This time, it's different

DESPITE some initial geopolitical concerns, financial markets finished the month of August with the MSCI AC World index down a mere -0.1 per cent while global bonds saw returns of 0.4 per cent. The portfolio rose 0.4 per cent over the month, outperforming the simple benchmark (70 per cent global equities, 30 per cent global bonds) return of 0.1 per cent.

Since its inception, the portfolio has delivered returns of 11.5 per cent, trailing the simple benchmark's return of 12.3 per cent. The decision to be more defensive in the fixed income sleeve and a US equity product caused the bulk of the underperformance.

Although the portfolio beat the simple benchmark on the headline number, the divergence in performance between regions and segments of fixed income was stark. The best performing funds over the month belonged to our Asian and emerging markets equity funds, with returns ranging from 1.8 to 4 per cent in August. Losses in the developed markets and high yield space detracted from the overall portfolio returns for the month. (All returns are as of Aug 31, 2017 in S$ terms, except for global bonds in US$.)