Distancing the short term

ETF-based digiPortfolio

Global and Asia Portfolios

Over 3Q21, global equities and global bonds ended 3Q21 slightly weaker, weighed down by concerns of monetary stimulus winding down, regulatory tightening in China and its property sector debt woes. In 3Q21, the MSCI All Country World Index declined around 1% while the Bloomberg Barclays Global Aggregate Total Return Index was flat. Developed markets continued to outperform developing market equities, with Japan as the outperformer.

The Global portfolio saw a minor correction over the third quarter, which can be attributed to the Asian equity and gold exposure. Asian equities, especially Chinese equities, remained under pressure given concerns over regulatory tightening in the technology sector and debt issues in the property sector. Sentiment on gold equities was weighed down by weak gold prices given the strong US dollar. That said, the developed market equity exposure across the US, Europe and Japan continued to contribute positively to the portfolios. Our reduction to the global bond allocation also benefited the portfolio as the US 10-year Treasury yield rose to 1.48% at the end of the third quarter.

The Asia portfolio continued to see downside pressures, similarly due to the Chinese equity allocation. While market volatility may remain elevated over the near term as markets do not like uncertainties, we believe that actions taken by Chinese policymakers are timely as this will set the path for long-term inclusive growth in the world’s second largest economy. We remain hopeful as China has solid long-term economic fundamentals and its stock market has corrected to attractive GARP (Growth-At-Reasonable-Price) valuations in our view. Hence, patience is needed. That said, our allocation in Indian equities benefited the portfolio as India continued to rally strongly and remains as one of the best performing Asian market in the third quarter as well as year-to-date.

Looking ahead, we believe the Fed will remain very deliberate in communicating their intent and roadmap, and financial markets will be on stronger footing amid a continued zero-bound rate policy stance. We continue to view risk assets favourably and will maintain a tilt towards equities. Longer dated bond yields will rise further albeit moderately as the Fed has signalled its intent to wind down its QE program. We will monitor events closely and make the necessary adjustments where needed.

Global Portfolio Slow n Steady Comfy Cruisin Fast n Furious
3Q21 USD -0.6% -1.6% -2.1%
YTD 2021 USD -0.1% 3.2% 5.9%

Asia Portfolio Slow n Steady Comfy Cruisin Fast n Furious
3Q21 USD -2.2% -3.9% -5.2%
YTD 2021 USD -4.3% -3.0% -2.3%

The above table is based on the Indicative Model Portfolio gross of fees returns and excludes dividends received. Individual performance may vary.
YTD Returns as of 30 Sep 2021.



5 Aug 2021

digiPortfolio: Navigating choppy waters – China

*A special market update*

In recent weeks, Chinese stocks have come under selling pressure in response to a series of policy announcements. While such episodes of regulatory tightening are not new to investors investing in China, the new regulations recently announced by the Chinese government did catch the markets by surprise, resulting in a broad-based selloff.

While we acknowledge market sentiment for Chinese equities will likely remain weak for now, we think that it is also important to properly ascertain the rationale behind these government measures. As such, would this be a case of short-term pain but long-term gains? For more details to our CIO views on Chinese equities, please refer to last week’s edition of NAV Insights (28th July) or follow the link here.

Unfortunately, our ETF digiPortfolios were not immune to this broad-based sell-off in China equity markets. In terms of asset allocation, the Global portfolio has approximately 8% exposure to China/HK equities (Comfy Crusin). For the Asia portfolio, given the nature of the mandate that China represents a large portion of the investment universe, it has approximately 18% exposure to China equities (Comfy Crusin). However, the overall portfolio impact was limited and cushioned by the diversified nature of our portfolios. For example, in the month of July, the MSCI China Index declined by approximately -13% (in SGD terms). However, over the same period, the Asia portfolio is estimated to decline by approximately -1% (Comfy Crusin). This highlights the importance of maintaining a well-diversified portfolio to manage risks and lower overall portfolio volatility – something we have always been advocating. We remain committed to running core, diversified portfolios that hopefully proves resilient in such unforeseen market events.

We understand that many investors may remain concerned about China equities over the near term. We will continue to closely monitor the situation and make adjustments to the portfolio allocation where needed.

This article was first published in DBS NAV insights, a weekly subscription-only newsletter.

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19 July 2021

Hope Into Reality

Global Portfolio

Global risk assets continued to grind higher through 2Q21, with global equities up +7.5% over the quarter. Developed market equities such as the US and Europe led gains. Bonds also rebounded as US bond yields retreated.

The Global portfolio, referencing the Comfy Cruisin’ risk level, rallied by +4.5% over Q2 benefiting from our overweight position in equities as well as allocations in emerging market and corporate bonds. Looking ahead, we see central banks gradually tapering their asset purchases while holding policy rates at zero-bound. On balance, with high levels of liquidity remaining, we believe the current environment will continue to support risk assets. Our portfolios are positioned with an overweight in equities and spread products such as credit with an allocation in gold as a portfolio diversifier.


2Q 2021 Slow n Steady Comfy Cruisin Fast n Furious
Global Portfolio USD 3.7% 4.5% 5.2%

YTD 2021 Slow n Steady Comfy Cruisin Fast n Furious
Global Portfolio USD 0.9% 5.1% 8.4%

The above table is based on the Indicative Model Portfolio gross of fees returns. Individual performance may vary.


Asia Portfolio

Global risk assets continued to grind higher through 2Q21, with global equities up +7.5% over the quarter. Developed market equities such as the US and Europe led gains. Bonds also rebounded as US bond yields retreated. The Asia portfolio, referencing the Comfy Cruisin’ risk level, returned +1.7% over Q2. Positions in India and China equities were key contributors with Singapore equities taking a breather after strong Q1 performance. SGD government and corporate bonds also returned positively.  

Looking ahead, we see central banks gradually tapering their asset purchases while holding policy rates at zero-bound. On balance, with high levels of liquidity remaining, we believe the current environment will continue to support risk assets. Our portfolios are positioned with an overweight in equities and spread products such as credit. We stay constructive on China’s technology and new economy sectors as their long-term fundamentals are compelling and valuations look attractive given the sharp correction. This quarter, we introduce Lion-OCBC Securities Hang Seng Tech ETF which seeks to track the performance of the Hang Seng Tech Index.


2Q 2021 Slow n Steady Comfy Cruisin Fast n Furious
Asia Portfolio SGD 1.1% 1.7% 2.1%

YTD 2021 Slow n Steady Comfy Cruisin Fast n Furious
Asia Portfolio SGD 0.3% 2.8% 4.5%

The above table is based on the Indicative Model Portfolio gross of fees returns. Individual performance may vary.



13 April 2021

Back On Track

Global Portfolio

Global equities continued to grind higher over the first quarter driven by an acceleration in the vaccination programs and hopes of more fiscal stimulus from the new Biden administration. Global bonds on the other hand, corrected over the period as US 10-year Treasury yields rose. Thus, our overweight allocation to equities continue to pan out well and supported the portfolio’s performance. For instance, our moderate risk (“Comfy Cruisin’”) Global USD Portfolio returned +0.6% over the quarter. As a reference, the MSCI World Index (global equities) returned around +5% while the Bloomberg Barclays Global Aggregate Total Return Index (global bonds) declined by around -4.5% over the same period.

US equities contributed the most while our allocation to China onshore equities weighed given concerns over potentially tighter monetary policies in China. Our bond allocation inevitably negated some of the positive performance from equities as bond markets as a whole came under selling pressure on rising interest rates. Our recently added exposure to alternatives detracted as gold prices came under some pressure.

Looking ahead, we continue to view risk assets favourably and will maintain a tilt towards equities. We are watchful of the rising bond yields although we expect this to peter out eventually. This is because the longer-term inflation outlook still faces structural headwinds such as disruptive technologies, ageing population and rising debt burdens. We continue to see alternatives as a good portfolio diversifier and expect gold prices to find some relief having priced in higher bond yields.

1Q2021 Slow n Steady Comfy Cruisin Fast n Furious
Global Portfolio USD -3.1% 0.3% 2.7%

FY2020 Slow n Steady Comfy Cruisin Fast n Furious
Global Portfolio USD 9.5% 12.1% 14.9%

The above table is based on the Indicative Model Portfolio gross of fees returns and excludes dividends received.
Individual performance may vary.

Asia Portfolio

Asian equities on the whole initially got off to a strong start in 2021 but lost simmer over the quarter as Chinese equities corrected on concerns over potentially tighter monetary policies and the government’s ongoing regulatory measures on the Chinese internet sector. Singapore equities on the other hand, delivered around +12% thus emerging as one of the best performing Asian markets over the quarter. This panned out well for the portfolio as we made a change in the beginning of the year to reduce our Chinese equity and increase our Singapore equity exposure. Our Indian equity allocation also contributed to performance while Asian REITs started to see a gradual recovery. That said, the positive performance from our overweight allocation to equities was inevitably negated to an extent by the bond allocation, as global bond markets including Singapore bonds came under selling pressure on rising interest rates. Over 1Q21, our moderate risk (“Comfy Cruisin’”) Asia SGD Portfolio managed to return +1%.

Looking ahead, we continue to view risk assets favourably and will maintain a tilt towards equities. We are watchful of the rising bond yields although we expect this to peter out eventually. This is because the longer-term inflation outlook still faces structural headwinds such as disruptive technologies, ageing population and rising debt burdens.

1Q2021 Slow n Steady Comfy Cruisin Fast n Furious
Asia Portfolio SGD -3.1% -0.7% 1.1%

FY2020 Slow n Steady Comfy Cruisin Fast n Furious
Asia Portfolio SGD 2.6% 5.3% 7.6%

The above table is based on the Indicative Model Portfolio gross of fees returns and excludes dividends received.
Individual performance may vary.



12 Jan 2021

A New Hope

Global Portfolio

After a strong performance in the third quarter, equity markets across many bourses continued its run-up into the fourth quarter following positives news surrounding the COVID-19 vaccines and rising optimism of a global economic recovery in 2021. Cyclical/value-oriented sectors witnessed a rally as global investors appeared to be gradually rotating toward laggard plays. Given our overweight allocation to equities, the Global Portfolio benefited from the strong equity rally. Notably, our overweight positioning in Asia equities paid off as Asia equities outperformed developed market equities over the fourth quarter. On fixed income, our preference for corporate bonds and emerging market debt also contributed positively.

Looking forward into 1Q21, we maintain an overweight call on equities over fixed income, with a preference for US and Asia equities. For fixed income, we prefer credit over government bonds and expect longer-end rates to edge higher. Given our positive view on gold and the importance of portfolio diversification, we decided to introduce gold as a new asset class ( “alternatives”) to our portfolios. This will be funded from our cash allocation, taking it down to 2% from 5%.


4Q 2020 Slow n Steady Comfy Cruisin Fast n Furious
Global Portfolio USD 5.3% 8.3% 10.4%

FY 2020 Slow n Steady Comfy Cruisin Fast n Furious
Global Portfolio USD 9.5% 12.1% 14.9%

The above table is based on the Indicative Model Portfolio gross of fees returns. Individual performance may vary.


Asia Portfolio

Asia markets carried their positive third quarter gains into the fourth quarter, helped by China’s recovery from the COVID-19 induced recession. Markets that had lagged such as ASEAN led the outperformance as investors started to rotate from markets that did well into those still offering value. Given our overweight allocation to equities, the Asia Portfolio benefited from the strong equity rally.

Looking forward into 1Q21, we maintain an overweight call on equities over fixed income. Given the strong performance of Chinese equities over 2020, we decided to rotate some of our exposure there to Singapore equities. While we remain structurally positive on China, we see room for Singapore equities to play catch-up and potentially outperform on a relative basis in 2021 as the post-COVID global recovery continues into 2021. We are also partially funding this allocation from cash, taking it down to 2% from 5%.


4Q 2020 Slow n Steady Comfy Cruisin Fast n Furious
Asia Portfolio SGD 2.4% 5.5% 8.0%

FY 2020 Slow n Steady Comfy Cruisin Fast n Furious
Asia Portfolio SGD 2.6% 5.3% 7.6%

The above table is based on the Indicative Model Portfolio gross of fees returns. Individual performance may vary.



06 October 2020

On the mend

Global Portfolio

Over the third quarter of 2020, risk assets such as equities continued to grind higher supported by policy stimulus and the progressive re-opening of major economies. Within the regions, Asian equities was the best performing market, especially China A shares, followed by US equities. This benefited the portfolio given our overweight positioning in equities which are skewed toward Asian and US equities. For fixed income, our preference for emerging market debt and corporate credit over government bonds continued to fare well as both emerging market debt and corporate bonds outperformed government bonds over the quarter.

Looking into the fourth quarter, market volatility may remain high due to near-term uncertainties as we approach the US elections. That said, we continue to advise clients to look beyond the short term. Over the medium term, we stay constructive on equities as interest rates are expected to stay low while the global economy appears to be on the mend, especially if a vaccine is successfully found. We will keep the portfolios under close scrutiny and will use available cash to seize opportunities when they occur.


3Q2020 Slow n Steady Comfy Cruisin Fast n Furious
Global Portfolio USD 2.2% 4.4% 6.0%

YTD Slow n Steady Comfy Cruisin Fast n Furious
Global Portfolio USD 4.0% 3.5% 4.0%

The above table is based on the Indicative Model Portfolio gross of fees returns.
Individual performance may vary.


Asia Portfolio

Over the third quarter of 2020, risk assets such as equities continued to grind higher supported by policy stimulus and the progressive re-opening of major economies. Within Asia, India and China were some of the best performing equity markets over the quarter - this benefited the portfolio given our positioning in both markets. Although Singapore equities saw lacklustre performance over the quarter, we stay constructive as the market continues to look forward to a vaccine discovery soon. Singapore REITS also remained on the recovery trend as the country gradually relaxes COVID-19 restrictions. As such, we continue to stay positioned in the segment.

Looking into the fourth quarter, market volatility may remain high due to near-term uncertainties as we approach the US elections. That said, we continue to advise clients to look beyond the short term. Over the medium term, we stay constructive on equities as interest rates are expected to stay low while the global economy appears to be on the mend, especially if a vaccine is successfully found. We will keep the portfolios under close scrutiny and will use available cash to seize opportunities when they occur.


3Q2020 Slow n Steady Comfy Cruisin Fast n Furious
Asia Portfolio SGD 1.1% 2.7% 3.9%

YTD Slow n Steady Comfy Cruisin Fast n Furious
Asia Portfolio SGD 0.2% -0.2% -0.4%

The above table is based on the Indicative Model Portfolio gross of fees returns.
Individual performance may vary.



04 August 2020

Capitalizing on the market rebound

2Q2020 Slow n Steady Comfy Cruisin Fast n Furious
Asia Portfolio SGD 4.4% 8.5% 11.5%
Global Portfolio USD 10.0%​​ 13.8%​​ 16.5%​​

YTD Slow n Steady Comfy Cruisin Fast n Furious
Asia Portfolio SGD -0.8%​ -2.8%​ -4.1%​
Global Portfolio USD 1.7%​​​ -1.1%​​​ -2.2%​​​

The above table is based on the Indicative Model Portfolio gross of fees returns.
Individual performance may vary.


Global Portfolio

Over the second quarter of 2020, given unprecedented monetary support measures from central banks worldwide, global markets across many asset classes took a dramatic turn and staged a strong comeback. The USD Global digiPortfolio benefited from the market rebound and recovered strongly over the second quarter given our positioning. For instance within equities, we stayed overweight in both the US and Asia equity markets despite the March sell-off. Our fixed income allocation also paid off as we favoured corporate bonds and emerging market debt.

Within the equity space, given our constructive medium-term view on China especially the China ‘A’ share market, we decided to add new exposure to this market with the iShares MSCI China A ETF. In the fixed income space, we further reduced our government bond exposure to rotate into corporate credit and emerging market debt where we see higher yields. Looking ahead, given the strong market rebound over the second quarter, we will not be surprised should we see a near-term market consolidation. While we continue to closely monitor near-term macro uncertainties, we think central banks will likely provide support if necessary. Thus should that happen, we stand ready to take advantage of any opportunities.


Asia Portfolio

Over the second quarter of 2020, given unprecedented monetary support measures from central banks worldwide, Asian markets took a dramatic turn and rebounded strongly across many countries. The SGD Asia digiPortfolio recovered strongly over the second quarter given our positioning toward Chinese equities and REITs. We also added Indian equities to the portfolio in Q2 which benefited the portfolios, as markets that saw large drawdowns in Q1 such as India were key outperformers.

Given our barbell approach, on one hand we decided to increase our exposure to Chinese equities for growth. On the other, we decided to increase our Asia REITS allocation for income on expectations that many Asian economies will gradually ease lockdown measures and progressively re-open their economies, supporting a slow but gradual recovery for REITs. In the fixed income space, we further reduced our government bond exposure to rotate into corporate credit and emerging market debt where we see higher yields. Looking ahead, given the strong market rebound over the second quarter, we will not be surprised should we see a near-term market consolidation. While we continue to closely monitor near-term macro uncertainties, we think central banks will likely provide support if necessary. Thus should that happen, we stand ready to take advantage of any opportunities.


12 May 2020

Distancing the short term

1 year (as of end Q1’20) Slow n Steady Comfy Cruisin Fast n Furious
Asia Portfolio SGD 1.3%​ -3.7%​ -6.8%​
Global Portfolio SGD 1.2%​ -4.8%​ -8.5%​

The above table is based on the Indicative Model Portfolio gross of fees returns.
Individual performance may vary.


Global Portfolio

Over the first quarter, fears over the COVID-19 pandemic coupled with crude oil price collapse led to a broad sell-off in global markets including global equities, corporate bonds and emerging market bonds. That said, government bonds led by US Treasuries rallied well which benefited the portfolio. Given the strong rebound, we decided to take some profits and tactically reduce the government bond exposure. This will be temporarily parked in cash.

Looking ahead, while markets may likely remain volatile over the near term, we do expect rationality to eventually prevail. With higher cash levels in the portfolio currently, we have the flexibility to take advantage of any market volatility to re-deploy into markets in the months ahead. In the meantime, one key lesson we have learnt through multiple market cycles is the importance of adopting a long-term portfolio approach toward investing. This is what we hope to deliver with the global ETF portfolio that is well-diversified across asset classes.


Asia Portfolio

Over the first quarter, fears over the COVID-19 pandemic coupled with crude oil price collapse led to a broad sell-off in global markets including Asian equities and corporate bonds. That said, our exposure to Singapore government bonds and investment-grade corporate bonds held up well over the quarter and benefited the portfolios. Our exposure to Chinese equities also contributed as they outperformed many Asian and developed equity markets relatively.

Looking ahead, while markets may likely continue to remain volatile over the near term, we do expect rationality to eventually prevail. With the sharp correction in Indian equity markets, we decided to make use of the opportunity to initiate a position. Besides China, India is one of the largest economies in Asia. Hence we believe that adding India will open up more investment opportunities for the portfolio while improving overall diversification of our equity exposure beyond Singapore and China currently. One key lesson we have learnt through multiple market cycles is the importance of adopting a long-term portfolio approach and improving portfolio diversification. This is what we hope to continuously achieve for the Asia ETF portfolio.

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