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FE Advisory Asia Portfolio review – February 2019

All portfolios continued to move up in February, but slower compared to the previous month.

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 balanced portfolio at the end of February 2019*. Performance figures are in the menu image above.


Luke Ng, FE Advisory Asia


How did the market perform in February?

February proved to be another positive month for equity markets, following on from the recovery seen in January. Among developed markets, UK equities led gains in US dollar terms, despite a considerable part of the gains being contributed by the appreciation of sterling amid hopes of avoiding a disorderly Brexit. Backed by the renewed discussion by the European Central Bank officials over the possibility to restart the targeted long-term refinancing operation (LTRO), European equities also did well. In the US, equities continued to trend higher on the back of increasing investor optimism for a resolution on the US-China trade standoff.

In response to the US decision to delay the implementation of further tariffs on Chinese goods, equities in the Greater China region were boosted. However, equities in the rest of Asia, as well as those in emerging Europe and Latin America failed to catch up with the market rally elsewhere. Overall, emerging market equities recorded a marginal gain in February, with gains predominately contributed by the rally of the Greater China markets.

Market sentiment continued to favour riskier assets. Emerging markets, corporates and high yield debt posted positive returns and outperformed government bonds. As the tone of the major central banks remained dovish, government bonds saw a rise in bond yields, meaning a fall in prices in the month.

How did the balanced portfolio perform?

The FE balanced portfolio rose 1.42% in February in US dollar terms. Despite performance of Japanese equities lagging behind its developed market peers, our holding in the JPMorgan Japan (Yen) Fund, which pursues businesses with secular growth prospects, did well and ended up as the top performing fund in our portfolio. Our emerging market equity exposure also posted solid returns in the month, outperforming its respective market and peers. On the other hand, our holding in European equities recorded a marginal gain and failed to catch up with the respective market rally. The portfolio benefited from our overall stance to stay high on our risk budget, both in terms of overweighting equities as well as the riskier assets among the fixed income sleeve. The latter included the positive contributions acquired from holding an emerging market debt strategy and the Asian high yield exposure through our Asian mixed asset income fund.


FE Advisory Asia portfolio performance 

Jan 2019 Feb 2019 Mar 2019 Apr 2019 May 2019 June 2019 YTD
Cautious  3.25% 1.19%   4.49%
Balanced 5.51% 1.42% 7.03%
Growth  7.36% 2.27%  9.80%
Source: FE Advisory Asia. Growth rates in US dollar terms. Data as of 28 February 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.