Endowus model portfolios — Q1 2024 performance update

The Endowus Investment Office has curated and optimised model portfolios using Best-In-Class Funds as building blocks for various investor needs. 

Investors in Hong Kong can use these pre-populated templates as a starting point for their portfolios; they can take the template as it is, or make changes to suit their preferences and needs.

The Core portfolios may suit your essential life needs and financial goals, as they are meant for goals such as long-term general wealth accumulation, short-term cash management, and passive income for regular cash flow. The Satellite portfolios are designed to target specific regions, themes, asset classes, and megatrends.

Read on to find out how the model portfolios performed in the first quarter of 2024.

Endowus Global model portfolios (USD)

About the Endowus Global model USD portfolios: The Endowus Global USD model portfolios consist of equity and fixed income funds. They make up the backbone of an investor’s overall investment strategy and can be catered to your risk tolerance and return expectations. 

Key performance highlights: The Endowus Global model USD portfolios generated positive returns during the first quarter of 2024, outperforming their respective benchmarks.

The 100% Equity portfolio beat the MSCI ACWI by about 0.4%. While its overweight allocation to the emerging markets relative to the index was a major detractor from an asset allocation perspective, the Schroder Global Emerging Market fund did relatively well compared to the MSCI EM index. On a relative basis, the Pinebridge US Large Cap Research Enhanced Fund was the strongest performer in the equity line-up during the quarter. It outperformed the MSCI ACWI by more than 3%.

The 100% Fixed Income portfolio outpaced the global fixed income markets (represented by the Bloomberg Global Aggregate Index) by about 1.1 percentage points. Once again, similar to the previous quarter, the strongest performer in the fixed income line-up was the PIMCO GIS Emerging Markets Bond Fund. However, all the underlying funds contributed to outperformance as they all beat the benchmark.

Read more: Introducing Global model portfolios: a core investment for everyone

Endowus Global model portfolios (HKD)

Key performance highlights: Similar to the USD portfolios, the Endowus Global HKD model portfolios delivered strong results in the first quarter of 2024. The 100% Equity Portfolio outperformed its benchmark by 0.5% while the 100% fixed income beat its benchmark by a significant margin.

The index funds in the 100% Equity portfolio largely tracked their benchmarks.The T. Rowe Price Global Value Equity Fund outperformed the MSCI ACWI, contributing to the relative outperformance while the Capital Group New Perspective Fund detracted.

The 100% Fixed Income portfolio outpaced the global fixed income markets (represented by the Bloomberg Global Aggregate Index, unhedged) by about 3 percentage points in the first quarter. While the HSBC Global Emerging Market Govt Bond Fund was the strongest performer in the line-up for the year, all the funds in the fixed income sleeve outperformed the Bloomberg Global Aggregate Index (unhedged) during the quarter and contributed to relative performance.

Endowus CashUp model portfolios 

About the Endowus CashUp Portfolios: Designed for short-term cash management, they are built using high-quality money market funds or ultra-short duration fixed-income funds.

Key performance highlights: CashUp portfolios maintained stable, positive returns in Q1 2024.

CashUp Simple continued its consistent performance into the first quarter of 2024, delivering a 1.33% return. This achievement was driven by strong contribution from its underlying funds, particularly the Ping An Money Market Fund.

Meanwhile, CashUp Plus edged out Simple slightly in the same quarter, with a return of 1.35%. This marginally higher performance can be attributed to its slightly longer portfolio-level duration, which allowed it to capture additional yield in the current rate environment.

Given the unpredictable nature of interest rates environments, our underlying fund managers employ a dynamic management approach aimed at minimising capital erosion while striving to generate returns comparable to prevailing money market rates. 

Lastly, investors are reminded that the CashUp Portfolios, along with any other investment products on Endowus, are not capital protected and their value may rise and fall with market movements.

We have been observing signs of yield peaking and staying at the prevailing high levels, as Central Banks and policymakers around the world near the end of their rate hike cycles. The CashUp Portfolios are largely exposed to US interest rates that are widely believed to stay elevated for longer. The Endowus CashUp Portfolios can capitalise on the prevailing higher levels of yield, while the active management of the underlying fund managers allows the funds and ultimately, the Portfolios, to benefit from capital appreciation opportunities when the markets enter a rate cut cycle in the upcoming months or years.

Read more: Introducing the newly launched CashUp Portfolios

Endowus IncomeUp model portfolios

About the Endowus IncomeUp model portfolios: The three IncomeUp model portfolios meet different income and capital preservation or growth needs for investors at different life stages.

Key performance highlights: 

The IncomeUp - Steady model portfolio delivered 0.9% positive return, outpacing the broader credit market. This outperformance came on the back of strong fund selection, with the majority of underlying funds surpassing their benchmarks. Additionally, the portfolio’s allocation to emerging market debt bolstered the portfolio's relative performance, underscoring portfolio’s effective asset allocation.

The IncomeUp - Plus model portfolio generated a return of 1.5%. Positive fund selection and allocation to emerging markets both contributed to relative performance. In addition, the portfolio’s allocation to high yield bonds contributed further as encouraging risk sentiment led to further spread tightening for high yield credit. 

The IncomeUp - Growth delivered a robust 3.5% return, outperforming 40-60 Equity - Fixed Income Composite Index by a slight margin. The fixed income component mirrored the success of the IncomeUp - Steady model portfolio, outshining the broad credit market due to similar strategic decisions. The equity component detracted slightly from relative performance due to its emphasis on low volatility stocks and allocation to emerging market equity. 

Read more: NEW: Introducing Endowus IncomeUp Portfolios

Endowus Satellite model portfolios

The Satellite model portfolios are designed to supplement the Core portfolios, and offer Hong Kong investors specific exposure to opportunities in selected regions, themes, asset classes, and trends. In taking a core-satellite approach, most investors should allocate the bulk of their asset allocation to the Core portfolios. 

China Equities model portfolio 

About the China Equities model portfolio: The China equity model portfolio aims to provide investors with holistic exposure to the China stock market, and consists of five Best-In-Class China equity funds.

Key performance highlights: 

The Endowus China Equity Portfolio outperformed the benchmark over the quarter. Allocations to stocks within the consumer discretionary and communications services sectors were the most additive, while exposure to healthcare and consumer staples detracted from relative performance.

From a regional allocation perspective, the Portfolio benefitted from Taiwan’s strong growth as its Taiwan holdings were driven by on-going investor demand for AI-related companies. On the other hand, the Portfolio’s A-Share allocation continued to hurt with weak sentiment surrounding the outlook for the Chinese economy. We maintain a diversified approach from both market and sectoral perspectives, ensuring our clients gain access to the structural growth opportunities available in China.

Read more: Introducing the China Equities model portfolio: capture Greater China’s high growth potential

Sustainability - Equities model portfolio 

About the Sustainability - Equities model portfolio: It offers access to ESG (environmental, social, and governance), sustainable, and climate equity funds so that investors can contribute to a better, sustainable future.

Key performance highlights: The Sustainability - Equities model portfolio continued to encounter difficulties across various areas in the first quarter of 2024, following a year of underperformance in 2023. While the portfolio achieved positive returns in Q1, it meaningfully lagged the MSCI ACWI. A significant underweight position in the US market, along with an overweight position in Emerging Markets (EM) compared to the benchmark, primarily hindered its relative performance from an asset allocation perspective. In terms of individual fund performance, the abrdn EM SDG Equity Fund and the BGF Sustainable Energy Fund were the weakest performers in the portfolio during the first quarter.

Global Technology model portfolio 

About the Global Technology model portfolio: It aims to provide access to the most innovative technology and technology-related companies around the world, across various market capitalisations and sectors. The Technology Portfolio closed the year with a gain of nearly 46%.  

Key performance highlights: The Technology portfolio achieved a 9.6% return in the first quarter of 2024, benefiting from a positive environment for technology stocks. The anticipation of potential Federal Reserve rate cuts within the year, along with growing enthusiasm for the advancements in artificial intelligence (AI), played significant roles in propelling the technology sector to the top of the performance charts during this period.

Amidst the market rally, the underlying fund managers adopted a cautious stance, cognizant of the mixed macroeconomic indicators, such as the persistently high inflation and uncertainties about the timing of rate cuts, as well as elevated valuations within the tech sector after its sustained rally. This prudence resulted in a performance that was more subdued in comparison to the broader market – the underlying funds focused on investing in high-quality businesses poised to benefit from the tech rally while managing risks in anticipation of potentially more volatile markets.

Nevertheless, the underlying funds, including notable performers like BGF World Tech and Franklin Tech, demonstrated favourable performance throughout the quarter. These funds displayed strong performance on the back of effective stock selection in industries such as semiconductors.

Read more: Introducing the Global Technology model portfolio: ride the wave of tech innovation

Future Trends model portfolio 

About the Future Trends model portfolio: It is a 100% equities portfolio made up of six Best-In-Class Funds spanning the major themes of healthcare, technology, industrials, and more. It caters to investors seeking exposure to high-growth firms.

Key performance highlights: Equity markets continued to rally in the first quarter of 2024. The Future Trends Portfolio participated in the rally with a positive performance but underperformed the MSCI All Country World Index benchmark. 

The lack of meaningful exposure to the Magnificent Seven stocks, a majority of which performed strongly on the back of good corporate earnings, contributed to the underperformance. On a fund-specific basis, the BGF Nutrition Fund continued to be a detractor, while the AB International Healthcare Fund was the best performing fund over the quarter.

The BGF Nutrition Fund continues to be affected by stock-specific issues, with Archer-Daniels-Midland declining by more than 20% in January and Nestle by more than 9% in February. Archer-Daniels-Midland fell on news that its CFO was placed on leave following investigations into accounting practices within its Nutrition segment, while Nestle was affected by an ongoing litigation over its water products in France.

Read more: Introducing the Future Trends model portfolio: invest in the biggest forces of change

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How to access the model portfolios on Endowus Hong Kong 

With Endowus, you can plan and manage your money with institutional-grade model portfolios that have been curated by our Investment Office, offering globally diversified exposure with Best-in-Class underlying funds as building blocks.

You can use these pre-populated portfolio templates as a starting point for your portfolio. You can either take the template as it is, or tweak the portfolio allocations to suit your personal risk appetite, preference, and goals.

Alternatively, on the Fund Smart platform, you can build your own do-it-yourself (DIY) portfolios from scratch, through Endowus’ proprietary portfolio creation tool. To learn more about Fund Smart, refer to this article.

If you are new to Endowus in Hong Kong, you can get started by opening an account with us.

Already have an account with Endowus HK? Here are a few simple steps to start using Fund Smart:

• Login to your Endowus account
• Click on “Invest |  Redeem”
• Click on “Add Goal”, and then follow the instructions to select the fund or portfolio of your choice, based on your investment horizon and objective.

Read more: 

• Endowus Q1 2024 Market Update and Outlook — Geopolitical risks and markets
• Introducing Endowus model portfolios — curated with Best-In-Class Funds for core-satellite strategies
• Why invest through Endowus
• Introducing the Endowus HK team
• Choosing Endowus when investing in Hong Kong

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General risk warnings relating to collective investment schemes 

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Funds are not a bank deposit and not capital guaranteed, and is subject to investment risks, including the possible loss of the principal amount invested.  

Some of the funds also involve derivatives. Do not invest in them unless you fully understand and are willing to assume the risks associated with them.

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