Build wealth with a smarter core

Portfolio diversification beyond a single asset class has been a cornerstone of investing for as long as there has been investing. It moved beyond practice and into academia when Modern Portfolio Theory (MPT) and the 60/40 portfolio emerged from Harry Markowitz’s seminal 1952 work, Portfolio Selection.

Back then, based on long-term historical results, a roughly 60/40 split between shares (growth assets) and bonds (defensive assets) was considered the optimal portfolio.

As portfolios and investing evolved and markets globalised, the standard 60/40 portfolios expanded to include global and domestic shares (growth) and global and domestic bonds (defence). In Australia, the Superannuation Guarantee made all Australian employees investors, and the industry responded with diversified funds being the default option. The Australian Government, via its moneysmart.gov.au has provided Australian investors with a practical guide to investing, and the website highlights typical investment portfolios including ‘balanced’ and ‘growth’ mixes.

ETF issuers, responding to investor demand, started to create versions of these diversified funds. These ETFs were simply ETFs of ETFs, and they tended to include only splits between equity and bond allocations, ignoring asset classes like gold and infrastructure.

There are three key reasons VanEck’s Core+ Active ETFs are different from other diversified ETFs.

Asset class breadth

The world of investing has changed since Markowitz wrote Portfolio Selection. Bond markets have become more complex with a broader range of issuers beyond developed market governments. At the time, it was illegal for US citizens to own significant amounts of monetary gold. It was only in 1974 when the ban, which had been in effect since 1934, was repealed by President Gerald Ford. Other trends, such as privatisation, have led to private investors owning and operating infrastructure such as roads and utilities. VanEck’s Core+ Active ETFs access asset classes beyond equities and bonds. They can include many of the asset classes that weren’t freely available to investors in the late 1950s such as gold and infrastructure.

Smart beta

Most diversified ETFs of ETFs include only the lowest-cost, market benchmark exposures to asset classes such as Australian or international equities. The outcome may not be optimal for investors. There is a plethora of academic and commercial research supporting smart beta. These are approaches that capture investment strategies such as value, quality and growth in transparent, rules-based indices that VanEck ETFs track. By replacing market benchmark exposures with carefully considered factor-tilted alternatives, the Core+ approach targets a structural improvement in expected return for a given level of portfolio risk. It is not a trading strategy; it is a construction philosophy.

Strategic asset allocation

VanEck’s Multi Asset Solutions team, based in New York, applies an institutional grade framework to the Core+ portfolios to ensure the underlying ETFs remain appropriate in the context of long-term capital market expectations and portfolio construction outcomes.

Investors can select from three portfolios: Balanced, Growth, and High Growth. Each has been carefully designed using the same institutional asset allocation frameworks that underpin large-scale portfolios.

Each strategy is calibrated to a different risk-return objective:

For over 70 years, smart investors have chosen VanEck.

Providing investors access to opportunities that strengthen their portfolios is VanEck’s guiding principle.

In 1955, John van Eck founded the firm with a bold but ambitious vision: to give investors access to opportunities beyond the ordinary. His conviction was that global change demanded innovative investment solutions. From launching the first dedicated gold equity fund in the US to redefining accessibility through ETFs, innovation has always been our advantage.

With over 50 ETFs on the ASX, we have spent decades building capabilities across market capitalisation, systematic/smart beta insights, thematic and active management. Our Core+ Active ETFs are the next evolution of our philosophy in practice.

Markets are not static systems. They evolve, driven by cycles in growth, liquidity, policy and behaviour. Portfolios that endure are not those built on a single philosophy, but those constructed with an appreciation for how different investment approaches perform across regimes. That is VanEck’s Core+.