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DBS PB’s barbell strategy returns 7% this year

In contrast, mixed-asset products offered by third-party fund managers have only returned around 0-2% so far this year.

DBS Private Bank’s flagship DPM strategy, the DBS Chief Investment Office Barbell Strategy Portfolio, has returned 7% on a year-to-date basis ending 31 July, according to a statement from the firm.

The mixed-asset portfolio, which was launched last year and now has S$1.2bn ($880m) in assets, has outperformed its composite benchmark, a 50/50 split between global equities and the Bloomberg Barclays US Aggregate Bond Index, which returned only 2.2% during the same period, the firm claimed.

Since launch date (28 Aug 2019) 1M 3M 6M YTD (ending 31 July 2020)
DBS CIO Barbell Strategy Portfolio 14.6% 6.2% 16.5% 5.4% 7.0%
Composite benchmark 8.3% 4.3% 8.9% 2.2% 2.2%
Source: DBS Private Bank

The DBS strategy has also outperformed most multi-asset products managed by third-party asset managers. Balanced and aggressive mixed-asset funds offered in Singapore returned an average of only 1.55% and 0.64%, respectively, while SFC-authorised global mixed-asset products sold in Hong Kong performed -1.24%, according to data from FE Fundinfo.

DBS Private Bank believes that its dual focus on growth- and income-oriented assets have helped the strategy to become more resilient in the current market environment.

The strategy’s growth assets include those that are exposed to secular trends, including digitalisation, e-commerce, healthcare, millennials and China equities, the bank said.

Meanwhile, its income-generating assets include dividend stocks, real estate investment trusts (Reits) and corporate bonds.

“The portfolio has holdings in Reits relating to data centres, which we foresee benefitting from growth in cloud services and server volumes, and can also offer investors a steady stream of dividends,” it added.

Besides equities and fixed income, the Barbell Strategy Portfolio may also invest its assets in alternatives, such as real estate, gold and hedge funds, according to the bank.

As of the end of July, equities make up around 50-55% of the strategy’s assets, while fixed income accounts for 30-35% of the portfolio, according to a Singapore-based spokeswoman of the bank. Gold and cash, meanwhile, make up about 10% and 5% of the portfolio, respectively.

“2020 has been a stark reminder for investors to be positioned for long-term resilience. Amid slower growth and rising bifurcation, and with the global pandemic and political tensions still on the world’s radar, it is more important than ever to take a well-diversified approach that also considers post-pandemic opportunities,” Hou Wey Fook, DBS Bank’s CIO, said in the statement.

The barbell challenge

To demonstrate its confidence in the portfolio, DBS Private bank has also challenged its clients to try beating the barbell strategy.

It launched the “Topple the Barbell Challenge”, which invites clients to put together a portfolio that they believe will outperform the portfolio’s return at the end of a 12-month period, according to the statement.

The minimum entry requirement is S$250,000, and clients may use any products distributed by the bank to create the portfolio. The best-performing client who outperforms the portfolio will be awarded S$50,000 to be donated to his or her choice of social enterprise or charitable organisation.

In addition, the top-performing 10% portfolios will receive 100,000 miles for every 1% of final outperformance of the customer portfolio against the DBS CIO Barbell Portfolio, capped at a maximum of 1,000,000 miles per customer.

Part of the Mark Allen Group.