Market Rewind

Summary:  After each quarter you can download your personal quarterly report into your SaxoWealthCare account. In this article we would like to further explain what has happened in the market and how we have responded to this within your profile and portfolio.

Market Review

In the third quarter (Q3) of 2023, market participants digested news that interest rates may need to stay higher for longer to combat elevated levels of inflation.  As a result, markets generally declined over the quarter, though year-to-date have still produced positive returns. 

The market rally incurred during earlier months of the year was driven by optimism that central banks could navigate the reduction of inflation whilst incurring a “soft” economic landing to avoid a prolonged recession. As of now, that optimism appears to have overshot reality and consequently investors became more cautious in recent months. Most notably, Utility companies suffered most in Q3 as their high levels of debt weighed on investor sentiment.

FAANG1 stocks were most relevant in 2017 but now there are the “Magnificent Seven” comprising Meta, Microsoft, Apple, Amazon, Google, Nvidia, Tesla. These seven stocks make up 28% of the combined value of the S&P500 index and were by far the biggest driver of positive market returns in Q2. By summer-end they seem to have lost some of their lustre, with some speculating that there could be a convergence of returns between the magnificent seven and the rest of the market. Companies with healthy balance sheets including low levels of debt and high cash piles, tend to be faring best in the current climate.

Regionally, Asian markets suffered more than their Western counterparts with China at the forefront of that underperformance. Local catalysts including the government crackdown on the technology industry and a sinking property market combined with rising energy prices, all of which contributed towards the market decline. Evergrande, which has over 300bn USD of debt and is China’s largest property developer, still makes headlines while the consequence of its collapse is being digested.

With expectations for higher interest rates for longer, the returns on “safe haven” government bonds are at their most attractive levels since the financial crisis. It remains the case that short term (1-3 year maturities) bond yields2 are higher than medium to longer term (5-10 year maturities) government bond yields. This is technically described as an inverted yield curve where short term interest rates remain elevated to tackle inflation compared to future expected interest rates. 

The 30% surge in oil price meant energy companies performed very well in Q3 in contrast the rest of the market. For ESG-considered investors, the removal of energy stocks due to their environmental impact meant they would not have benefited from this compared to their non-ESG filtered counterparts.

The outlook for a soft or hard economic landing remains the biggest driver of market activity into the year-end. Moreover, the market will be eagerly awaiting inflation updates, GDP updates and the interest rate decisions of central banks as they limbo between fighting short term inflation whilst attempting to avoid the hard landing scenario of a prolonged recession.

Portfolio Performance

Fixed Mix Strategies - Sustainable Growth



10Y Annualised Return


10Y Annualised Volatility


Since Inception


Year to Date


Quarter to Date


Very Dynamic
















































Very Defensive











Source: Data from Bloomberg, Morningstar, BlackRock, Amundi, from 9/30/2013 to 9/29/2023. Inception date of the strategy is 5/31/2022. Returns are shown in SGD and gross of costs such as management fee and transaction costs but net of ETF costs (TER). 

Returns are calculated with a monthly rebalance to target allocation. Returns before the launch of the strategy with Saxo are calculated based on the portfolio allocation at the launch date. These historical returns do not attempt to simulate investment decisions that could have been made before the first portfolio was implemented with Saxo. The returns presented are indicative of the returns of individual investors, which may differ slightly.

In the third quarter of 2023, the ESG equity portfolio suffered negative returns though they were mostly in line with global equity markets. The bonds portfolio also gave up some ground. 

Still, all the risk profiles maintain a positive return year-to-date, helping recover part of the negative returns incurred in 2022. 

Portfolio Protector and Goal-Based Strategies

Investors who have opted for Portfolio Protector or Goal-Based strategies have their own unique asset allocation that depends on their individual preferences and constraints. Still, the mix of assets in their portfolios will fall somewhere on the spectrum of the Fixed Mix portfolios since they are composed of the same building blocks for equity and bonds. Hence, we believe the information presented in this report should bring them some light to interpret the performance of their portfolios accordingly.

Portfolio Changes


In the third quarter of 2023, the global ESG equity portfolio was rebalanced one time by BlackRock.

This portfolio gives investors a broad exposure to sustainable equities. It aims to outperform global stock markets via dynamic tactical adjustments to the mix of ETFs in the portfolio. These adjustments are done via two investment models: country rotation and factor rotation. Country rotation is implemented through ETFs that track the general market of various countries and represents the biggest share of the portfolio. The rest of the portfolio is allocated to the factor rotation strategy which is implemented through ETFs that select stocks based on a set of attributes associated with higher risk-adjusted returns. 

All the ETFs in this portfolio are selected according to ESG characteristics. They follow MSCI SRI indices which were designed to represent the performance of companies with high ESG ratings.

Early July

The exposure to factor ETFs was reduced given a lack of conviction compared with country rotation, the second strategy present in this equity portfolio. The reduced exposure to factors represents a shorter-term tactical move and does not change the overall conviction on the ability of these strategies to deliver good risk-adjusted returns in the long run.

Within country rotation, the portfolio was rebalanced to overweight US and Japan, and underweight Emerging Markets. In addition, the allocation to US Minimum Volatility was reduced to increase the portfolio beta back to match the benchmark and be positioned to better capture any upside in the market.


In the third quarter of 2023, the bonds portfolio was kept unchanged by Amundi.

This is a yield-seeking bond portfolio. It is composed of global government and corporate bonds with a medium duration. The foreign currency exposure is mostly hedged to USD in this portfolio. It is designed to invest for more stable returns than equities and to act as a diversifier to equities during negative periods.

Quarterly Outlook 2024 Q3

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  • FX: Risk-on currencies to surge against havens

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