09 July 2024
Written by MYTHEO
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Key Takeaways
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• The U.S equites markets have shown strong performance, as major indices reached new all-time highs this month.
• The Income portfolio's performance remained flat, attributed to the decision by the US Federal Reserve to maintain interest rates.
• The inflation hedge portfolio was affected by clean energy investments, primarily due to their high financing costs and fluctuating commodity prices related to clean energy generation.
• The price of lithium has dropped to a 35-month low despite the increasing sales of electric vehicles.

In this monthly report, we will assess the performance of MYTHEO’s portfolios in light of the financial market developments in June 2024.

1. Growth Portfolio

‍MYTHEO’s Growth Portfolio was up by 1.28% (up 1.61% in MYR) in June 2024.

In June 2024, the MYTHEO AI-Assist signal for the UK, which had been triggered the previous month, was deactivated, resulting in a strategic reallocation that increased its weight in UK ETFs by shifting funds back from Asia-Pacific and European ETFs to the UK ETF. The US continues to hold the largest investment exposure in the portfolio.

‍The portfolio’s allocation to the Nasdaq 100 ETF (about 17%) was the key contributor to the overall portfolio performance during the period.
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Top 3 ETFs performance (Growth portfolio)

Bottom 3 ETFs performance (Growth portfolio)

Source: GAX MD Sdn Bhd, data in USD term for the month of June 2024.

2. Income Portfolio

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‍MYTHEO’s Income Portfolio recorded a gained of 0.57% (up by 0.90% in MYR) in June 2024.

For the month of May, the income portfolio didn’t shift much and continues to hold significant levels of short-term duration corporate bonds and treasury bonds that balanced out longer-term US Treasury holdings. Presently, the yield-to-maturity of the bond ETFs in the portfolio (excluding preferred stock) stands at approximately 4.90%.

The portfolio’s exposure to long-term treasury bond (about 13%) was the key contributor to the overall portfolio performance during the period.
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Top 3 ETFs performance (Income portfolio)

Bottom 3 ETFs performance (Income portfolio)

Source: GAX MD Sdn Bhd, data in USD term for the month of June 2024.

3. Inflation Hedge Portfolio

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MYTHEO’s Inflation Hedge Portfolio recorded a negative USD return in June 2024, down by -0.28% (+0.10% in MYR).

The core holdings of this portfolio are meticulously structured to prioritize resilience amid market volatility, particularly within equities and bonds. Emphasizing US real estate and inflation-linked bonds, the allocation to these assets is strategically designed to navigate fluctuations adeptly. US real estate, infrastructure, and base metals allocations are chosen for their ability to mitigate long-term inflation risks. Simultaneously, investments in inflation-linked bonds and gold offer added stability and diversification benefits, acting as buffers against the inherent turbulence of equity and bond markets.

‍The portfolio’s allocation to Oil (about 3%) was the key contributor to the overall portfolio performance during the period.
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Top 3 ETFs performance (Inflation hedge portfolio)

Bottom 3 ETFs performance (Inflation hedge portfolio)

Source: GAX MD Sdn Bhd, data in USD term for the month of June 2024.

4. Global ESG Portfolio

MYTHEO’s Global ESG portfolio is up by 1.68% (+2.02% in MYR) in June 2024.

In line with the growth portfolio strategy, MYTHEO Global ESG portfolio exhibits a preference and exposure of around 60% to the US market. This substantial weighting is justified by the United States' prominent role in Environmental, Social, and Governance (ESG) investments, coupled with its well-established track record. By carrying a higher allocation to US markets, MYTHEO recognizes not only the maturity of these markets but also underscores its commitment to effective risk management strategies.
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Top 3 ETFs performance (Global ESG portfolio)

Bottom 3 ETFs performance (Global ESG portfolio)

Source: GAX MD Sdn Bhd, data in USD term for the month of June 2024.

5.  Essential Products Portfolio

MYTHEO’s Essential Products portfolio was down by 4.67% (-4.35% in MYR) in June 2024.

The portfolio emphasis on ETFs reflecting pivotal themes of food, water, and energy, encompassing both new energy and traditional energy resources. With an allocation of around 60% to the US market, this strategic positioning is weighed to seize promising investment prospects arising from technological innovations and evolving business models within these sectors on a global scale.
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Top 3 ETFs performance (Essential products portfolio)

Bottom 3 ETFs performance (Essential products portfolio)

Source: GAX MD Sdn Bhd, data in USD term for the month of June 2024.

Chart 1: May 2024 - Portfolio Year-to-Date Rate of Return in % (MYR)

Source: GAX MD Sdn Bhd, July 2024
Note: Past performance is not an indication of future performance
Balanced allocation consists of 30% Growth, 45% Income and 25% Inflation Hedge

How to calculate MYTHEO Omakase actual monthly portfolio return

For MYTHEO Omakase, the actual portfolio returns derive from the combined weighted returns of each allocated functional portfolio.
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For instance, assuming allocations of 30% to the Growth portfolio, 45% to the Income portfolio and 25% to the Inflation Hedge Portfolio, the actual portfolio return in MYR for May would be +1.35%, calculated as follows: [(30% x 1.61%) + (45% x 0.90%) + (25% x 0.10%)].

Our Thoughts
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In the second quarter of 2024, U.S. equities closed higher, driven by strong performances in mega-cap growth stocks such as Apple and Tesla, which propelled the tech-heavy Nasdaq to a higher close. The Dow Jones and the S&P 500 also recorded modest gains. This rally was underpinned by positive economic indicators, including global Purchasing Managers’ Indexes (PMIs) showing growth in the global manufacturing sector in recent months. Corporate earnings typically track these indicators closely, showed signs of improvement during the current earnings cycle.

‍The dollar soared to a new 38-year high against the yen, amid heightened investor concerns about potential intervention by Japanese authorities to support their currency. The yen's decline was further exacerbated by economic data revealing that Japan's economy contracted more than initially estimated in the first quarter.

‍Fixed income instruments generated modest returns as the US Federal Reserve kept the target rate at 5.25-5.50% throughout June. Due to a robust labour market and ongoing inflation, the Federal Reserve may find it necessary to maintain higher interest rates for an extended period, despite beginning to reduce rates. In its June meeting, the Fed indicated a forecast of just one rate cut for the year, a decrease from initial expectations of three cuts. Additionally, the Malaysian Ringgit depreciated by 0.33% against the USD during the month.
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In the commodities market, oil prices surged by more than 5% driven by expectations of increased demand amid concerns about potential spread of conflict in the Middle East, which could impact global oil supplies. Brent crude oils rose by 6.48% to $86.74 per barrel, while U.S. West Texas Intermediate crude oils gained 5.93% to $81.54 per barrel.

As market dynamics continue to evolve, MYTHEO remains committed in providing investors with options aligned with their financial goals. As a digital investment platform, MYTHEO is prepared to support you in achieving your long-term financial objectives through diversified investments, seamlessly and cost-effectively. Discover how MYTHEO can enhance your portfolio diversification today, and embark on your financial journey with confidence. Take the first step towards your financial goals now.

This material is subject to MYTHEO’s Notice and Disclaimer.

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