Tuesday, 10 May 2022
Written by Sonia Tan, Portfolio Manager of GAX MD
In this monthly report, we will review MYTHEO’s portfolio performances based on the financial market developments in April 2022.
You can also learn about MYTHEO’s portfolio performances by playback our webinar below.
1. Growth Portfolio
MYTHEO’s Growth Portfolio was down 4.48% in April 2022, due to a massive sell-off in equities globally. In the US, the Nasdaq Composite tumbled 13.3% in April, the index’s worst monthly performance since 2008, while the S&P 500 fell 8.8% and ended the month at levels last seen in May 2021.
Meanwhile, US GDP decreased at an annual rate of 1.4% in the first quarter of 2022, marking an abrupt reversal for an economy coming off its best performance since 1984.
In Malaysia, the Ringgit depreciated against the US dollar in April by 3.51% to RM4.352 on 30th April 2022, compared to RM4.203 on 31st March 2022.
In response, we have conducted portfolio rebalancing coupled with portfolio reallocation to the growth portfolio as May 2022 is the optimization month for the growth portfolio.
- Included WISDOMTREE INDIA EARNINGS (EPI), ISHARES MSCI SOUTH KOREA (EWY) and ISHARES RUSSELL MID-CAP VALUE (IWS);
- Exited ISHARES MSCI TAIWAN (EWT), ISHARES MSCI SINGAPORE (EWS), SPDR EURO STOXX 50 (FEZ) and ISHARES MSCI GERMANY (EWG).
Top 3 ETFs (Growth portfolio)
ISHARES MSCI FRONTIER 100 (FM)
ISHARES CHINA LARGE-CAP (FXI)
ISHARES MSCI UNITED KINGDOM (EWU)
Bottom 3 ETFs (Growth portfolio)
INVESCO QQQ ETF (QQQ)
ISHARES RUSSELL MID-CAP GROWTH (IWP)
ISHARESMSCI TAIWAN (EWT)
2. Income Portfolio
MYTHEO’s Income Portfolio inched lower by -0.62% in April 2022, in line with the market which had seen bond yields rising due to lower demand. The yield on the 10-year US Treasury bond gained 26.08% to close at 2.934% in end-April, up from 2.327% on 31st March 2022, thereby hitting a new high since May 2019. This came as US Fed Chairman Jerome Powell said that the central bank could be more aggressive with its rate hikes to keep inflation under control.
Top 3 ETFs (Income portfolio)
SPDR BLACKSTONE/GSO SENIOR LOAN (SRLN)
ISHARES SHORT-TERM CORPORATE(IGSB)
ISHARES 3-7 YEAR TREASURY BONDS(IEI)
Bottom 3 ETFs (Income portfolio)
ISHARES 20+ YEAR TREASURY BONDS (TLT)
ISHARES INTERNATIONAL TREASURY (IGOV)
ISHARES IBOXX INVESTMENT GRADE(LQD)
3. Inflation Hedge Portfolio
MYTHEO’s Inflation Hedge Portfolio declined slightly by 0.37% in April 2022, mainly due to the negative performance of some of the commodities ETFs.
In the commodities markets, crude oil prices continued to trend upwards in April with Brent crude oil added 1.33% to US$109.34 per barrel on 30th April 2022, up from US$107.91per barrel on 31st March 2022. Meanwhile, the West Texas Intermediate (WTI) crude oil was also up by 4.39% to US$104.69 per barrel on 30th April 2022, from US$100.28 per barrel on 31st March 2022. Gold futures were down by 2.16% to US$1,911.70 per ounce, while silver futures and copper futures declined by 8.12% and 7.21% respectively.
Top 3 ETFs (Inflation hedge portfolio)
INVESCO DB OIL FUND (DBO)
ISHARES GOLD TRUST(IAU)
ISHARES TIPS BOND ETF(TIP)
Bottom 3 ETFs (Inflation hedge portfolio)
ISHARES S&P GLOBAL CLEAN ENERGY INDEX ETF (ICLN)
ISHARES MORTGAGE REAL ESTATE (REM)
INVESCO DB BASE METALS F (DBB)
4. Global ESG Portfolio
Similar to the Growth Portfolio, MYTHEO’s Global ESG portfolio was down by 3.88%, due to massive sell off in equities globally.
In response, we have conducted portfolio rebalancing coupled with portfolio reallocation to the Global ESG portfolio composition as May 2022 is the optimization month for the Global ESG portfolio.
- Reduced the weightage of ISHARES MSCI USA ESG SELECT ETF (SUSA) and ISHARES ESG AWARE MSCI EM ETF (ESGE);
- Included NUVEEN ESG LARGE-CAP GROWTH ETF (NULG) and ISHARES ESG AWARE MSCI USA ETF (ESGU);
- Exited NUVEEN ESG MID-CAP GROWTH ETF (NUMG).
Top 3 ETFs (Global ESG portfolio)
NUVEEN ESG LARGE-CAP VALUE ETF (NULV)
ISHARES ESG AWARE MSCI EAFE ETF (ESGD)
ISHARES ESG AWARE MSCI EM ETF (ESGE)
Bottom 2 ETFs (Global ESG portfolio)
NUVEEN ESG MID-CAP GROWTH ETF (NUMG)
ISHARES MSCI USA ESG SELECT ETF (SUSA)
Chart 1: April 2022 - Portfolio Cumulative Rate of Return in % (MYR)
Do you know how to calculate your actual monthly portfolio return?
As part of diversification, the actual portfolio returns to the investors are the combined weightage return from the allocation to each functional portfolio.
For example, if an investor allocates 40% of their investment in Growth, 40% in Income and 20% in Inflation Hedge, the actual monthly portfolio return is -2.11% (40% x -4.48% + 40% x -0.62% + 20% x -0.37%)
Chart 2: April 2022 – Portfolio Cumulative Rate of Return in % (MYR)
*Please note that this is the cumulative performance based on model portfolios in March 2022. Your portfolio performance may differ from the model portfolio as it is subject to any deposits and/or withdrawals, as well as asset allocations made during the month.
Reacting during times of uncertainty
The implications of the US Fed’s interest rate hikes continue to pose uncertainties to the financial market. History shows that when investors invest and stay invested, they're more likely to earn positive returns in the long run.
When markets start to fluctuate, it may be tempting to make financial decisions in reaction to changes to your portfolio. But investors who base their financial decisions on emotion often end up buying when the market is high and selling when prices are low. These investors ultimately have a harder time reaching their long-term financial goals.
How can you avoid making these common investing mistakes? Consider these investment strategies, which can help you reduce the risks associated with investing and potentially earn more consistent returns over time:
1. Asset allocation
2. Portfolio diversification
3. Dollar-cost averaging
Asset allocation and portfolio diversification go hand in hand. MYTHEO’s Omakase portfolio combined Growth, Income and Inflation Hedge functional portfolios based on your needs. It offers global diversification to protect against extreme fluctuations in any single asset class.
Dollar-cost averaging is a disciplined investment strategy that can help smooth out the effects of market fluctuations in your portfolio.
With this approach, you apply a specific investment amount toward your investment portfolio on a regular basis i.e monthly, or quarterly. Over time, it helps to lower the amount you pay for investments and because this strategy is systematic, it can help you avoid making emotional investment decisions (thus minimizing investment risk).
Aside from these, MYTHEO strives to obtain the investment results that are suitable for each customer by taking care of all the necessary investment maintenance required including rebalancing, reallocation, re-creation and reprofiling.
The time you're invested in the market is more important than investment timing.
In MYTHEO, you can invest with peace of mind as we do the heavy lifting of helping you achieve your long-term financial goals so that you can focus and enjoy your life’s biggest moments.
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This material is subjected to MYTHEO's Notice and Disclaimer.