Balanced

Balanced ETF portfolios USD Q1 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 -4.78%
Moderate -4.12%
Aggressive-4.28%

Market overview 

The first quarter of the year was a volatile one for financial markets. Russia’s invasion of Ukraine, the resulting exacerbated energy shock and rate hikes across many global central banks added significantly to investor uncertainty over the period. Supply-driven inflation and commodity prices surged following the sanctioning of Russia, with risk assets falling sharply before rebounding. Emerging markets were also weighed down by a new round of Omicron cases and broader geopolitical tensions. Developed market equities and emerging market counterparts declined steeply in a classic risk-off move over the period. Developed market equities (MSCI World Index) were down 5.53 percent, while emerging market equities (MSCI Emerging Markets Index) were down 14.7 percent over the quarter. Most global bond indices experienced a volatile period and finished the quarter down as rates continued to advance amidst upward trending inflation.

On the policy front, the US Federal Reserve (Fed) raised interest rates by 0.25 percent, in line with market expectations, with further rate hikes expected to rapidly reduce the size of the Fed’s balance sheet. Markets have priced in a further six increases for the remainder of the year, given record inflationary readings. Russia’s invasion of Ukraine has placed additional strain on food and energy prices, with inflation accelerating. The US labour market remained resilient over the period with the unemployment rate falling to 3.8 percent and average hourly earnings growing by 0.5 percent in February.

Within the European block annual inflation grew to an all-time high of 7.5 percent in March, driven by high food and energy prices; this was a significant increase from February. Following a €12 billion debt raising for its COVID-19 recovery fund, the European Union discussed the possibility of issuing bonds to finance energy and defence spending to alleviate sharply rising energy costs.

Sterling weakened against the US dollar from $1.35 to $1.31, while it was broadly flat versus the euro at €1.19. The dollar generally strengthened against major world currencies in Q1 2022, driven by a more risk-off tone to markets and by greatly heightened increases in expectations for interest rates in the US.

Major commodities, including energy and industrial materials, gained over the quarter. Gold prices rose meaningfully over the period on a flight to safety, alongside strong price rises for crude oil.

Portfolio performance

Returns net of feesDefensiveModerateAggressive
Jan-3%-4.3%-5%
Feb-1.6%-1.6%-1.9%
Mar-0.2%1.8%2.6%
Since inception (Feb 2017)17.17%38.52%53.55%

The multi-asset portfolios produced negative absolute returns, but outperformed their respective index in Q1 2022. Within equities, the portfolios’ overweight in Canada contributed to relative performance as the country’s stock market was powered by the surge in commodity and energy prices. The portfolios’ underweight in emerging market equities was also additive to overall performance, while the overweight in US equities and real estate investment trusts (REITs) detracted.

Within fixed income, the portfolio benefited from the underweight in investment-grade bonds and emerging market debts. Overall, the duration underweight was additive. Elsewhere in fixed income, the overweight in high-yield bonds detracted from performance.

As global markets remained volatile, the portfolio’s gold exposures within the alternative sleeve contributed to performance.

Portfolio allocation (as of 20th April 2022)

Q1-22-Balanced-USD-defensive

Q1-22-Balanced-USD-moderate

Q1-22-Balanced-USD-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. 

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.


Boulevard Plaza, Tower 1, 30th floor, office 3002
Downtown, P.O. Box 33641 Dubai, UAE

Contact Saxo

Select region

UAE
UAE

Trade responsibly
All trading carries risk. Read more. 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

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.