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Balanced ETF portfolios EUR Q4 2022 commentary

SaxoSelect Commentaries
Asset classesStocks (developed and emerging equity), bonds, non-traditional
Investment style Macro, diversified investment focus
Quarterly return (net of fees)

Market overview 

After a short period of respite from market falls in October and November, December proved to be another disappointing month for asset returns. This rounded off an extremely challenging year across markets with equities posting their worst annual return since 2008, and global government bonds experiencing their first bear market in 70 years. Typically, government bonds provide a cushion to investors in uncertain environments. This did not prove to be the case in 2022, as higher and more persistent inflation led central banks to raise rates further than had been expected coming into the year. The resulting rise in yields across sovereign and credit markets led to the worst performance in a generation.

Commodity markets were one of the very few areas to generate positive returns over the year as the tragic war in Ukraine caused energy and food prices to rise. However, energy markets gave back some of these price gains in the final quarter of the year in response to signs of a much milder winter in Europe, in addition to measures that were introduced to reduce demand, thereby keeping gas storage levels relatively high. One of the main features of 2022 was the sizeable outperformance of ‘value’ oriented equity sectors relative to more interest rate-sensitive ‘growth’ sectors. This remained a theme over the final quarter in aggregate.

In addition to the negative impact of higher interest rates, growth stocks, particularly in the technology sector, had become increasingly expensive in terms of their valuations coming into 2022. Asian equities performed notably well in the final quarter, driven by some easing of COVID-19 control measures in China. The rebound in Asian equities late in the year was in sharp contrast to the moves seen in the preceding three quarters of the year, where these assets had been one of the most severe areas of decline.

Despite a weaker finish to the year, USD proved to be a bright spot for investors in 2022. It benefited from its traditional ‘safe haven’ status in addition to the rising rate environment in the US. In contrast, GBP declined over the course of the year, alongside UK government bonds, given investor risk aversion and the extreme levels of uncertainty created by the autumn ‘mini-budget’ proposals. 

Portfolio performance

Returns net of feesDefensiveModerateAggressive
Since inception (Sep 2015)4.84%26.32%44.58%

The portfolios delivered returns in the flat to positive territory over the quarter, with the higher-risk profiles outperforming the lower-risk profiles. Within the equities sleeve, European equities were the main contributors to performance, followed by Asia-Pacific equities. Within the fixed income sleeve, government bonds exhibited mixed performance. Emerging market debt was the top contributor, while US and European government bonds were in the flat to slightly negative territory. The contribution of the commodities sleeve was negative; gold ended the quarter flat.

Portfolio allocation (as of 16 December 2022)




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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