Balanced ETF portfolios USD Q2 2021 commentary

Balanced ETF portfolios USD Q2 2021 commentary

SaxoSelect Commentaries
Saxo Markets

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

Market overview

Similar to the 1st quarter, the 2nd one was characterized by strong economic data. However, after solid performance of risky assets at the beginning of the year, markets have been more muted in the second quarter. In addition, positive data surprises have raised concerns about inflation which could push central banks to lower monetary support and thereby weight on the economic rebound.

The UK and US were leading in terms of positive economic releases – driven by high inoculation rates and fiscal support. The pace of recovery for the European Union has stepped up in Q2 and asset prices benefited. However, in the emerging parts of the world, where vaccination levels are substantially lower, such as in Asia, we have seen new virus outbreaks and lockdowns. 

Not surprisingly, on the equity side, year to date, developed markets reported the highest returns led by Europe, North America and Japan. This was driven by a massive vaccine rollout and strong fiscal and monetary measures. Value and size factor have largely benefitted from these dynamics. The emerging markets, specifically Asia, still returned positively but certainly more muted. The recent increase in infections is part of the story but we should also not forget that these markets posted the strongest quarterly returns over a decade at the end of last year. More recently, China equity has seen a correction which started in February on the back of concerns about policy tightening.

The fixed income markets were clearly influenced by the increase in inflation and, thereby, the fear of tighter monetary policy in the near future. Year to date, government bonds have performed negatively across the board. Climbing up the risk ladder, investment grade still suffered while high yield, as a result of its correlation to equity, managed to post positive returns. Separately, interest rate linked fixed income securities posted low positive returns. 


Portfolio performance

Returns net of feesDefensiveModerateAggressive
Since Inception (Feb 2017)21.4%38.6%52.2%

The multi asset portfolios all produced positive returns in Q2 and YTD, outperforming their respective index benchmarks. 

Broadly speaking, the overweight to equities continues to pay off as the asset class performed strongly. In absolute terms, all equity positions contributed positively led by the US and followed by emerging markets and Europe. From a relative standpoint, since the April rebalance, the overweight to the US, Canada and the emerging markets has contributed. However, an underweight in Europe was a key performance detractor.

The fixed income allocations reflect the general market observations. In absolute terms, contributions were mostly negative with the exception of high yield and interest hedged credit. Long-dated US treasuries were the largest detracting force although the  underweight to duration has helped shielding some of that off. 


Portfolio Allocation and top portfolio holdings (as of June 2021)






The BlackRock team (the “team”) remains optimistic on equity and further increases the equity overweight by funding it from US high yield.

Within the equity sleeve, the team is constructive on EMU as valuation and management sentiment improved. Vaccination rate in major European countries are picking up and improved optimism on a stronger economic recovery. The overweight in Canada is increased because of the country’s exposure to Energy, which is likely to benefit from higher inflation expectation. Also, Canada has made significant progress in vaccinations over the past few weeks. As a result, the share of population that received at least one vaccine dose has surpassed that in UK and US. 

Emerging market equity, US minimum volatility and Pacific ex Japan are the major funding sources for the increase in EMU and Canada. Valuation continued to deteriorate in the emerging markets. It has been lagging in vaccination rates, thereby making it vulnerable to new COVID infection waves and slower economic recovery. Economies in developed markets are expanding on recovery and the Fed’s target zone of low and modest inflation at an average of 2% dimmed performance of minimum volatility. 

Within the fixed income sleeve, the underweight in duration is kept at the portfolio level. US high yield has outperformed the fixed income benchmark and the team is taking profit from the previous overweight as spreads narrowed to the lowest levels in 10 years. The team is moving some of the previous high yield allocation to equity and emerging market fixed income for a higher carry.   

The allocation within the alternative sleeve for all three risk profiles is maintained. 


SaxoSelect is offered and issued by Saxo Capital Markets Pte Ltd (“Saxo Markets”). Products or services offered by Saxo Markets or its affiliates or related entities are not sponsored, endorsed, sold, guaranteed or promoted by BlackRock (Singapore) Limited (“BSL”) or its affiliates or related entities (collectively, “BlackRock”) and BlackRock is not affiliated with Saxo Markets. BlackRock does not make any representation or warranty, express or implied, to the investors or any member of the public regarding the advisability or suitability of investing in any product or service offered by Saxo Markets, including SaxoSelect. BSL’s role is limited to the provision of model portfolios to Saxo Markets which are non-binding on Saxo Markets (for the avoidance of doubt Saxo has full discretion and responsibility for SaxoSelect and may make investment decisions that are independent of and differ from the model portfolios). BlackRock (i) is not an investment advisor or fiduciary to any client or potential client of Saxo Markets, or investor in SaxoSelect and (ii) is not responsible for determining the suitability or appropriateness of the model portfolios for any clients or potential clients of Saxo Markets, or investor in SaxoSelect and (iii) will not be liable to any client or potential client of Saxo Markets for any losses, damages, costs or expenses associated with the model portfolios provided to Saxo Markets. BlackRock does not place trade orders for Saxo Markets or any product or service offered by Saxo Markets, including SaxoSelect. BlackRock does not guarantee the performance of any of its funds or products. iShares® and BlackRock® are registered trademarks of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. All other trademarks, service marks or registered trademarks are the property of their respective owners.

This material is provided for marketing and/or information purposes only. Fee charges mentioned herein are subject to change – you may find the latest updated pricing information on the description page for the respective portfolios. None of the information contained herein constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy. Saxo Capital Markets does not take into account your personal investment objectives, specific investment goals, specific needs or financial situation and makes no representation and assumes no liability to the accuracy or completeness of the information provided here. The information and commentaries are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by Saxo Capital Markets. Any expression of opinion (which may be subject to change without notice) is personal to the author and the author makes no guarantee of any sort regarding accuracy or completeness of any information or analysis supplied. Although every endeavour has been made to ensure that our trading platforms are secure and reliable, please note that as with all facilities and systems, our trading platforms may be vulnerable to temporary disruption or failure. If you undertake transactions on an electronic trading system, you will be exposed to risks associated with systemic failure, i.e. failure of hardware and software.  

See the full Managed Portfolio Disclaimer for more information. Please also consider our Risk Warning and General Business Terms before trading with us.

Saxo Markets
Most of our staff in Singapore are working from home to help limit the spread of the coronavirus. We remain at your service on the details below. Thank you for your understanding.

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.