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Balanced

Balanced ETF portfolios EUR Q2 2022 commentary

SaxoSelect Commentaries
Asset classes Stocks (developed and emerging equity), bonds, non-traditional
Instruments ETFs
Investment style Macro, diversified investment focus
Quarterly return (net of fees) 
Defensive -6.87%
Moderate -9.73%
Aggressive-11.84%

Market overview 

The second quarter of the year was marked by volatility, with equities and fixed income selling off on the back of recessionary concerns, high inflation and tightening financial conditions. Global equities finished the quarter down, with emerging markets outperforming their developed market counterparts. 

Developed market equities (MSCI World Index) and emerging market equities (MSCI Emerging Markets Index) were down -16.2 percent and -11.5 percent in USD terms respectively, over the quarter. Asian equities rebounded, driven by the rebound in activity across China. Specifically, Chinese equities (CSI 300 Index), rose 7.3 percent in the second quarter, after declining by over 15 percent in the first quarter. Most global bond indices experienced a volatile period and finished the quarter down, as rates continued to advance amidst upward-trending inflation.

Fixed income markets were challenged by higher yields, particularly at the start of the quarter, before reclining downwards towards the end of June amidst concerns that policy tightening may hurt the economy.

On the policy front, the Fed increased the policy rate by 1.25 percent over the second quarter as it continued to battle tightening labour markets and elevated inflationary readings. Within the European block, annual flash headline inflation hit an all-time high of 8.6 percent in June. Rising food and energy prices, alongside growing core inflation readings, have continued to add to concerns that high inflation may become entrenched in the region. The ECB further reiterated the possibility of a rate hike in July and an exit to negative interest rates by the end of Q3. The Bank of England hiked rates by 50bps over the period as UK inflation soared to 9.1 percent in May, the highest reading in more than 40 years. In China, banks cut key interest rates for long-term loans with the five-year loan prime rate reduced to 4.45 percent alongside more than CNY 140 billion in tax relief offered to companies and consumers to offset the heavy impact of Covid lockdowns.

 

Portfolio performance

Returns net of fees DefensiveModerateAggressive
April-2.7%-3.5%-3.8%
May-1.6%-2.0%-2.3%
June-2.8%-4.6%-6.2%
Since inception (Sep 2015) 7%25%40%

The portfolios delivered negative performance over the quarter, with the lower-risk profiles outperforming the higher-risk profiles. Within the equities sleeve, US and EMU ESG equities were the main detractors from performance.

Emerging market and Asia-Pacific equities also detracted, though to a lesser degree. Within the fixed income sleeve, the government bonds sleeve detracted the most from performance. In particular, European climate government bonds, inflation-linked treasuries and long-dated European government bonds were the main detractors from performance. Finally, the contribution of the commodities sleeve was flat over the quarter. 

Portfolio allocation (as of 27th July 2022)

q2-22-balanced-eur-defensive

q2-22-balanced-eur-moderate

q2-22-balanced-eur-aggressive

Disclaimer

Any information found in this document, including performance information and statistics are subject to change. You can find the latest updated pricing information on the description page for each available portfolio. In providing this material Saxo Bank has not taken into account any particular recipient’s investment objectives, special investment goals, financial situation, and specific needs and demands and nothing herein is intended as a recommendation for any recipient to invest or divest in a particular manner and Saxo Bank assumes no liability for any recipient sustaining a loss from trading in accordance with a perceived recommendation. All investments entail a risk and may result in both profits and losses, and all capital is at risk. In particular investments in leveraged products, such as but not limited to foreign exchange, derivatives and commodities can be very speculative and profits and losses may fluctuate both violently and rapidly. Speculative trading is not suitable for all investors and all recipients should carefully consider their financial situation and consult financial advisors in order to understand the risks involved and ensure the suitability of their situation prior to making any investment, divestment or entering into any transaction. Any mentioning herein, if any, of any risk may not be, and should not be considered to be, neither a comprehensive disclosure of risks nor a comprehensive description of such risks. Any expression of opinion may not reflect the opinion of Saxo Bank and all expressions of opinion are subject to change without notice (neither prior nor subsequent).

SaxoSelect Balanced Portfolios are offered by Saxo Bank. BlackRock’s data which is utilised by Saxo Bank in building the SaxoSelect Balanced Portfolios is based upon certain internal assumptions and BlackRock has not considered the suitability of the content of its data against individual needs and risk tolerances for all investors. As such, BlackRock’s data is for information purposes only and does not constitute investment advice or an offer to sell or a solicitation of an offer to buy the securities described within. BlackRock’s data has not been prepared in accordance with the legal requirement designed to promote the independence of investment data and is not subject to any prohibition on dealing ahead of the dissemination of the data provided to Saxo Bank and, as such, is considered to be a marketing communication to Saxo Bank. 

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