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FE Advisory Asia Portfolio review – April 2019

The firm's cautious portfolio was up, mostly driven by equity exposure to developed markets.

Each month we feature the allocation in one of the three portfolios offered by FE Advisory Asia: Cautious, Balanced and Growth. Data is included to show how well the portfolio has done compared to the previous month and year-to-date so that readers can get a sense of performance.

Additionally, Luke Ng, senior VP of research at FE Advisory Asia, provides a concise analysis on macro events and their impact on the portfolio.

A breakdown of the cautious portfolio at the end of April 2019*. Performance figures are in the menu image above.

Luke Ng, FE Advisory Asia

How did the market perform in April?

April was a positive month for equity investors, thanks to the continuing dovish stance from central banks and a better than expected earnings season. All main equity markets produced positive returns, with developed markets outperforming their developing counterparts.

In the US, markets were supported by strong growth figures that increased investor risk appetite. Growth figures in the first quarter came out at 3.2% annualised, up from 2.2% for the final quarter of 2018. Technology stocks posted particularly strong returns, with the notable exception of Google parent Alphabet, which disappointed.

Europe meanwhile was the best performing region, driven by the IT, financials and consumer discretionary sectors producing better than expected results. GDP growth in the first quarter came in at 0.4%, a significant increase on the 0.1% seen in the final quarter of 2018. The Japanese market traded mainly sideways for the month, news was muted as the country was dominated by the abdication of the old Emperor and the coronation of the new, which culminated in a 10 day public holiday.

Among emerging markets, emerging Europe generally did better than peers in Asia and Latin America, thanks primarily to the higher oil prices that benefited Russia. Taiwanese equities also performed well as Terry Gou, founder of Foxconn, announced for his bid for the Taiwan presidency in mid-April. The market responded well amid his China-friendly attitudes.

With supportive data and a dovish stance from the central banks, riskier assets generally benefited. That drove government bonds yields higher in the month. Corporates, especially high yield, outperformed.

How did the Cautious portfolio perform?

The FE cautious portfolio rose 1.23% in April in US dollar terms. Key positive drivers primarily came from the portfolio’s equity exposure, particularly those in developed markets. Our holding in Legg Mason ClearBridge US Large Cap Growth was the top performer in April, thanks to the strong focus in the IT sector. Our remaining developed market exposure was acquired through a global equity strategy, and that also outperformed MSCI World and peer funds in the month. The positioning among the fixed income sleeve also added value as we have been diversifying across various sub-asset classes with a tilt towards the riskier spectrum of the universe. That includes holdings with strong exposure to emerging market debt and selective emerging market currencies, as well as a strategy investing into Asian high yield. Overall, all holdings in the portfolio posted positive returns in April.

FE Advisory Asia portfolio performance 

Jan 2019 Feb 2019 Mar 2019 Apr 2019 May 2019 June 2019 YTD
Cautious  3.25% 1.19% 1.00% 1.23%   6.83%
Balanced 5.51% 1.42% 1.30% 1.81% 10.39%
Growth  7.36% 2.27% 1.75% 2.74%  14.79%
Source: FE Advisory Asia. Growth rates in US dollar terms. Data as of 31 March 2019.

Full-year 2018 performance for the FE Advisory portfolios can be viewed here.

*Portfolio breakdown and holdings are based on latest published data for each constituent, which may have publication dates that differ. Percentages are based on current holdings and should only be used as a guide. Some information is provided to FE from independent third parties whom FE does not control. FE cannot guarantee the accuracy or reliability of the data, or its suitability for use by all investors.
FE Advisory Asia has designed the portfolios to target specific risk levels of cautious, with a target annualised portfolio volatility of 4%, balanced (7%) and growth (10%). They are rebalanced twice per year, typically in May and December.
The portfolios are managed using a proprietary optimisation system with strategic asset allocation insights from AKG to complement the shorter-term tactical asset allocation decisions made by FE’s research team.
The portfolios typically comprise eight funds chosen from the FE Advisory top 100 list of funds spanning all asset classes and sectors from the Hong Kong SFC-authorised fund universe.

Part of the Mark Allen Group.