Endowus model portfolios — Q2 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.

For your core allocation needs, we are excited to announce the launch of Endowus Flagship Portfolios in Hong Kong this quarter, offering our most popular investment portfolio solution from Singapore. While our Global model portfolios will be sunsetting, the Flagship Portfolios will now be the preferred choice for investors seeking an one-stop solution for a globally diversified exposure. 

As part of our Discretionary Portfolio Management (DPM) offering, the Flagship Portfolios provide institutional-grade portfolio construction, ongoing monitoring, and updates by the Endowus Investment Office. This ensures that investors can benefit from professional management and timely adjustments to their portfolios.

Read more: Introducing Endowus Flagship Portfolios: a core strategy for your financial goals

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

Endowus Global portfolios (USD)

‍About the Endowus Global model portfolios: The Endowus Global 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 portfolios continued to generate positive returns in the second quarter of 2024. Even though the 100% Equity portfolio lagged the global equity markets during the quarter, the Portfolio still outperformed in the year-to-date period. The 100% Fixed Income portfolio beat the global fixed income markets by about 0.2% during the second quarter, bringing its excess return in the year-to-date period to 1.4%.

The 100% Equity portfolio’s overweight allocation to the emerging markets relative to the index contributed to relative performance from an asset allocation perspective even though the Schroder Global Emerging Market fund underperformed its benchmark by a marginal amount. However the positive impact was negated by the underperformance of the T Rowe Price Global Value fund, which trailed the global equity markets by more than 2%.

The 100% Fixed Income portfolio outpaced the global fixed income markets (represented by the Bloomberg Global Aggregate Index) by about 0.3 percentage points. The PIMCO GIS EM Bond fund was the strongest performer in the fixed income sleeve but all the underlying funds contributed to outperformance as they all outperformed the broad fixed income benchmark.

Please note that the Endowus Global model portfolios have been sunsetted since 3Q 2024. We are excited to announce the launch of the Endowus Flagship Portfolios as the recommended core allocation for our clients.

Endowus Global portfolios (HKD)

Key performance highlights: The Endowus Global HKD model portfolios outperformed the broad equity and fixed income markets during the second quarter of 2024. The 100% equity Portfolio outperformed its benchmark by 0.2%. Even though the 100% fixed income Portfolio was flat for the quarter, it bested the fixed income benchmark by 1.3%.

The index funds in the 100% equity portfolio largely tracked their benchmarks. The Schroders Global Emerging Markets Opportunities Fund was the top performing fund in the equity sleeve while the T Rowe Price Global Value fund detracted largely because of its value bias.

The 100% fixed income portfolio was flat during the second quarter. While the PIMCO GIS Income fund was the best performing fund in the fixed income line-up, all the funds in the fixed income sleeve outperformed the Bloomberg Global Aggregate Index (unhedged) during the quarter and contributed to relative performance.

Please note that the Endowus Global model portfolios have been sunsetted since 3Q 2024. We are excited to announce the launch of the Endowus Flagship Portfolios as the recommended core allocation for our clients.

Endowus Flagship Portfolios

Read more: Introducing Endowus Flagship Portfolios: a core strategy for your financial goals

Endowus CashUp 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 to deliver consistent performance in the second quarter of 2024, delivering a 1.35% return. The performance was driven primarily by positive contributions from its underlying funds, particularly the Ping An Money Market Fund.

CashUp Plus also generated positive performance, with a return of 1.35%. With yields persisting at attractive levels and the "higher for longer" rhetoric playing out for many months, CashUp Plus is currently yielding similar levels to CashUp Simple. There simply isn't a significant boost in yield for taking up longer duration in the current market environment, so the underlying fund managers of CashUp Plus are electing to achieve Simple-like yields with lower duration.

Given the unpredictable nature of the interest rate environment, 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 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 0.7% positive return, outpacing the broader credit market by 0.6%. The biggest contributor to the relative outperformance was the portfolio’s allocation to flexible bond funds. Amongst the 4 flexible bond funds, JPM Income Fund delivered the strongest Q2 performance of 1.3%. The portfolio’s allocation to emerging markets bonds and Asian bonds also contributed to its relative outperformance

The IncomeUp - Plus model portfolio generated a return of 0.9%, delivering robust outperformance against the broader credit market by 0.8%. Similar to the IncomeUp-Steady model portfolio, all underlying fund positions contributed to outperformance. Notably, its additional allocation to high yield bonds provided an additional boost to the return, as high yield bond markets registered another quarter of strong performance with resilient economic fundamentals and supportive technicals. 

The IncomeUp - Growth delivered a return of 1.8%, outperforming the 40-60 Equity - Fixed Income Composite Index by 0.6%. Both its fixed income and equities sleeve contributed to outperformance. The fixed income component mirrored the success of the IncomeUp - Steady model portfolio. The equity component benefited from its slightly overweight position in emerging markets, as emerging market equities registered strong performance on the back of positive performance in Asia. 

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 performed closely in line with the benchmark over the quarter.  The Portfolio’s underlying allocation to Consumer Staples detracted whereas allocations to Information Technology and Communication Services were the most additive. 

Within Information Technology, continued investor confidence in stocks poised to benefit from the growth of AI-boosted semiconductor names in the second quarter. As for Communication Services, internet companies with consensus beating quarterly results and share buyback announcements rallied, driving share prices higher. 

Given that a number of these Q2 winners are listed offshore, allocations to the likes of Schroder Greater China Fund, and FSSA Greater China Growth contributed strongly. It is also worth noting that the T. Rowe Price China Evolution Equity Fund was the strongest performing Fund over the quarter, benefitting from its unique focus on identifying outlier companies beyond the top 100 mega-cap stocks.  On the other hand, the Portfolio’s A-share allocation continues to be weighed down by a soft domestic market and weak sentiment.

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 struggle during the second quarter of 2024. While the portfolio achieved positive returns in Q2, it trailed the broad global equity markets . Its overweight allocation to emerging markets was additive to relative performance but the positive impact was negated by weak fund selection. In terms of individual fund performance, the BGF Sustainable Energy Fund was the weakest performer in the portfolio during the first quarter due to the persistent challenges in the clean energy sector.

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% in 2023.  

Key performance highlights: The Technology portfolio achieved a 6.7% return in the second quarter of 2024, benefiting from the tailwind for the technology sector. 

Following a robust Q1, the portfolio experienced some pullback in April. Global equity markets declined overall after stronger-than-anticipated economic data led investors to fear a delay in the easing of monetary policy. The technology sector was the worst-performing sector in April; however, our portfolio's drawdown was more controlled compared to the MSCI ACWI IT benchmark. This was due to the underlying fund managers' cautious stance in anticipation of mixed macroeconomic indicators.

The portfolio rebounded in May and June, buoyed by renewed investor optimism regarding the likelihood of a rate cut. Underlying funds such as BGF World Tech and Franklin Tech contributed to performance, driven by their allocations to established large-cap companies.

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 gave back some returns in April, but a recovery in market sentiment drove a strong finish for the quarter. The Future Trends Portfolio’s performance lagged the index, with Allianz Thematica and BGF Nutrition being the most notable detractors.

Allianz Thematica did not participate meaningfully in May's equity rally, due to a significant underweight to the major technology companies, especially Nvidia. BGF Nutrition was also a detractor, as stock-specific issues impacted on performance.

<divider><divider>

How to access portfolio offerings 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 Q2 2024 Market Update and H2 Outlook — Shifting economic landscape and challenges
• Introducing Endowus model portfolios — curated with Best-In-Class Funds for core-satellite strategies
• Why invest through Endowus
• Introducing the Endowus HK team

Risk Warnings

Investment involves risk. Past performance is not an indicator nor a guarantee of future performance or returns. Projected performance or returns is not guaranteed to materialise. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund.

General risk warnings relating to collective investment schemes 

Before making an investment decision, you are reminded to refer to the relevant prospectus/ offering document for specific risk considerations and related fees and charges. 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.

Opinions

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endowus HK Limited (“Endowus”) and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus HK Limited, its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.

No invitation or solicitation

Nothing contained in this article should be construed as a solicitation, an offer to buy or sale, or recommendation, to acquire or dispose of any security, commodity, investment or to engage in any other transaction in any jurisdiction in which such solicitation, offer to buy or sale would be unlawful under the securities laws in such jurisdiction. No information included in this article is to be construed as investment advice or as a recommendation or a representation about the suitability or appropriateness of any advisory product or service; or an offer to buy or sell, or the solicitation of an offer to buy or sell, any security, financial product, or instrument; or to participate in any particular trading strategy. Investors should seek independent financial and tax advice before making any investment decision.

Product Risk Rating: Please note that any product risk rating (the “PRR”) provided by us is an internal rating assigned based on our product risk assessment model, and is for your reference only. The PRR is subject to change from time to time. The PRR does not take into account your individual circumstances, objectives or needs and should not be regarded as advice or recommendation to purchase, hold or sell any fund or make any other investment decisions. Accordingly, you should not solely rely on the PRR in making your investment decision in the relevant Fund.

This advertisement has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong.