In our monthly portfolio update, we share how the AutoInvest portfolio has fared, the key drivers of performance, and our forward looking views.
For the month of October, the AutoInvest portfolio performance is 0.13%. This translates to a 1.60% annualized return, which is just shy of our projected returns of 1.8%. However, we also monitor the rolling 3-month annualized return, which at 1.97%, is well above our target returns.
The category of short term interest rate funds continues with strong performance as the key driver of the portfolio returns with the Fullerton Short Term Interest Rate fund returning 3.84% and UOB AM’s United SGD fund adding 2.49% (both returns are on an annualized basis).
Development of SGD 100 invested into AutoInvest at the end of June 2020
The MAS has released it’s semi annual monetary policy statement and commented that “Singapore’s GDP picked up in Q3 2020 after its sharp contraction in the previous quarter. However, beyond the immediate rebound, GDP growth momentum is likely to be modest against a sluggish external backdrop, persistent weakness in some domestic services and limited recovery in the travel-related sector. Nevertheless, barring a renewed worsening of the course of the COVID-19 pandemic, the Singapore economy is expected to expand in 2021, following the recession this year. Core inflation will remain low at 0–1% next year.”
The report further comments that “Likewise, activity in Singapore’s major trading partners saw a significant recovery in Q3 2020 as economies reopened. However, the pace of expansion is expected to be moderate in the quarters ahead. A resurgence in infections in some countries has led to localised lockdowns. Heightened uncertainty over the course of the pandemic, the extent of future fiscal policy support, and tensions in US-China relations will also weigh on the global growth outlook.”
The most important part of the statement is the conclusion that while Singapore’s economy is expected to see a recovery in 2021, the underlying growth momentum will remain weak. Monetary policy will remain accommodative for some time – that means that market interest rates are likely to remain low for the foreseeable future. This should provide little surprise to the portfolio’s performance and we expect it to continue performing similarly in the near future.
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The content in this article is meant for informational purposes only and should not be relied upon as financial advice. Past performance is not necessarily indicative of future performance.