In this legendary Stockhead series, investment manager James Whelan from VFS Group offers his insights on the key investment themes and trends in domestic and global markets. From macro musings to the metaverse and everything in between, Whelan offers his distilled thoughts on the hot topic of the day, week, month or year, from the point of view of a damn fine professional money manager.

Good morning,

December arrives again and along with it the realisation that another year is almost done. One of survival and evaluation. Or more specifically, revaluation.

The lofty junk of 2021 was met with the brute reality of 2022 valuations as central banks raised at the fastest pace in history.

And if you believe the chatter, it looks like we’re almost at the end of the upwards run in yields. One or two more smaller moves from the Fed and RBA and we’re about done, then they’ll keep them up around that level for most of 2023 and the reduction starts.

That’s only with all things being equal, mind you. If there’s one guarantee it’s that all the big ideas for the year ahead that come out around now face their first contact with the enemy and become partially redundant.

With that in mind I thought it apt to put together a robust list of the ideal portfolio for a generic balanced account to buy on dips and hold through most of the year.

I say “dips” for a few reasons:

I first put this together on November 20 internally and there’s been a few per cents rally between then and now. The Fed is friendlier, and the door has shown a crack of light to reopening in China. Yields were a little higher, markets were a little lower. They were good days, the heady ones of late November.

Still if you’re all about the buy and hold then these things shouldn’t concern you.

The VIX correlation with markets really concerns me. Last week I wrote about a great return you would have had if all you did this year was buy the S&P 500 when volatility was at panic stations and sell when everything is rosy. You’d be up almost 30% this year.

stocks to buy 2023

Vix and the top, S&P at the bottom.

stocks to buy 2023

When the Fed changes, the market is not kind. Stats!


In short with global growth being slower and “choppier” expect markets to not move in a vaguely straight line. If you told me the S&P 500 ends 2023 around the same place as it starts then I’d be unsurprised.

So here goes the simple portfolio strategy. Where possible I’m keeping these to Australian listings for ease of access:


US bond ETF allocation – Global X US Treasury Bond ETF (Currency Hedged) (USTB)

Long bonds has to be the order of the day for 2023. You’re getting paid nicely to do nothing for the first time in a while. The 60/40 equities/bonds portfolio is back. US treasuries offer slightly more than Aussie ones and any reduction in yield by the Fed means the capital appreciation for this one is to the upside.


Aussie Bond ETF Allocation – Vanguard Australian Fixed Interest Index ETF (VAF)

Same as above and added for diversification in the bonds market. It’s more than just Government Treasuries, it covers semi-gov bonds and investment grade corporations. Our companies are fine. Invest with confidence.


Credit ETF Allocation – BetaShares Australian Investment Grade Corporate Bond ETF (CRED)

This one gives you access to senior, fixed rate, investment grade corporate bonds listed in Australia. Note they’re not always Australian companies, just ones listed here. It’s non-Government so the yield is higher. Investment grade bonds should stay okay with rates not having as much impact on them as the smaller end of town and with the global economy not going completely backwards the debt is fine.


Aussie Index Weighted ETF – iShares Core S&P/ASX 200 ETF (IOZ)

Moving on to the core equities portion of the portfolio we get to the index weighted Aussie ETF, tracking the ASX 200. Let’s be honest here, the Aussie market is banks and resources. I want to be weighted to the big end of town hence the reason I steered clear of the equal weighted alternative. Own BHP and RIO on China reopening, own the banks on bigger Net Interest margins and a housing market under the close protection of the RBA.


Overseas Equities Exposure – BetaShares FTSE 100 ETF (F100)

My preferred overseas equities exposure remains the biggest companies on the FTSE. Energy, Staples, Financials. The biggest, most dependable companies in Europe. Shell, Astrazeneca, Unilever, HSBC and BP are the biggest holdings. It ticks a lot of boxes for me.

And for a little bit of extra risk:


Global X Copper Miners ETF (WIRE) and Global X Physical Silver (ETPMAG)

Copper should need no introduction after the wealth of knowledge written on it. It’s integral for the decarbonisation of the world. There is not enough of it. This ETF offers exposure to the best copper miners in the world.

As for silver, something happens when rates start coming off with a USD that’s probably going to be taking a breather for a while.

Here are two charts from Crescat Capital:

Image courtesy Crescat Capital
Image courtesy Crescat Capital

From early October: “Last time silver went up as much as today was November 2008. That was the bottom and silver went up 400% in the next two and a half years.”

And so there you have it. I still like FOOD because we are still in a global food crisis but with weather patterns changing again this one is under review.

There are also still single stocks that I like (BHP, Google) that have no real problem in a portfolio, but the mandate was a simple ETF buy and hold strategy, so that’s what I came up with.

Three weeks until Christmas which means Santa Rallies get talked about. However, don’t pull the trigger too early on that one, just stay alert in the last week and a half.

Good luck and stay safe,


The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.