Endowus HK Q3 2024 Model Portfolios Performance Review

For your core allocation needs, the launch of Endowus Flagship Portfolios in Hong Kong offers our most popular investment portfolio solution from Singapore. 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.

Our Investment Office has curated and optimised other 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.

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

Endowus Flagship Portfolios 

‍About the Endowus Flagship Portfolios: The Endowus Flagship Portfolios are a one-stop solution to globally diversified portfolios, tailored for varying risk profiles and suitable for your core, long-term wealth accumulation. 

Key performance highlights: The Endowus Flagship Portfolios delivered positive returns in the quarter while keeping pace with the broad global equity markets. The Very Conservative 100% Fixed Income Portfolio also generated positive returns and outpaced the global fixed income markets by a slight margin.

The 100% Equity Portfolio has structural tilts to value and small caps, via the Dimensional funds. These factor biases contributed to relative performance, as value stocks had a stellar quarter relative to growth stocks. Small caps also outperformed large caps, which benefited the Portfolio. In the equity fund line-up, a fund investing in small-cap stocks across five developed markets countries in the Pacific region was the strongest performer, as its focus on small caps drove excess returns over the broad benchmark.

The 100% Fixed Income Portfolio outperformed the global fixed income markets during the quarter. The weakest performer in the fixed income line-up was a global bond fund, as its underweight exposure to US duration and select Asian countries, namely Thailand and Singapore, detracted from relative performance. 

Emerging markets debt was one of the better-performing sub-asset classes in fixed income. The outperformance of an emerging markets bond fund mitigated some of the negative impact from the abovementioned global bond fund.

Read more: Introducing Flagship Portfolios

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: The CashUp Portfolios delivered attractive, positive returns in Q3 2024.

CashUp Simple continued to deliver consistent performance in the third quarter of 2024, delivering a 1.36% return.

CashUp Plus also generated positive performance, with a return of 1.39%. As the rates environment normalises, we observe that the returns of the CashUp Portfolios are starting to align with their respective risk profiles; CashUp Simple generated slightly lower returns than CashUp Plus in the quarter.

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.

CashUp Portfolios, primarily exposed to USD market rates, are seeing declining projected yields as markets enter a rate cut cycle. Also, CashUp Plus has overtaken Simple in terms of projected yield, given the varying levels of duration and credit risk across the portfolios. Investors are encouraged to review their investment goals and assess whether their current Cash Smart Portfolio remains aligned with their needs.

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 a 4.4% positive return, which lagged the broader credit market. The portfolio’s shorter duration relative to the benchmark was the primary reason for its underperformance, as longer-duration assets outperformed shorter-duration assets in Q3 2024. 

The IncomeUp - Plus model portfolio generated a return of 4.3%, lagging the broader credit market. Similar to IncomeUp - Steady, the Portfolio’s shorter duration relative to the benchmark underperformed. In addition, its allocation to developed market high yield bonds detracted from relative performance as high yield underperformed investment grade credit in Q3 2024.

The IncomeUp - Growth model portfolio delivered a return of 4.7%, underperforming the 40-60 Equity - Fixed Income Composite Index. Both its fixed income and equities sleeve contributed to relative underperformance. The fixed income component mirrored IncomeUp - Steady. The slightly underweight positioning to utilities and real estate, as well as negative security selection in the healthcare sector in the equities sleeve detracted from performance. 

Read more: 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 equities 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 Equities Portfolio registered positive returns over the quarter, benefitting from the rally in onshore and offshore markets as driven by promising stimulus measures announced by the central bank. These measures, aimed at rejuvenating China’s ailing economy, resulted in euphoric China equity markets, which registered its largest 5-day rally since 2008. 

The Endowus China Equities Portfolio’s performance was primarily driven by its allocation to financials, consumer discretionary and industrial sectors. The Portfolio’s allocation to real estate was additive as well, with the sector rebounding strongly on the back of governmental support. From a market perspective, positions in the A- and H-share markets benefited, whereas exposure to Greater China markets such as Taiwan dragged performance on a relative basis.

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 posted positive returns in the third quarter of 2024. While the portfolio achieved positive returns in Q3, it trailed the broad global equity markets by a slight margin. The portfolio’s 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 Schroder ISF Global Sustainability Growth Fund was the weakest performer in the portfolio during the quarter, as its stock selection in the US dragged on returns.

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 0.8% return in Q3 2024.

The third quarter was eventful for the tech sector, starting with a sell-off in July amid concerns over high AI-related capital expenditures by mega-cap companies, and scepticism about whether these investments would translate into meaningful earnings. 

Profit-taking also hit the Magnificent Seven stocks, as cyclical and geopolitical risks triggered reality checks among investors. August saw a slight rebound as recession fears eased, though the mega-caps continued to underperform as their earnings reports fell short of investor expectations, prompting a market rotation into smaller, more reasonably valued names that had been previously overlooked. In September, a rate cut by the Federal Reserve fueled risk-on sentiment, lifting returns across the broader tech market.

The Technology Portfolio outperformed its benchmark for the quarter, despite a challenging start. In July, the portfolio declined by 2.9% due to its exposure to AI-related names across both large and mid and small caps. However, it rebounded in August and September, posting returns of 1.5% and 2.2%, respectively, with contributions across its underlying funds. Some of the portfolio’s gains were further boosted by funds hedged to SGD, which benefited from the currency’s strength.

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: Weak US economic data and an interest rate hike by the Bank of Japan initially jolted equity markets. However, excitement over the start of the Fed’s rate-cutting cycle and the announcement of new stimulus in China led to equity markets finishing strongly. 

The Future Trends Portfolio slightly underperformed the benchmark in the third quarter of 2024. While most of the underlying funds generated strong performance, AllianceBernstein International Health Care Portfolio Fund was a laggard, having been the best performer in the prior two quarters. The Fund did well over July and August but declined in September amidst general weakness in the healthcare equity sector.

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How to access 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 Q3 2024 Market Update and Outlook — A glimmer of hope
• Introducing the Endowus HK team
• Choosing Endowus when investing in Hong Kong

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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. 

Risk related to discretionary management . As Flagship Portfolios are provided under discretionary services, Endowus will manage the assets under the portfolio subject to compliance with the terms and conditions of the DPM Services Agreement and on a fully discretionary basis; you will not have any role or right to make investment decisions, except for making contributions or withdrawals from the portfolio; it would not be mandatory for Endowus to provide the underlying fund prospectuses or other fund information to you for each and every investment decision made on behalf of you.  You should exercise caution before investing in discretionary managed portfolios. 

Flagship Portfolio may contain professional-investors only fund(s) and/or “Complex Product”.  In general, Professional-investors only funds are funds that have not been authorised, nor have the offering documents been reviewed by the SFC.  “Complex Products” (as defined by the Securities and Futures Commission, the “SFC”) refer to investment products (e.g. funds) whose terms, features and risks are not reasonably likely to be understood by retail investors because of their complex structures.  Professional-investor only funds and Complex Product in general may have higher risk than other retail and non-complex products.  Past performance is not indicative of future performance. All investments involve risks (including the possibility of loss of the capital invested) and the price of fund units may go up as well as down. This fund may invest in financial derivatives which may involve additional risks (e.g. market, counterparty, liquidity, leverage and volatility risks) and lead to higher volatility. In adverse situations, the fund may suffer significant losses. This fund is not principal protected. In the worst-case scenario, you may lose the entire invested amount. Do not invest in a complex product unless you understand and are willing to assume the risks associated with it, including (in some cases) the risk that you may lose more than the invested amount. Please refer to the “Important Information About Funds” for details of the risks involved.  If you are in any doubt, you should clarify with us or seek independent professional advice.

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

Whilst Endowus HK Limited (“Endowus”) has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or typographical errors.  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 article  has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong.