StashAway’s Q3 2024 Returns

Strong portfolio growth despite market turbulence

During the third quarter of 2024, global markets experienced a notable rebound. This wasn’t without its moments of volatility, however, as the start of August saw a market correction tied to unwinding of the carry trade.

Ultimately, easing inflationary pressures, a favourable economic outlook, and the start of the US Federal Reserve’s rate cut cycle were supportive of equities and fixed income. Gold, meanwhile, soared amid continued geopolitical tensions. 

Put together, global equities have risen 19.1% for the year to end-September in USD terms, global bonds have edged up 2.7%, ultra-short-dated Treasuries have delivered 4.1%, and gold has climbed 27.2% 

In this environment, our portfolios’ positioning under our Economic Regime Asset Allocation (ERAA®) framework have enabled them to continue outperforming their benchmarks on average year-to-date.

Here’s how our portfolios performed in Q3 2024:

• General Investing portfolios powered by StashAway
• General Investing portfolios powered by BlackRock 
• Responsible Investing portfolios 
• Thematic portfolios
• Singapore Investing portfolio 
• Simple and Simple Plus portfolios

General Investing portfolios powered by StashAway 

StashAway’s General Investing (GI) portfolios continued to deliver positive absolute returns across StashAway Risk Indexes (SRIs), and outperform their same-risk benchmarks on average for the year to date.

Over the period, they were up +11.6% on average in USD terms (+8.6% in SGD terms). That compares with an average +10.0% for their same-risk benchmarks in USD terms.

Our portfolios’ lower volatility have aided their performance over a longer time period 

Our portfolios continued to experience lower volatility versus their same-risk benchmarks so far this year. On average, our GI portfolios faced annualised volatility of about 6.0% in USD terms for the year to end-September, versus 6.6% for their same-risk benchmarks.

This resulted in better volatility-adjusted returns versus their benchmarks – or a ratio of 2.5 year-to-date, compared with 1.8 for benchmarks. This ratio measures the return for each unit of risk taken.

Taking a longer view, that lower volatility in our portfolios has helped to protect against market drawdowns and support their performance over longer time horizons.

This was especially apparent over the past few years of elevated market volatility, as illustrated in the chart below. During this period, our portfolios have outperformed their benchmarks by about 6.7 percentage points on average.

Gold has provided a solid foundation for our portfolios’ performance

Our ERAA® investment framework's overweight allocations to gold have been one of the key drivers of our portfolios’ performance in Q3 and throughout the year. A number of factors contributed to gold's strong gains – including safe-haven demand during episodes of market volatility, escalating geopolitical tensions, and the start of the Fed’s rate cut cycle. During the quarter, the precious metal posted returns of +13.1% in USD terms. For the year to end-September, it returned +28.5%.

As a reminder, we updated our benchmarks earlier this year to incorporate gold, as well as ultra-short-dated US Treasuries, with the goal of producing better risk-adjusted returns for our portfolios across economic cycles. (You can read more about that here: CIO Insights: How we put your money to work – the nuts and bolts of ERAA®, our investment framework.)

Looking ahead, we continue to see both cyclical and structural opportunities in gold. In the near-term, it could continue to benefit amid still-elevated geopolitical risks and from declining real interest rates as the Fed continues to cut.

Over the longer-term, we still believe concerns about higher US government bond issuance and efforts to diversify international reserves away from USD holdings should continue to underpin the asset class.

Equity markets regained steam, but have rotated away from tech 

Following a pair of sizable market corrections toward the end of the summer, the rally in global equities has continued to regain steam. However, recent months have seen the drivers of the rally rotate away from growth stocks and mega-cap technology firms and toward value stocks and smaller- and medium-sized companies.

ERAA®'s allocations to broad US and global equities helped our portfolios to ride this broad upswing, especially in our higher-risk portfolios. It also captured the rotation toward other parts of the market via exposure to value-tilted sectors like consumer staples, as well as to equal-weighted US equities.

Looking ahead, the latest signals from the data suggest that the US economy, while moderating, is still holding up. (Read more in CIO Insights: Why US recessions risks may be overstated.) What’s more, the start of the Fed’s rate cut cycle in a bid to support growth has further lowered the odds of a recession. Put together, our base case is that we’re likely to remain in an environment of inflationary growth – a regime that’s supportive of risk assets, and which should continue to benefit cyclical sectors like industrials, as well as mid- and small-cap stocks.

Safe-haven demand, rate cuts brought bond returns back in the black

After spending much of the year in negative territory, global bond returns finally turned positive in August as market volatility drove investors to safe-haven assets. A relatively benign economic environment, easing inflationary pressures, and global central banks finally kicking off their easing cycles were also supportive for the asset class.

Accordingly, ERAA®'s allocations to longer-duration segments of fixed income – particularly the global aggregate, government, and emerging market bond sectors – have benefitted our lower-risk portfolios. That said, its exposure to ultra-short-duration US Treasury bills also supported returns amid still-elevated rates. (For more on bonds, see CIO Insights: Bond voyage! Our no-nonsense guide to fixed income.)

General Investing portfolios powered by BlackRock

Our General Investing portfolios powered by BlackRock posted slightly lower performance versus their same-risk benchmarks on average so far this year. They were up +13.3% on average in USD terms (+10.2% in SGD terms).

Here’s a detailed commentary on the latest reoptimisation by BlackRock.

Responsible Investing portfolios

Our Responsible Investing (RI) portfolios – which optimise for both long-term returns and ESG impact – also continued to deliver positive absolute returns across StashAway Risk Indexes (SRIs) and outperform their same-risk benchmarks on average this year.

For the year to end-September, they were up +12.8% on average in USD terms (+9.8% in SGD terms). That compares with a +12.3% gain on average for their same-risk benchmarks.

Similar to the GI portfolios, our RI portfolios continued to benefit from their allocations to ESG-screened large-cap US and global equities – especially for our higher-risk portfolios.

In our lower-risk RI portfolios, safe-haven demand and rate cuts contributed to gains in longer-dated parts of fixed income – including global government bonds and green bonds. Gold was a major contributor to performance across risk levels.

Singapore Investing

Our Singapore Investing portfolio (formerly known as Income Investing) generated positive returns of +5.7% in Q3 in SGD terms and +7.7% for the year to date. 

These returns were largely driven by the portfolio’s allocations to Singaporean equities. The asset class has rallied on the back of bank stocks like DBS, OCBC and UOB – which have offered investors high dividend yields and relatively stable earnings. Singapore REITs have also performed strongly in recent months amid expectations of declining interest rates, while Singapore government bonds have been a steady source of support.

Simple and Simple Plus cash management portfolios

Our Simple portfolio posted returns of +3.0% for the year to end-September. That compares with the portfolio’s average projected annualised rate during the period of 3.7% (including trailer fee rebates). Both of the underlying funds’ exposure to low-risk government and corporate bonds supported yields, with both posting similar returns over the period.

Our Simple Plus portfolio generated returns of +3.9% for the year to end-September. That compares with the portfolio’s average yield to maturity (YTM) of about 4.2% during the period. The portfolio’s allocations to short-duration bonds continued to be the main driver of returns during this period – and has been more pronounced in recent months amid safe-haven demand and declining interest rates.

Thematic portfolios

Our Thematic portfolios have shown solid performance so far this year, with our Technology Enablers portfolio seeing the strongest gains. Our Environment and Cleantech portfolio experienced a pickup in performance in Q3, while our Future of Consumer Tech and Healthcare Innovation portfolios posted more modest returns.

Technology Enablers

Our Technology Enablers portfolios posted returns of +13.8% on average in USD terms (+10.8% in SGD terms) for the year to end-September.

While the semiconductor sector saw some pullback in Q3 due to the rotation away from mega-cap technology companies, it remained the main contributor to the portfolio’s performance for the year to date – with the our semiconductor ETF still up more than 40% during the period. Cloud computing and robotics sub-sectors were also positive contributors to performance.

Future of Consumer Tech

Our Future of Consumer Tech portfolios saw returns of +6.1% on average in USD terms (+3.3% in SGD terms) for the year to end-September.

The esports and gaming sub-sector continued to be a key driver of portfolio performance during the period, amid strong growth in the global video game industry. The fintech sub-sector was also a positive contributor, particularly in recent months. Those gains more than offset declines in other sub-sectors, including electric and autonomous vehicles.

Healthcare Innovation

Our Healthcare Innovation portfolios posted returns of +2.6% on average in USD terms (-0.2% in SGD terms) for the year to end-September.

The pharmaceutical and global healthcare sub-sectors continued to post solid gains in Q3 and remained the main contributors to the portfolio for the year so far – though industry leaders like Eli Lilly and Novo Nordisk have seen more muted performance since mid-year. Our exposure to the healthtech and biotech industries were also supportive of performance, and has helped to offset the drag from parts of the genomics sub-sector.

Environment and Cleantech

Our Environment and Cleantech portfolios saw returns of +8.0% on average in USD terms (+5.1% in SGD terms) for the year to end-September. 

Our allocation to the smart-grid infrastructure sub-sector has continued to be a key driver of the portfolio returns, as has our exposure to water companies. The clean energy sector also saw a broad-based bounce in Q3 – which boosted returns for this portfolio during the period.

Disclaimers:

Model portfolio returns are expressed in gross terms before fees, withholding taxes, and reclaims on dividends. They are provided only as a gauge of pure performance before other items.

Actual account returns may deviate from the model portfolios due to differences in the timing of trade execution (e.g. during the day vs close), timing differences and intraday volatility of reoptimisation and rebalancing, fees, dividend taxes and reclaims, etc.

Past performance is not a guarantee for future returns. Before investing, investors should carefully consider investment objectives, risks, charges and expenses, and if need be, seek independent professional advice.

This communication is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to purchase any financial product or subscribe or enter any transaction.

This communication does not take into account your personal circumstances, e.g. investment objectives, financial situation or particular needs, and shall not constitute financial advice. You should consult your own independent financial, accounting, tax, legal or other competent professional advisors.

This information should not be relied upon as investment advice, research, or a recommendation by BlackRock regarding (i) the iShares Funds, (ii) the use or suitability of the model portfolios or (iii) any security in particular. Only an investor and their financial advisor know enough about their circumstances to make an investment decision. Past Performance is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy.

For StashAway General Investing portfolios that are powered by BlackRock, BlackRock provides StashAway with non-binding asset allocation guidance. StashAway manages and provides these portfolios to you, meaning BlackRock does not provide any service or product to you, nor has BlackRock considered the suitability of its asset allocations against your individual needs, objectives, and risk tolerance. As such, the asset allocations that BlackRock provides do not constitute investment advice, or an offer to sell or buy any securities.

BlackRock® is a registered trademark of BlackRock, Inc. and its affiliates (“BlackRock”) and is used under license. BlackRock is not affiliated with StashAway and therefore makes no representations or warranties regarding the advisability of investing in any product or service offered by StashAway. BlackRock has no obligation or liability in connection with the operation, marketing, trading or sale of such product or service nor does BlackRock have any obligation or liability to any client or customer of StashAway.