotes a dangerously misleading view about what investment risk really is in practice, which in turn can lead people to make poor decisions.
This is why in the charts on page 1 we make a point of highlighting the income generated each year (vertical bars).
Yes, price volatility is there – the wriggly lines behind the bars, although the long term trend is clearly up – but for the vast majority of us the emphasis should be on the income.
At the recent investor sessions we showed the chart below to further highlight the income return earned by that hypothetical investor who deposited $100,000 on 1/7/2010. Note:
- Annual income has never been negative (sounds obvious, but it’s true, and is a counterpoint to the reporting of daily prices)
- Almost without exception the income return has been higher than the “safe” alternative to which investors might be tempted to flee – ie bank deposits as shown by the red dots. (Source: Vanguard Cash Index)
- This period was not without its challenges – global pandemic, presidential elections, record low interest rates, inflation spikes….
Right now there is absolutely no reason to suspect this situation will change or that there is unusual risk to your income return. And if your portfolio mix is designed around your near- and longer-term cash withdrawals (or “bucketised” – thank you, Duncan), there is nothing to fear from price volatility either.
So, best to just move on to the sports pages. (Or, if you’re an Essendon Richmond supporter, try the travel liftout …….).
So, who’s got what?
The table below shows the ARAIF’s investments at the time of writing. Please note, the percentages refer to the proportion of each portfolio allocated to that investment, not its rate of return.
Major Holdings – diversified portfolios
Apart from bank deposits and other interest-bearing accounts, Defensive, Growth and Equities portfolios invest in a range of assets through the fund managers listed in the table above. If we drill through to the assets selected and overseen by those managers, there are in fact over a hundred individual securities providing diversification of risk and exposure to a wide range of opportunities.
The table below shows the 20 largest individual holdings and what proportion of each portfolio they represent. These are the investments that will have the biggest impact on the portfolios’ returns.
Returns quoted in this report are after all costs, and before the application of management fee rebates. Return figures are pre-tax, and include the value of franking credits from franked dividends. Total return figures assume the re-investment of gross distributions including franking credits. 3-month return figures are for the period to 31 March 2026 and are not annualized. Data source ARA Consultants Pty Ltd & Context Capital (except where indicated).
ARA Consultants Pty Ltd provides this update for the information of its clients and associates. If you do not wish to receive this or other information about ARA in future, please contact us on (03) 9853 1688.
This document has been issued by ARA Consultants Pty Ltd for its own use and the use of its clients. Fundhost Limited (ABN 69 092 517 087) (AFSL No: 233 045) (Fundhost) is the issuer of the ARA Investment Fund (ARSN:104 232 448). Information contained in this document is general information and is not intended to constitute nor does it purport to offer any specific or individual investment advice. Whilst every effort has been made to ensure the accuracy of the information contained in this document, neither ARA nor Fundhost accept any liability in relation to anyone who makes and acts upon a decision based upon that information. No person should make a decision based upon the information contained in this document without first seeking and obtaining the appropriate professional advice relevant to their own individual circumstances and financial needs. You should consider the Product Disclosure Statement in deciding whether to acquire, or continue to hold the product. The PDS and applicable Target Market Determinations are available at www.araconsultants.com.au or by contacting ARA by phone on (03) 9853 1688 or by email at info@araconsultants.com.au. We also caution that past returns are just that, and the fact that they have been achieved previously does not guarantee or imply that they will be achieved again.
If you would like a pdf version of this update for your files you can download it here: March 2026 Quarter Investment Update.
