Balanced ETF portfolios Q4 2019 commentary

SaxoSelect Commentaries 5 minutes to read

Saxo Group

Asset classes
Stocks, bonds, non-traditional
Investment styleMacro, diversified investment focus
Quarterly return (net of fees) 

Market overview

Unlike the negative market experience of 2018, 2019 proved to be a year of positive returns for most asset classes. This was despite several patches of turbulent markets, particularly in the summer, which was a challenging time for risky assets. While global economic data continued to disappoint and geopolitical tensions remained at elevated levels throughout 2019, positive sentiment mostly on the back of supportive central banks helped asset performance. 

The fourth quarter was a particularly strong one and characterised by a risk-on sentiment. BlackRock believes that this was the result of supportive central banks but also because the year ended with some positive geopolitical news: a Phase One trade agreement between the US and China, and subsiding risk of a no-deal Brexit.

Looking at the equity side, emerging market equity was clearly leading the fourth quarter in terms of performance. Political tensions eased when the US decided not to increase tariffs in December. Global emerging market equity and Asia ex-Japan equity both returned robust numbers. Equities in the developed market also experienced a substantial rally. Several factors supported their performance including the above-mentioned easing tensions, as well as improving service and manufacturing data in the US and the Eurozone. At the bottom of the performance list were UK equities, which were lifted by the election outcome in December.

Performance of fixed income was in line with market observations. The risk-on market sentiment in the fourth quarter drove yields for riskier fixed income assets lower, and sovereign debt higher. US high yield performance came in first, closely followed by emerging market debt and Euro high yield. On the losing side we saw developed market treasuries, which have given up some of their previous gains.

Returns net of feesDefensiveModerateAggressive
Since inception (February 2017)+12%+18%+27%

The Multi Asset portfolios ended the fourth quarter with positive returns.

Broadly speaking, on the equity side, all allocations contributed positively to portfolio performance. Our overweight to US equity was certainly of help, given its strong performance. While US equity was the largest single contributor and our overweight was certainly additive, the minimum volatility share of it was detrimental. 

Looking at the fixed income side, absolute contribution over the fourth quarter was positive for credit but negative for government bonds. Considering our relative positioning, our underweight to corporate bonds was working against us and performance suffered slightly, but the relative underweight to the longer-dated treasuries was supportive. The gold allocation helped in terms of diversification and supported performance.


The 2020 macro environment marks a big shift from the dynamics of 2019, when an unusual late-cycle dovish turn by central banks helped offset the negative effect of rising trade tensions. The US dovish pivot looks to be over for now. Any meaningful support in the Euro area will have to come from fiscal policy, and BlackRock does not see this in 2020. Emerging markets (EMs), however, still have room to provide monetary stimulus.

This makes growth the key support of risk assets. BlackRock’s base case is for a mild pickup supported by easy financial conditions, with a slight rise in US inflation pressures. BlackRock see China’s economy stabilising, but little appetite for replays of the large-scale stimulus of the past. We see the growth uptick taking root in the first half of the year, led by global manufacturing activity and rate-sensitive sectors such as housing. 

The main risk to our outlook is a gradual change in the macro regime. One such risk: growth flatlines as inflation rises. This might pressure the negative correlation between stock and bond returns over time, reducing the diversification properties of bonds.
A deeper economic slowdown is another risk to consider. There has been a pause in the US-China trade conflict, but any material escalation of global trade disputes could undermine market sentiment and cut short the expected manufacturing and capex recovery that underlies our tactical views. 

BlackRock remains modestly overweight equity and credit, due to the firming growth outlook and pricing that still looks reasonable against the macro backdrop. Yet we have made meaningful changes to our granular views. BlackRock sees potential for a bounce in cyclical assets in our base case: BlackRock prefers Japanese and EM equities, as well as EM debt and high yield. We are cautious on US equities amid 2020 election uncertainties.

BlackRock believes growth should edge higher in 2020, limiting recession risks. This is a favorable backdrop for risk assets. But the dovish central bank pivot that drove markets in 2019 is largely behind us. Inflation risks look underappreciated, and the lull in US-China trade tensions could end. This leaves us with a modestly pro-risk stance for 2020.


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.