VIP Growth Portfolio Performance Overview
The VIP Growth Portfolio continued to deliver positive performance during the September quarter, yielding a gross return of 1.21% outperforming its benchmark by 46 bps. Over the full quarter, the portfolio delivered a return 4.6%, resulting in a 15bps outperformance relative to the benchmark. The portfolio remains strategically positioned to manage risk, with a standard deviation of 6.49%, notably lower than Vanguard’s 7.01%, reflecting a more stable risk profile in a challenging market environment.
Portfolio Contributors
Portfolio performance was driven by strong gains in gold and copper exposures, with holdings such as Global X Physical Gold (+0.57%), Sandfire Resources (+0.42%), Northern Star Resources (+0.34%), and Ramelius Resources (+0.39%) benefiting from rising metal prices supported by central bank gold accumulation and improving industrial demand. The property sector also contributed positively, with REITs like Scentre Group (+0.42%) and Centuria Industrial REIT (+0.40%) performing well as investors rotated back into Income amid softening interest rate expectations and stabilising yields. Banks added to performance as resilient credit conditions and solid net interest margins underpinned a broader recovery across the majors, with Westpac (+0.38%) and National Australia Bank (+0.32%) outperforming as they played catch-up to the earlier strength in Commonwealth Bank.
The main detractors were CSL (–0.19%), Sonic Healthcare (–0.20%), and WiseTech Global (–0.26%), with performance driven by stock-specific factors. CSL’s future growth guidance was weaker than expected, its vaccine business is struggling, and the company is undergoing a costly, disruptive restructuring that adds uncertainty about its near-term performance. Sonic Healthcare also continued to weaken as COVID-related revenues declined and operating costs rose. WiseTech fell on disappointing forward guidance and board instability linked to governance concerns.
Australian Economy
Between July and September 2025, the ASX200 gained 4.71%, led by materials, energy, and consumer discretionary sectors. The Reserve Bank of Australia maintained the cash rate at 3.6%, signalling confidence despite a 1.8% annual GDP growth rate, below the historical average of 3.1%. Unemployment remained steady at 4.2% mid-quarter. Inflation data for Q3 is scheduled for release on October 29, 2025. The Australian 10-year government bond yield rose to 4.39% by early October, reflecting expectations of continued economic growth.
International Economy
Internationally, the S&P 500 outperformed the ASX200 during the quarter, with equities in Japan and Europe showing mixed performance. The USD remained relatively stable against major currencies. Gold prices surged, driven by increased demand from central banks and investors seeking safe-haven assets amid global uncertainties. Oil prices declined due to oversupply concerns, with the U.S. Energy Information Administration forecasting record oil production in 2025. U.S. Treasury yields remained stable, with the 10-year yield holding steady, indicating investor confidence in the U.S. economy despite ongoing inflation and tariff concerns.
Strategic Positioning
VIP remains cautious on a weakening USD and has increased hedge exposure accordingly, anticipating a continued rotation from USD into gold as a safe haven. Gold is positioned as a key defensive play amid rising global uncertainty. Despite concerns over the USD, VIP continues to see strong growth potential in US equities, driven by AI advancements. With the Australian cash rate at 3.6%, VIP looks to cycle out of domestic fix interest and into domestic income assets such as property, which are well placed to deliver stable yields in the current environment. These strategic adjustments aim to navigate global economic uncertainty while positioning the portfolio to benefit from long-term structural trends. By focusing on defensive sectors and strategic resource allocations, the portfolio aims to navigate economic volatility effectively while delivering long-term returns aligned with its capital preservation and growth philosophy.