Distancing the short term

ETF-based digiPortfolio

The Return of 60/40

Global Portfolio

Over 4Q22, global equity and fixed income markets saw a strong rebound as moderating US CPI data spurred hopes that the worst of inflationary pressures may be behind us, giving room for the US Fed to potentially slow the pace of rate hikes. In addition, there were positive news from China as the government took swift and concrete steps in 4Q22 towards ending COVID-19 lockdown measures and reopening the country. As a result, global equities (as measured by the MSCI ACWI Index) and global fixed income (as measured by the Bloomberg Global Aggregate Total Return Index) markets rebounded by +9.8% and +4.6% respectively over 4Q22.

The Global portfolio benefited from the global market recovery and enjoyed a strong rebound as well. Our overweight allocation to equities, especially Chinese equities, did well as the China market rallied by +13.6% over the quarter on the back of reopening hopes. The allocation to gold miners also contributed positively as gold prices climbed. However, our underweight allocation to fixed income detracted as global bonds also rallied on the back of lower long-end rates and narrowing credit spreads. For the full year 2022, although the portfolios were unfortunately down in absolute returns, they held up relatively better and outperformed the general markets which were down even more.

Looking into 1Q23, we are looking to make several adjustments to the portfolios’ asset allocation. On equities, after keeping the asset class at an Overweight stance for most of 2022, we now intend to trim the allocation back to Neutral weight. Within equities, we continue to prefer US and Asian equities. On fixed income, we will upgrade the asset class to Overweight as we now see attractive risk-reward for bonds. Within fixed income, we remain focused on quality. Hence, we prefer to add to US Treasuries and short-dated Developed Market investment grade credit, while maintaining an Underweight stance on emerging market debt. On the whole, we will continue to monitor closely market risk factors such as recession concerns and adjust the portfolios accordingly. But if our view of a mild recession is realised, we think that there are good opportunities for the market to stage a rebound this year, albeit in a volatile manner.


Global Portfolio Slow n Steady Comfy Cruisin Fast n Furious
4Q 2022 USD 3.1% 6.1% 7.9%
FY 2022 USD -12.3% -14.9% -16.6%

Figures as of 31 December 2022.
The above table is based on the Indicative Model Portfolio gross of fees returns. Individual performance may vary.


Asia Portfolio

Asian markets took a positive turn over the fourth quarter, led by China as the Chinese government swiftly rolled back Covid-19 lockdown measures and took active steps towards reopening the country. In addition, Chinese policymakers also announced a series of supportive measures for key economic sectors and reiterated the importance of supporting economic recovery. As a result, Asian equities, especially China rebounded strongly. Singapore government bonds also rallied as interest rates declined on the back of moderating inflation data.

Given our sizeable positioning in Chinese equities, the Asia portfolio benefited from the China market recovery. Singapore equities also continued to climb higher, contributing positively to performance. However, the exposure to Indian equities and REITs detracted as India  saw a consolidation on rich valuations while REITs faced headwinds from higher interest rates. On fixed income, the portfolio benefited from the rally in Singapore government bonds.

Looking into 1Q23, with the constructive Zero-Covid policy pivot in China, low valuation levels and still very low global investor positioning, we believe there remains compelling upside potential for China equities and intend to increase our exposure especially to Chinese internet stocks. In turn, we will further reduce Indian equities as we see less near-term catalysts given rich valuations. On fixed income, we now see attractive risk-reward for bonds and will look to add to government bonds. On the whole, while near-term risks still remain for Asian markets which will keep equity bourses volatile, we remain constructive and expect equities to continue to recover from the lows over the next few months.


Asia Portfolio Slow n Steady Comfy Cruisin Fast n Furious
4Q 2022 SGD 1.0% 2.3% 3.0%
FY 2022 SGD -10.4% -10.7% -11.8%

Figures as of 31 December 2022.
The above table is based on the Indicative Model Portfolio gross of fees returns. Individual performance may vary.



Fed in Focus

Global Portfolio

Over the third quarter of 2022, both equities and fixed income markets went through a rollercoaster ride, recovering well through July to mid-August before taking a dive after the US Federal Reserve reiterated their hawkish stance to further tighten monetary policies to combat inflation. Global equities (as measured by the MSCI ACWI Index) and global fixed income (as measured by the Bloomberg Global Aggregate Total Return Index) markets fell by -4.8% and -7.3% respectively over 3Q’22 (as of 28 Sep 2022).

While our Global ETF portfolio inevitably fell by -5.8% over 3Q’22, the portfolio still slightly outperformed the global market reference composite which fell by -6%. Year-to-date, while the Global ETF portfolio fell by -19.8% in absolute terms, it outperformed the market reference composite which fell more by -22.1%. Broadly speaking, our underweight call on European equities panned out well as European equities fell by -11.1% over 3Q’22 (as measured by Stoxx Europe 600 Index, USD terms). Our overall underweight stance on fixed income was also right as bond markets suffered on rising interest rates. However, our overweight call on Asian equities which fell by -13.6% over 3Q’22, remained a drag.

Looking into 4Q’22, we expect market volatility to remain high and continue to focus on quality by reducing our emerging market bond exposure and adding to shorter-duration high quality developed market bonds. However that said, we also see value emerging especially for equities. We advocate investors to stay the course and adopt a patient “dollar-cost average” approach to ride out the current policy normalisation cycle.


Global Portfolio Slow n Steady Comfy Cruisin Fast n Furious
3Q 2022 USD -3.5% -5.8% -7.0%
YTD 2022 USD -15.0% -19.8% -22.8%

Figures as of 30 September 2022.
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 2022, both equities and fixed income markets went through a rollercoaster ride, recovering well through July to mid-August before taking a dive after the US Federal Reserve reiterated their hawkish stance to further tighten monetary policies to combat inflation. Global equities (as measured by the MSCI ACWI Index) and global fixed income (as measured by the Bloomberg Global Aggregate Total Return Index) markets fell by -4.8% and -7.3% respectively over 3Q’22 (as of 28 Sep 2022).

Asia is facing challenges from China’s Zero Covid policy and strengthening USD. Our Asia ETF portfolio fell by -7.8% over 3Q’22, compared to the Asia market reference composite which fell by -7.3%. Year-to-date, while the Asia ETF portfolio fell by -12.7% in absolute terms, it also outperformed the market reference composite which fell more by -17.7%.

Looking into 4Q’22, we expect market volatility to remain high and continue to focus on quality. However that said, we also see value emerging especially for equities. We advocate investors to stay the course and adopt a patient “dollar-cost average” approach to ride out the current policy normalisation cycle.


Asia Portfolio Slow n Steady Comfy Cruisin Fast n Furious
3Q 2022 SGD -4.8% -7.8% -9.9%
YTD 2022 SGD -11.4% -12.8% -14.4%

Figures as of 30 September 2022.
The above table is based on the Indicative Model Portfolio gross of fees returns. Individual performance may vary.



21 Jul 2022

Rising Above Inflation

Global Portfolio

Over the second quarter of 2022, high inflation and geopolitical tensions continued to lead to investor concerns over further Fed rate hikes and global growth slowdown. This resulted in a watershed quarter for risk assets with global equities (as measured by the MSCI ACWI Index) and global fixed income (as measured by the Bloomberg Global Aggregate Total Return Index) falling by -15.5% and -8.2% respectively over 2Q22 (as of 30 June 2022).

The actions taken in the beginning of the quarter to increase portfolio defensiveness contributed positively. For example, our moves to reduce Europe equities and Emerging Market corporate bonds contributed, although the increase to US equities detracted. Looking ahead, we continue to maintain a sizeable overweight position in Asian equities as we believe the risk-reward for China looks compelling. In addition, we move Japan equities to a tactical overweight as the weak Japanese Yen has made the investment case more compelling for this export-oriented market. On Fixed Income, we increased our allocation in developed market government bonds such as US Treasuries. On the other hand, we further cut exposure to emerging market bonds given the twin headwinds posed by dollar strength and expected monetary tightening in EM countries.

On the whole, barring further deterioration on the geopolitical front, we stay hopeful for a better showing of risk assets in the second half of the year. We continue to advocate investors to stay the course and maintain a well-diversified portfolio across asset classes.


Global Portfolio Slow n Steady Comfy Cruisin Fast n Furious
2Q 2022 USD -6.4% -9.6% -12.0%
1H 2022 USD -11.9% -14.9% -16.9%

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


Asia Portfolio

Over the second quarter of 2022, Asian markets started to outperform developed markets on relative terms. For example, while US equities fell by -16.1%, Asian equities (as measured by the MSCI AC Far East ex. Japan Index) fell by a much lesser extent of -8.2%. Similarly for fixed income, while global bonds (as measured by the Bloomberg Global Aggregate Total Return Index) fell by -8.3% over 2Q22, Asian bonds (as measured by the iShares J.P. Morgan Asia Credit Bond Index ETF) fell by a smaller magnitude of -6.7%. Notably, Chinese equities bucked the trend to register a positive gain of +3.5% over the quarter. This benefited the Asia ETF digiPortfolio given our overweight stance on China.

Looking ahead, we remain overweight on Chinese equities as we believe the stage is set for China to continue its outperformance over the second half of the year. We further reduced the Indian equity exposure tactically given still high valuations coupled with weak Indian Rupee, although the long-term structural outlook remains bright. Within Singapore equities, we reduced our position in the Nikko AM Singapore STI ETF given the year-to-date relative outperformance of the broad Singapore equity market and re-allocated to the NikkoAM-StraitsTrading Asia ex Japan REIT ETF. We think that the year-to-date underperformance of SG REITs suggests concerns over rate hikes and cost pressures may have been priced in by the market while dividend yields for REITs should likely stay stable. In addition, we see REITs as adding defensiveness to the portfolios in light of the current volatile market environment. For fixed income, we remain underweight on the asset class and focus on building portfolio resilience. This is done by further reducing our corporate bond exposure and re-allocating to government bonds.

On the whole, barring further deterioration on the geopolitical front, we stay hopeful for a better showing of risk assets in the second half of the year. We continue to advocate investors to stay the course and maintain a well-diversified portfolio across asset classes.


Asia Portfolio Slow n Steady Comfy Cruisin Fast n Furious
2Q 2022 SGD -2.7% -1.6% -1.3%
1H 2022 SGD -6.9% -5.4% -5.0%

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



06 May 2022

Anchor in the Storm

Global Portfolio

Over the first quarter of 2022, market sentiment was dented by concerns over the Russia-Ukraine conflict, the effects of surging oil prices on inflation, and the US Federal Reserve embarking on its tightening cycle. As a result, global equities fell by -5.3% and global credit fell by -6.7% (in USD terms) while the Comfy Cruisin’ portfolio returned -5.8% (without including dividend payouts). Despite the choppy start to the year, we think some of the fears currently affecting investor sentiment may perhaps be overblown which offers opportunities looking ahead.

While stagflation risks have risen, it remains an unlikely scenario as growth momentum has shown resilience, corporate profitability is strong and consumers have significant untapped spending power. Therefore in terms of asset allocation, we stay overweight in equities over fixed income. Within equities, we added to US equities as valuations look more compelling after the recent market correction but reduced our European equity exposure on concerns over the potential impact of higher energy prices and lingering uncertainties. To hedge against inflation risks, we maintained our existing gold miner ETF position and further added a global infrastructure ETF. For fixed income, we remain underweight and advocate an up-in-quality shift in terms of credit exposure. Historically in a rising rate environment, developed market (DM) investment grade bonds tend to be most resilient while emerging market (EM) bonds tend to underperform. As such, we further reduced our EM credit exposure to tilt the fixed income allocation toward DM corporate bonds. That said, we do think that we may also be approaching peak hawkishness on the rates front which could present interesting opportunities for fixed income down the road in our view.


Global Portfolio Slow n Steady Comfy Cruisin Fast n Furious
1Q22 USD -5.90% -5.80% -5.60%
FY 2021 USD 1.50% 6.50% 10.60%

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


Asia Portfolio

Along with most developed markets, the first quarter of 2022 was a highly volatile period as Asian equities and credit fell by -7.6% and -6.2% respectively (in SGD terms). On a relative basis, the Comfy Cruisin’ portfolio held up strongly and returned -3.8% (without including dividend payouts) for the quarter. This was helped by diversifying our sources of returns.

Over Q1, the downside pressure on broader Asian equities was led by Chinese equities on several concerns. However that said, while risks certainly still remain for China equities, we see the move on 16th March 2022 by Chinese Vice Premier Liu He to announce that they will take “substantial measures” to stabilise markets as a positive. The Chinese officials stated that they will proactively work with the US on the US ADR delisting issue, look into alleviating debt issues to restore confidence in the China property sector, eliminate the current regulatory uncertainty overhang on the internet sector and gradually adjust its “covid-zero” policy to minimise economic impact. While exact details are yet to be disclosed, this is a positive as the government appears to be addressing the key concerns many international investors have on China. This is coupled with compelling valuations as Chinese equities are currently trading at their lowest in seven years. Thus, we see asymmetric risk-reward to increase our Chinese equity exposure on expectations of an eventual return to normalcy over the summer. This is funded by reducing our India equity exposure as we see reasons to be tactically prudent over the near term given the market’s strong outperformance and high valuations.


Asia Portfolio Slow n Steady Comfy Cruisin Fast n Furious
1Q22 SGD -4.30% -3.80% -3.70%
FY 2021 SGD -4.70% -4.0% -3.90%

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



18 Mar 2022

Staying diversified amidst China panic

The MSCI China Index, which tracks China equities, suffered from a turbulent start to the week as it faced a two-day sell-off, losing more than 14%. It was little different for the Hang Seng Tech Index, which tracks the performance of Chinese technology stocks. It plunged 18% since last Friday (11 Mar 2022).

Recent heavy sell-offs are deemed to be triggered by a combination of factors relating to:

  1. Worries that US allegations of China’s ties to Russia could lead to further sanctions on Chinese companies
  2. Regulatory headwinds in sectors like property and technology that have persisted since 2021
  3. The impact of renewed Covid-19 lockdowns affecting the domestic economy

These concerns outweighed positive economic data on Tuesday signalling strong retail sales and industry output in January and February 2022 as well as assertions that China is not involved in Russia’s war with Ukraine.

Diversification within the portfolio

It is often said that “Too much of a good thing can be bad”. This holds when it comes to investing too. At times, investors can hold a very positive view on certain markets or sectors, which might lead them to invest too heavily into those areas. Instead, investors should realise the importance of sizing up appropriate allocations within a portfolio.

As the largest economy in Asia, China investments would naturally have a place in well diversified global investor’s portfolio, let alone an Asia investor’s portfolio. It is no different for digiPortfolio as its portfolio managers seek to draw on multiple sources of returns, providing for diversification. While a well-diversified portfolio doesn’t eliminate risk, it can cushion the blow from heavy sell-offs in particular markets and sectors.

While the Asia Portfolio (Comfy Crusin’) invests in China equity as well as a China technology index, the allocations are moderated with a 15% allocation to a MSCI China ETF and just 3% in the Hang Seng Tech ETF. The Asia Portfolio further invests in Singapore bonds, Singapore equities, Real Estate Investment Trusts (Reits) and India equities within a well-diversified portfolio.

While the portfolio is down 5.4% for the month, the drawdown is relatively muted compared to the markets and sectors that are feeling the brunt of the turmoil this week.

 

1M returns in SGD (15 Feb – 14 Mar 2022)

MSCI Asia Ex Japan index

-12.0%

MSCI China index

-23.4%

Hang Seng Technology index

-30.3%

Asia Portfolio (Comfy Crusin’)

-5.4%

In summary

There are no guarantees in investing but investment principles such as seeking diversification is crucial to tide over challenging market conditions. digiPortfolio offers investors such portfolios driven by the views of the DBS investment team. In next week’s DBS NAV insights newsletter, we explore dollar cost averaging as an investment principle that we would advocate during choppy markets.

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

Sign up for DBS NAV Insights, our weekly investment newsletter, to stay updated on views from our experts at the DBS CIO office and DBS Group Research.

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03 Mar 2022

Navigating the Russia-Ukraine crisis

The Russia-Ukraine crisis is the main topic on everyone's minds. Many questions have been raised on how the situation may evolve, and how investment portfolios should be positioned.

Here's a factsheet from DBS Chief Investment Office that will address some of the key questions surrounding the conflict.

  1. What's happening

    Why did the crisis unfold?

    In the years after the breakup of the Soviet Union (USSR) in 1991, many newly independent states of the former Eastern Bloc chose to join the North Atlantic Treaty Organization (NATO), a defensive alliance.

    There are two distinct viewpoints on what triggered the Russia-Ukraine crisis.

    The Russian view: NATO's expansion to Eastern Europe is a security threat, with the alliance's intention to admit Ukraine, deemed has crossing the line.

    The US view: US President Joe Biden believes Russian leadership is harbouring a bigger ambition beyond Ukraine, to “reestablish the former Soviet Union”.

    Sanctions on Russia

    Economic and Financial: Limited access to financial systems for banks, key state-owned companies, and individuals as well as asset freezes and visa restrictions.

    Technology: Ban on the import and export of technological goods, suspension of licenses, ban on sale of aircraft and equipment, and limits on access to semiconductors and select software.

    SWIFT: Banning of some Russian banks from using the platform, which is a messaging network for financial institutions to securely send and receive information.

    Low risk of economic contagion

    As Russia accounts for only 1.8% of global gross domestic product, the impact on the global economy is likely limited. This compares with 24.7% for US and 17.4% for China. In terms of global trade flows, Russia accounts for only 1.7% of global exports (vs 9.5% for US and 12.1% for China), and 1.4% of global imports (vs 12.8% for US and 10.8% for China).

    A bigger threat is likely to come from commodity prices. With Russia a primary exporter of energy to Europe, a prolonged crisis may result in slower production and supply shortages.

    US Federal Reserve policy could be affected

    With sentiment taking a turn from geopolitical tensions, the Fed could invoke more caution in the hiking cycle and pare back expectations for aggressive hikes.

    Unlikely the start of a bear market

    On average, global equities have rallied 38% during military conflicts. Rising uncertainties, meanwhile, triggered average gains of 138% for gold and 89% for crude oil.

    During the 2014 Crimean crisis, where Russia invaded and annexed the peninsula from Ukraine, global equity markets were flat while gold and oil registered only slight dips.

    European banking system little affected

    Most European banks derive 1% to 2% of their profits of even less from Russia, and a much lower percentage in terms of total banking assets. Moreover, they have sufficient capital buffers to weather the direct impact of the Ukraine crisis.

    The European Central Bank (ECB) could also turn more cautious on policy tightening given the proximity of the crisis to the continent, allowing funding conditions to remain stable while tensions persist.

  2. What to expect now

    Demand for inflation hedges, geopolitical risks, and volatility is expected to rise leading to higher gold prices. As a hard asset, gold has preserved and risen in value during environments of hyperinflation, stagflation, and negative interest rates. Its attribute of being uncorrelated to risk assets makes it an effective hedge during periods of high volatility.

    Europe is most exposed to the conflict due to its proximity as well as dependency on Russia’s energy resources. Domestic sentiments will likely be weak in the near term, and recovery delayed. Investors should stay with resilient sectors such as oil majors, luxury brands, and commodity producers while scanning the banks for exposure to Russia and companies involved in the Nord Stream 2 project, which has been halted.

  3. Are there market opportunities?

    Investors can consider focusing on sectors and secular themes that are supported by strong fundamentals and resilient against geopolitical events. These are predominantly sectors with globally diversified revenue streams and pricing power.

    The investment expressions include US big cap Technology stocks and global Health Care sectors which will maintain outperformance over the broader markets. For Technology, we maintain our conviction on semiconductor upstream and equipment, software services, cyber security, cloud computing, and electric vehicle supply chain. For Health Care, we like large pharmaceuticals and drug developers.

The above is a summary of DBS CIO Perspectives report titled "Factsheet: Navigating the Russia-Ukraine crisis" published on 28 Feb 2022. The full report can be accessed through the DBS Private Bank website, under Market Insights.

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

Sign up for DBS NAV Insights, our weekly investment newsletter, to stay updated on views from our experts at the DBS CIO office and DBS Group Research.

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09 Feb 2022

A Divergent World

Global Portfolio

2021 was a year of sharp divergences among global markets and asset classes. Surging corporate profits combined with central banks’ promise of monetary policy support helped drive many equity markets around the world to new highs. This lies in sharp contrast to the declines seen in global bonds as fears of Fed tapering hampered returns. For the full year 2021, the global USD portfolio did well, returning +6.5% for the Comfy Crusin’ risk profile. Our asset allocation positioning largely panned out right as we have been overweight equities over bonds for most of the year. We also preferred developed market equities over Asian equities as reflected in the portfolio’s positioning, contributing positively to performance as well.

Looking into 2022, elevated market volatility is to be expected as the world transitions from a period of high economic growth to medium economic growth (early-stage recovery to mid-stage). We expect interest rates to gradually grind higher as the US Federal Reserve indicates its intent to tighten monetary policy over the course of the year. As such, we remain underweight on fixed income in our asset allocation. In addition, in order to increase resilience of our fixed income exposure against rising interest rates, we are making a few changes to reduce overall fixed income duration to ~5. We also continue to favour corporate bonds over government bonds as the higher yield may provide some cushion to rising rate pressures. We continue to favour equities as we expect resilient earnings growth to support momentum in equities despite the Fed’s policy tightening. We also maintain our gold miner exposure as a portfolio diversifier and hedge against inflation risks.


Global Portfolio Slow n Steady Comfy Cruisin Fast n Furious
4Q21 USD 1.70% 3.20% 4.40%
FY 2021 USD 1.50% 6.50% 10.60%

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


Asia Portfolio

2021 was a year of sharp divergences among Asian markets. While our positioning in Singapore and Indian equities did well, exposure to China equities was unfortunately a drag as the Asia SGD portfolio ended the year with -4% for the Comfy Crusin’ risk profile. As the Western countries continued their path of fiscal stimulus and unconventional monetary policies, China did the exact opposite by adopting fiscal prudence and sticking to a conventional monetary policy, on top of the various regulation tightening measures carried out across sectors. Only time will tell which will be a long-term benefit to the economies. But in the short-term, this has led to a bear market in Chinese equities.

Looking into 2022, China has started to reverse its policy by reducing its RRR and cutting policy interest rates. These moves further highlight the policy divergence between China and the US as the US Federal Reserve now hints at monetary policy tightening. We expect China to stay accommodative on its policy front this year and focus on addressing rising downside GDP growth risks. This should be supportive for China equities, coupled with its compelling valuations after the deep correction in 2021. However that said, a meaningful rerating for China equities will hinge on a few factors such as a gradual tapering of regulatory tightening measures, effective solutions to address the debt situation of Chinese property developers and signs of earnings rerating for essential sectors such as e-Commerce, financials and consumer discretionary. We stay constructive on China equities but will closely monitor developments for the mentioned factors.


Asia Portfolio Slow n Steady Comfy Cruisin Fast n Furious
4Q21 SGD -0.40% -1.10% -1.60%
FY 2021 SGD -4.70% -4.0% -3.90%

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



09 Dec 2021

Navigating choppy waters – Omicron

When it comes to investing, uncertainties can have a sizeable impact on investor sentiment, which can result in short-term market volatility.

The selloffs that gripped US stock markets saw the S&P500 Index slide 2.3% last Friday (26 November) and 1.9% on Wednesday (1 December). The dips were triggered by investors coming to grips with the unknown impact of the Omicron variant of Covid-19, which was recently discovered in South Africa. While some reports cite that this variant may cause less severe illness, it may take some time to ascertain that with more data and of course, whether the existing vaccines are effective against this variant.

In the meantime, investors are naturally concerned about a rapid spread of the variant triggering new lockdown measures as well as prolonging supply-chain disruptions and keeping inflation elevated. There are also mounting inflation concerns, especially after US Federal Reserve chair Jerome Powell on Wednesday (1 December) said that he believes inflation is no longer transitionary.

Like all investment products, our digiPortfolios are not immune to turbulent market performance. That said, at the very core of our portfolios are well-diversified holdings which serve to manage risks and lower overall portfolio volatility. This is something that we have always been advocating.

On 26 November, our Comfy Crusin' (Level 3) ETF-based Global portfolio returned -1.1%, losing less than the 2.3% the S&P500 index lost. Navigating choppy periods has always been difficult for investors but core holdings like the Asia and Global digiPortfolio seeks to smoothen the ride to allow investors to stay invested for the long term and reap its rewards. Despite 2021 being a challenging year for markets, as of September, 95% of clients who invested in digiPortfolio for more than 12 months experienced positive returns. Out of this group, 40% of them enjoy double digit returns.

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 the outlook over the near term. We will continue to closely monitor the situation and adjust the portfolio allocation where needed.



15 Oct 2021

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 SGD -2.2% -3.9% -5.2%
YTD 2021 SGD -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.

Sign up for DBS NAV Insights, our weekly investment newsletter, to stay updated on views from our experts at the DBS CIO office and DBS Group Research.


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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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