Q2 2024 Portfolio performance
- As of 30 June 2024, UOBAM Megatrends portfolio returned 1.0% for the second quarter of 2024, and returned 11.9% over a one-year period.
Portfolio returns (% in SGD terms) and ETF weight (%) 31 March 2024 – 30 June 2024
| Return (%) | Weight (%) | |
| Changing Demographics | ||
| iShares Global Healthcare ETF | 0.9 | 16.0 |
| Global X Millennial Consumer ETF | -1.1 | 4.1 |
| Invesco Biotechnology & Genome ETF | 0.7 | 6.3 |
| Total | - | 26.4 |
| Environmental | ||
| Vaneck Low Carbon Energy ETF | -1.1 | 3.2 |
| First Trust Water ETF | -1.6 | 16.0 |
| First Trust Nasdaq Clean Edge Smart GRID Infrastructure Index | 1.8 | 17.0 |
| Total | - | 36.2 |
| Digital | ||
| First Trust Nasdaq Cybersecurity ETF | 0.3 | 11.4 |
| Global X Artificial Intelligence and Technology ETF | 5.4 | 8.9 |
| First Trust Indxx Innovative Transaction & Process ETF | 2.4 | 15.2 |
| Total | - | 35.5 |
| Overall Portfolio Returns | ||
| 3 months (31 Dec 2023 – 31 Mar 2024) | 1.0 | - |
| One year as of 31 Mar 2024 | 11.9 | - |
Source: Factset/Bloomberg/UOBAM. Portfolio holding period returns as at 30 June 2024. Exchange Traded Fund (ETF) average weights from 31 March 2024 – 30 June 2024, cash remains at approximately 2.0%.
The information about asset allocation provided herein are subject to change at the discretion of UOBAM without prior notice. Past performance of the portfolio or UOBAM and any past performance, prediction, projection or forecast on the economy or markets are not necessarily indicative of the future or likely performance of the portfolio or UOBAM. Returns are calculated on a single pricing basis.
BREAKDOWN BY THEME
1) Changing Demographics
Performance
| Return (%) | Weight (%) | |
| iShares Global Healthcare ETF | 0.9 | 16.0 |
| Global X Millennial Consumer ETF | -1.1 | 4.1 |
| Invesco Biotechnology & Genome ETF | 0.7 | 6.3 |
| Total | - | 26.4 |
Source: Factset/Bloomberg/UOBAM. Holding period returns as at 30 June 2024. ETF average weights from 31 March 2024 – 30 June 2024
Past performance of the portfolio or UOBAM and any past performance, prediction, projection or forecast on the economy or markets are not necessarily indicative of the future or likely performance of the portfolio or UOBAM. Portfolio returns on the scheme is calculated on a single pricing basis.
Market Development
Equities rose strongly for the second quarter, driven mainly by the Magnificent 7 stocks, especially Nvidia, Apple and Amazon amidst optimism on artificial intelligence (AI). However, looking deeper, retail sales weakened as consumer demand slowed due to tepid real wage growth, depleted excess savings, and rising credit card debt. This resulted in the underperformance of the Global X Millennial Consumer ETF that has a large allocation to the retail sector. Performance of the healthcare and biotechnology ETFs remain muted as recession risk recedes and the market focused on growth stocks. Notably though, the share prices of Eli Lilly and Novo Nordisk continue to soar due to demands for the companies’ obesity drugs.
Outlook
The outlook of the healthcare sector remains positive. Valuation stays attractive, with company fundamentals such as sales and earnings growth strong, and innovation remains robust in key areas such as Alzheimer’s, metabolic diseases and cancer. An aging population and the use of innovative technologies would provide a strong boost for the sector. Likewise for the biotechnology sector. We see tailwinds as rate cuts are on the horizon and acquisitions are being announced at a rapid pace. US Food and Drug Administration (FDA) has also increased its pace of drug approval, which could provide a lift for the sector. For the consumer discretionary sector, moderating inflation in the US has helped to ease the worries of the man in the street. Although the consumers’ willingness and ability to draw down excess savings is fading, it continues to support spending, particularly among high income consumers. Backed by a strong economy and labour market, the US consumer confidence remains high.
2) Environmental
| Return (%) | Weight (%) | |
| Vaneck Low Carbon Energy ETF | -1.1 | 3.2 |
| First Trust Water ETF | -1.6 | 16.0 |
| First Trust Nasdaq Clean Edge Smart GRID Infrastructure Index | 1.8 | 17.0 |
| Total | - | 36.2 |
Source: Factset/Bloomberg/UOBAM. Holding period returns as at 30 June 2024. ETF average weights from 31 March 2024 – 30 June 2024
Past performance of the portfolio or UOBAM and any past performance, prediction, projection or forecast on the economy or markets are not necessarily indicative of the future or likely performance of the portfolio or UOBAM. Portfolio returns on the scheme is calculated on a single pricing basis.
Market Development
The Vaneck Low Carbon Energy ETF continues to remain under pressure as the impact of high interest rates and labour wages continue to hit the clean energy sector. Clean energy projects have become less attractive due to rising input costs and more expensive debt. Competition from China is another reason for the lacklustre performance of the clean energy sector. The First Trust Water ETF gave back some gains after a strong first quarter while the First Trust Nasdaq Clean Edge Smart GRID Infrastructure Index rose slightly as it continues to benefit from the Inflation Reduction Act focusing on clean energy infrastructure.
Outlook
Despite these near-term headwinds, we continue to see the environmental theme having strong growth as the world moves towards net-zero. The demand for renewable energy continues to soar, yet global investment in clean energy is still far below where it needs to be. Enterprises and government agencies have been trying to close the supply and demand gap and are directing funding towards achieving new energy sources and lower carbon footprints. The US is also taking steps to protect its clean energy industries and grow US supply chains for electric vehicles, solar panels and other key products. With rate cuts on the horizon, concerns about weakening corporate earnings due to elevated interest rates should subside and we should see investor sentiments on the clean energy sector improving. Furthermore, with AI being both a heavy consumer and enabler of clean energy, it is poised to accelerate and propel the energy transition.
3) Digital
Performance
| Return (%) | Weight (%) | |
| First Trust Nasdaq Cybersecurity ETF | 0.3 | 11.4 |
| Global X Artificial Intelligence and Technology ETF | 5.4 | 8.9 |
| First Trust Indxx Innovative Transaction & Process ETF | 2.4 | 15.2 |
| Total | - | 35.5 |
Source: Factset/Bloomberg/UOBAM. Holding period returns as at 30 June 2024. ETF average weights from 31 March 2024 – 30 June 2024
Past performance of the portfolio or UOBAM and any past performance, prediction, projection or forecast on the economy or markets are not necessarily indicative of the future or likely performance of the portfolio or UOBAM. Portfolio returns on the scheme is calculated on a single pricing basis.
Market Development
Market returns grew even more concentrated this quarter, as the Magnificent 7 stocks continue to dominate market performance. AI related stocks continue to perform well on the back of AI optimism with semiconductor names such as Nvidia soaring more than 150% year to date. Apple rose about 30% this quarter as it announced plans to incorporate AI into its products. The Global X Artificial Intelligence and Technology ETF and First Trust Indxx Innovative Transaction & Process ETF benefited as they hold some of these names. The First Trust Nasdaq Cybersecurity ETF was largely flat, but developments in AI is expected to help enhance detection and responses to cyber threats, improving cybersecurity resilience.
Outlook
We continue to see strong structural growth in the digital space as innovation technologies come to the fore in areas such as AI, blockchain and cybersecurity. Advancement in AI continues to improve our lives, powering everything from our smartphones and autonomous-driving features on cars, to disease detection and discovery of new drugs. As digital transformation accelerates across industries, so does the risk of cybersecurity threats, leading to companies increasing spending to enhance security which AI and automation are playing an increasingly large role. The digital economy presents enormous opportunities, and we believe that new and exciting products will be created from these technologies for the global economy, and we are at the beginning of the journey to harness their power and capabilities.
This document is for your general information only. It does not constitute investment advice, recommendation or an offer or solicitation to deal in Exchange Traded Funds ("ETFs") or in units in any Unit Trusts ("Unit Trusts", ETFs and Unit Trusts shall together be referred to as "Fund(s)") nor does it constitute any offer to take part in any particular trading or investment strategy.
This document was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. The information is based on certain assumptions, information and conditions available as at the date of this document and may be subject to change at any time without notice. If any information herein becomes inaccurate or out of date, we are not obliged to update it. No representation or promise as to the performance of the Fund or the return on your investment is made.Past performance of any Fund or UOB Asset Management Ltd ("UOBAM") and any past performance, prediction, projection or forecast of the economic trends or securities market are not necessarily indicative of the future or likely performance of the Fund or UOBAM. The value of any Fund and the income from them, if any, may fall as well as rise, and may have high volatility due to the investment policies and/or portfolio management techniques employed by the Fund. Investments in any Fund involve risks, including the possible loss of the principal amount invested, and are not obligations of, deposits in, or guaranteed or insured by United Overseas Bank Limited ("UOB"), UOBAM, or any of their subsidiary, associate or affiliate ("UOB Group") or distributors of the Fund. Market conditions may limit the ability of the platform to trade and investments in non-Singapore markets may be subject to exchange rate fluctuations. The Fund may use or invest in financial derivative instruments and you should be aware of the risks associated with investments in financial derivative instruments which are described in the respective Fund’s prospectus. The UOB Group may have interests in the Funds and may also perform or seek to perform brokering and other investment or securities-related services for the Fund. Investors should read the Fund’s prospectus, which is available and may be obtained from UOBAM or any of its appointed agents or distributors, before investing. You may wish to seek advice from a financial adviser before making a commitment to invest in any Funds, and in the event that you choose not to do so, you should consider carefully whether the Fund is suitable for you. Any reference to any specific country, financial product or asset class is used for illustration or information purposes only and you should not rely on it for any purpose. We will not be responsible for any loss or damage arising directly or indirectly in connection with, or as a result of, any person acting on any information provided in this document. Services offered by UOBAM Invest are subject to the UOBAM Invest Terms and Conditions.
This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
UOB Asset Management Ltd Co. Reg. No. 198600120Z
