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 potential impact on the portfolio.
A breakdown of the Balanced portfolio at the end of October 2017. Performance figures are in the menu image above.
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.
Luke Ng, FE Advisory Asia
How did the market perform in October?
October proved a positive month for equity investors as strong global growth figures drove positive market returns. Emerging markets outpaced developed markets, driven primarily by strong performance in selected Asian countries, namely South Korea, Taiwan and India. South Korea and Taiwan were boosted by a strong rally in technology stocks, while India benefitted from government plans to recapitalise state-owned banks. Contrary to emerging Asia, emerging Europe and Latin America posted negative returns in US dollar terms for the month.
Among developed markets, Japan was the top performer, largely thanks to the prime minister Abe’s win in the snap general election, as well as positive earnings results announced in the final week of October. With better than expected GDP growth and resilient recovery after hurricanes Harvey and Irma, the US market also enjoyed a good run. In Europe the recovery continued with third quarter GDP growth holding up at 0.3%. Spain however underperformed most markets, due to the unrest caused by the Catalonia independence referendum.
In fixed income, the movement of government bond yields diverged in October. The tapering announcement by the ECB was generally viewed as a dovish move, thus driving European government bond yields lower. On the contrary, the US treasury yields trended higher for the month. As global growth remained resilient, corporates posted a better return than that of sovereigns in general. While the US dollar continued to strengthen, the Bloomberg Barclays Global Aggregate Index recorded a loss of 0.38% in US dollar terms.
How did the Balanced portfolio perform?
The FE Balanced Portfolio gained 2.42% in October, bringing the YTD return to 13.49% in US dollar terms. With a bias towards Asia-Pacific equities, our portfolio benefited as the market posted strong gains. Our fund selection in the region also added value. The First State Asia Opportunities Fund, a quality-biased strategy which holds an overweight position in India and Taiwan, outperformed Asian equities. Our holding in the Matthews Asia China Dividend Fund also contributed positively to the portfolio. Overall, the top performing fund in the portfolio was our Japanese equity fund whose strategy of investing into quality growth stocks helped the manager to outperform the market during the month.
It was also a good month for our fixed income sleeve as the two underlying fixed income holdings performed better than the Bloomberg Barclays Global Aggregate Index. It was primarily due to our stronger focus on corporates and US dollar-denominated instruments.
FE Advisory Asia 2017 portfolio results
| Jan | Feb | Mar | Apr | May | Jun | First half of 2017 | |
| Cautious | 0.78% | 1.28% | 0.77% | 0.71% | 1.05% | 0.44% | 5.15% |
| Balanced | 2.03% | 0.78% | 0.19% | 1.23% | 1.85% | 0.44% | 6.69% |
| Growth | 2.57% | 2.00% | 0.53% | 1.19% | 2.81% | 0.17% | 9.61% |
| Jul | Aug | Sep | Oct | 2017 YTD | |
| Cautious | 0.68% | 1.16% | 0.34% | 1.64% | 9.21% |
| Balanced | 1.11% | 1.40% | 1.29% | 2.42% | 13.49% |
| Growth | 2.01% | 1.69% | 1.87% | 2.48% | 18.70% |
