StashAway’s H1 2024 Returns

Navigating a diverging market with confidence

The first half of 2024 continued to see divergence among global asset classes. Equity markets were lifted by mega-cap technology companies, while fixed income markets were weighed down by sticky inflation and expectations of US rates staying higher for longer. Put together, equities were up 11.6% for the year to end-June, while bonds were down 4%.

In this environment, our portfolios’ positioning under our Economic Regime Asset Allocation (ERAA®) framework continued to deliver solid, positive returns and outperformance versus their same-risk benchmarks on average.

Here’s how our portfolios performed in H1 2024:

• General Investing portfolios powered by StashAway
• General Investing portfolios powered by BlackRock 
• Responsible Investing portfolios 
• Thematic portfolios

General Investing portfolios powered by StashAway 

StashAway’s General Investing (GI) portfolios continued to deliver positive absolute returns across StashAway Risk Indexes (SRIs) during H1, and outperformed their same-risk benchmarks on average.

Over the period, they were up +4.7% on average in USD terms. That compares with an average +3.0% gain for their same-risk benchmarks.

Tech, large-cap stocks drove equity performance in H1

Following a brief pullback in April – the result of concerns over stronger-than-expected economic data and the prospect of stickier inflation – equities continued to see further gains in the latter part of H1 as those concerns subsided. Mega-cap US technology companies in particular remained a key driver behind the rally.

Our investment framework ERAA®'s allocations to the tech sector and broad US equities contributed to our portfolios’ solid gains over that period – especially among our higher-risk SRIs, which have higher exposure to equities. 

Beyond the US, ERAA®'s overweight positioning to India following our re-optimisation in late April contributed to our portfolios’ relative gains, as Indian equities rose 7.3% in USD terms since then. That also came despite a brief bout of volatility during the country’s national election in early June – during which we advocated staying invested.

With our framework signalling that the economy is now in a regime of inflationary growth, we see scope for the equity bull market to broaden out as other sectors benefit from growth. This is why it’s placed an overweight exposure to cyclical sectors like US industrials, as well as equal-weighted US equities.

For more on what’s in store for the second half of the year, see our 2024 Mid-Year Outlook.

Gold’s strong performance in H1 bolstered our portfolios

ERAA®'s overweight allocations to gold supported our portfolios’ performance in H1. During the period, the precious metal posted returns of 12.5% in USD terms. This was driven by a combination of factors, including demand due to geopolitical tensions and global central banks’ purchases.

As we shared in our April CIO Insights, How we put your money to work – the nuts and bolts of ERAA®, our investment framework, we’ve updated our benchmarks to incorporate gold, as well as ultra-short-dated US Treasuries. The aim: producing better risk-adjusted returns for our portfolios across economic cycles.  

Looking ahead, we see both cyclical and structural opportunities in gold. In the near-term, it could benefit from falling real interest rates as the Fed starts to cut. Over the longer-term, concerns about higher US government bond issuance and efforts to diversify international reserves away from USD holdings should underpin the asset class.Short-dated and global bonds supported fixed income performance

In fixed income, ERAA®'s allocations to ultra-short-dated US Treasury bonds – especially in our lower and medium-risk portfolios – helped to offset the drag from longer-dated US bonds, which have been weighed down by sticky inflation and expectations of US rate cuts being pushed further out.

Our framework’s allocations to global bonds – especially in emerging markets (EMs) and some pockets of developed markets (DMs) – also aided our portfolios’ performance, as a number of central banks have kicked off their rate cut cycles.

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 during H1. On average, our GI portfolios faced annualised volatility of about 4.7% in USD terms, versus 6.3% for their benchmarks. 

This resulted in better volatility-adjusted returns versus their benchmarks, or a ratio of 1.3 in H1, compared with 0.7 for their same-risk 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 two and a half years of elevated market volatility. In the chart below, you can see that our portfolios have outperformed their benchmarks by about 6.7 percentage points on average over that period.

General Investing portfolios powered by BlackRock 

Our General Investing portfolios powered by BlackRock also posted positive returns in H1 and outperformed their same-risk benchmarks on average. They were up +8.2% on average in USD terms, versus 7.5% for their benchmarks.

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 solid, positive returns in H1. They also outperformed their same-risk benchmarks on average.

In H1, they were up +5.7% on average in USD terms. That’s better than a +4.7% gain on average for their same-risk benchmarks.

Similar to the GI portfolios, our RI portfolios benefitted from their allocations to ESG-screened large-cap US and global equities. 

In our lower-risk RI portfolios, gains in global bonds and ultra-short-dated US Treasuries offset  declines in longer-duration fixed income. Gold supported performance across risk levels.

Thematic portfolios 

Our Thematic portfolios posted mixed performance in H1. Our Technology Enablers portfolio posted solid, double-digit returns, while our Future of Consumer Tech, and Environment and Cleantech portfolios saw more modest gains and our Healthcare Innovation portfolio posted slight losses for the period.

Technology Enablers

Our Technology Enablers portfolios achieved solid, positive returns of +10.3% on average in USD terms in H1. 

Continued strong performance in global semiconductor equities propelled this portfolio’s performance during the period, with our allocation to the sector up 49% during the period. Blockchain and cloud computing companies were also positive contributors to performance. Among balancing assets, ultra-short-duration bonds and gold also contributed to returns, moderating declines in longer-duration bonds.

Future of Consumer Tech

Our Future of Consumer Tech portfolios delivered more modest, positive returns of +0.8% on average in USD terms in H1, as these segments of the tech sector have not rallied as strongly as those more directly tied to AI. 

The esports and gaming sub-sector was the main contributor to the portfolio in H1, supported by its exposure to chipmakers and AI-related stocks, as well as solid performance from the global video game industry overall. Its gains offset declines in other thematic assets, including electric and autonomous vehicles, and the ARK Innovation ETF. As with Technology Enablers, positive returns from T-bills and gold helped to offset declines in longer-duration bonds.

Healthcare Innovation

Our Healthcare Innovation portfolios posted returns of -2.7% on average in USD terms in H1. 

Pharmaceutical and global healthcare stocks were the largest contributors to this portfolio in H1, owing to strong performance from companies involved in the development of obesity and diabetes drugs – like Eli Lilly and Novo Nordisk. Other parts of the healthcare sector did not perform as strongly – perhaps due to uncertainty surrounding the US elections – while the healthtech sub-sector and the ARK Genomic Revolution ETF posted declines. That said, the portfolio’s balancing assets – in particular, lower-risk SRIs’ allocations to ultra-short-dated T-bills and gold – helped to moderate those losses.

Environment and Cleantech

Our Environment and Cleantech portfolios saw returns of +0.4% on average in USD terms in H1. 

Environmental services, smart grid and water companies remained the main contributors to these portfolios’ performance. That helped to offset losses faced by the clean energy sub-sector, as well as by global green and inflation-protected bonds.

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. All returns are in USD terms.

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.