Balanced

Balanced ETF portfolios GBP Q4 2022 commentary

SaxoSelect Commentaries
Asset classesStocks (developed and emerging equity), bonds, non-traditional
InstrumentsETFs
Investment style Macro, diversified investment focus
Quarterly return (net of fees)
Defensive0.96%
Moderate1.47%
Aggressive
1.28%

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
October-0.2%0.5%0.9%
November1.9%2.5%2.4%
December-0.7%-1.4%-1.9%
Since inception (Sep 2015)20.47%40.47%50.55%

The portfolios delivered positive performance over the quarter, with the higher-risk profiles outperforming the lower-risk profiles. Within the equities sleeve, UK equities and broad European equities (GBP hedged) were the main contributors to performance, followed by S&P 500 equities (GBP hedged) equities. Emerging market and Asia-Pacific equities also contributed positively. Within the fixed income sleeve, the performance of the government bonds was mixed. Emerging market debt (GBP hedged) and UK gilts contributed positively to performance, while China bonds detracted from performance. The performance of US (GBP hedged) and European government bonds was broadly flat. Finally, the contribution of the commodities sleeve was flat over the quarter.

Portfolio allocation (as of 16 December 2022)





Disclaimer

Saxo Markets provides personal portfolio management via its SaxoSelect service. Before entering any managed portfolio, we must first take into account your investment objectives, goals and financial situation. 

This material should be considered as a marketing communication under the Financial Conduct Authority’s rules. Saxo Capital Markets UK Limited (SCML) undertakes reasonable efforts to ensure that any information published in this communication is reliable. SCML makes no representation or warranty, and assumes no liability, for the accuracy or completeness of any information contained in this communication. 

Investing in financial products always involves risk. As a general rule, you should only invest in financial products if you understand the risks associated with them. Investing in a portfolio with currency that differs from the base currency of your account carries the risk of exposure to changes in the rate of exchange between them. See the full Managed Portfolio Disclaimer for more information. Past performance is not a guide to future performance.

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. 

iShares and BlackRock are registered trademarks of BlackRock, Inc. and its affiliates (“BlackRock”) and are used under license. BlackRock is not affiliated with Saxo Bank. BlackRock makes no representations or warranties regarding the advisability of investing in any product, portfolio or service offered by Saxo Bank or any of its affiliates. BlackRock has no obligation or liability in connection with the operation, marketing, trading or sale of any product, portfolio or service offered by Saxo Bank or any of its affiliates nor does BlackRock have any obligation or liability to any client or customer of Saxo Bank.

 

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Support Centre
For existing clients, please click here to request support via the Support Centre.

Have a question about our products, platforms or services? Visit the Support Centre to find answers for our most frequently asked questions. If you are still unable to locate an answer to your question, you will also find contact details for your local Saxo office to speak with a representative.

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.