14 October 2024
Written by MYTHEO
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Key Takeaways
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• Federal Reserve cuts US interest rates for the first time in four years.
• The US Dollar (USD) continued its depreciation against the Malaysian Ringgit (MYR), declining by 4.60%
• The U.S equites markets have shown strong performance, as major indices reached new all-time highs this month.

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

1. Growth Portfolio

‍MYTHEO’s Growth Portfolio was up by 3.03% (down 1.71% in MYR) in September 2024.

For the month of September 2024, the portfolio did not shift by much and the US market remains as our largest investment exposure.

‍The portfolio’s allocation to Emerging markets (VWO) of about 15% 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 September 2024

2. Income Portfolio

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‍MYTHEO’s Income Portfolio recorded a gained of 2.03% (down by 2.66% in MYR) in September 2024.

In September 2024, the income portfolio remained relatively stable, maintaining substantial positions in short-term duration corporate bonds and treasury bonds, which were strategically balanced with longer-term US Treasury holdings. The current yield-to-maturity of the bond ETFs in the portfolio (excluding preferred stock) stands at approximately 4.84% reflecting a strategic focus on yield enhancement while managing risk effectively.

The portfolio’s exposure to US Preferred Stock ETF (PFF) of about 10% 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 September 2024.

3. Inflation Hedge Portfolio

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MYTHEO’s Inflation Hedge Portfolio recorded a positive USD return in September 2024, up by 3.79% (down by 0.98% 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 iShares U.S Real Estate ETF (IYR) of about 30% 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 September 2024.

4. Global ESG Portfolio

MYTHEO’s Global ESG portfolio is up by 3.01% (down by 1.73% in MYR) in September 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 September 2024.

5.  Essential Products Portfolio

MYTHEO’s Essential Products portfolio was up by 4.01% (-0.77% in MYR) in September 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 August 2024.

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

Source: GAX MD Sdn Bhd, October 2024
Note: Past performance is not an indication of future performance
Balanced allocation consists of 30% Growth, 47% Income and 23% 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, 47% to the Income portfolio and 23% to the Inflation Hedge Portfolio, the actual portfolio return in MYR for September would be -1.99%, calculated as follows: [(30% x -1.71%) + (47% x -2.66%) + (23% x -0.98%)].

Our Thoughts
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In September 2024, the US Dollar (USD) further depreciated against the Malaysian Ringgit (MYR), falling by 4.60% from MYR 4.3090 to MYR 4.1190 by September 30, 2024. This notable decline negatively affected the portfolio's performance when assessed in Ringgit terms, diminishing gains from US-based assets. The weakening of the USD suggests an impending decrease in U.S. interest rates.

‍Global equities experienced a collective increase in September 2024, overcoming early-month volatility as strong economic reports and a continued disinflation trend in the U.S. renewed optimism for a soft landing for the economy. Emerging market equities significantly outperformed the global MSCI ACWI after authorities pledged additional monetary and fiscal support towards the end of the month.

‍The fixed income markets maintained strong performance, bolstered by the U.S. central bank’s first interest rate cut in over four years, which was larger than usual. The Federal Reserve lowered its key lending rate by 0.5 percentage points, bringing it to a range of 4.75% to 5%. This action led to a decline in the 10-year U.S. government bond yield, which briefly reached a year-to-date low of 3.63% in September 2024.
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Gold prices increased by 5.7% last month, marking the best performance since early 2020, has reached an all-time high of $2,696.60 per ounce. This surge was driven by the U.S. Federal Reserve’s half-percentage-point cut and tensions in the Middle East.

Lithium-related stocks rebounded this month due to expectations of increased sales volume in the coming months. Given that batteries utilize a mix of metals, along with the AI trend supporting semiconductor production, this has likely boosted the prices of rare earth-related stocks as well.

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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