Our Returns in the First Half of 2022

15 July 2022

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Click here for our portfolio returns in Q4 and 2022.

Find out how your portfolios have performed in the year-to-date. 

Markets have had a rough first half of the year. Both global equities and bonds have seen double-digit drawdowns – a rare occurrence – with the MSCI World Equity Index slumping 20.3% in USD terms over the period and the FTSE World Government Bond Index declining 14.8%.

1H22 returns chart 1

Several unique factors created the perfect storm for markets this year. Russia’s invasion of Ukraine in late February created huge supply disruptions in global commodity markets – lifting inflation and slowing growth.

With supply chains already disrupted by COVID-19, rising food and energy costs pushed inflation to decade-highs in the US and Europe. That’s forced global central banks, like the US Federal Reserve, to hike interest rates aggressively – even at the expense of growth. The resulting uncertainty rippled across asset classes.

Against this backdrop, we share details on how our General Investing, Responsible Investing, and Thematic portfolios have performed in the year to end June 2022.

Key takeaways: 

  • Our General Investing portfolios outperformed their respective benchmarks across all portfolio risk levels, thanks to their exposure to inflation-protected bonds, Gold, and energy-related equities.
  • Our Responsible Investing portfolios also outperformed their respective benchmarks because of their exposure to inflation-protected and floating-rate bonds.
  • The broad tech sector selloff weighed on our Thematic portfolios. The Environment and Cleantech portfolio saw comparatively smaller declines as global clean energy stocks saw positive returns in the first half.
  • Looking ahead, aggressive rate hikes from the Fed and the potential for the US to fall into recession mean markets will likely remain volatile.
  • In addition to maintaining a diversified portfolio, ensuring your asset allocation matches your risk tolerance is one way to help you stomach the market’s ups and downs.

Our General Investing portfolios outperformed their respective benchmarks across all risk levels 

During the first half of the year, our General Investing (GI) portfolios returned between -6.8% and -15.5% in SGD terms, beating their respective benchmarks across all portfolio risk levels. On average, our GI portfolios outperformed their respective benchmarks by 4.9 percentage points in SGD terms.

We understand that it can be difficult to see negative returns in a positive light. But remaining invested during a market downturn gives you the best chance of capturing the eventual rebound.

1H22 returns GI portfolios

How have our portfolios managed to outperform their respective benchmarks? Our investment framework, Economic Regime Asset Allocation (ERAA®), optimised our portfolios for a period of higher inflation and rising interest rates at the start of the year.

Our exposure to inflation-protected bonds and Gold contributed to our relative outperformance

Our portfolios’ increased exposure to inflation-protected and floating-rate bonds helped to offset the rout in other parts of the fixed income market. Our allocation to Gold served not only as a hedge against inflation, but also as a safe-haven asset during the market sell-off. Gold prices were only down about 1.5% during the period, outperforming both equities and bonds.

Our equity allocations to US energy, Canada, and Australia helped performance, while Chinese technology detracted  

On the equity side, our allocation to US energy stocks helped our portfolios outperform the benchmark: the sector posted a 31.4% gain during the first half versus the 20% decline in the broader S&P 500 index. Our exposure to equities in Canada and Australia (economies that benefit from higher commodity prices) also helped performance – these markets saw declines of about 11.7% versus the 20.3% slump in the broader MSCI World Equity Index.

Conversely, Chinese technology stocks dragged on our portfolio returns, due to a regulatory crackdown on the country’s tech industry, geopolitical risk, and COVID policies.

Weakness in fixed income markets weighed on our lower-risk portfolios 

For any given General Investing portfolio, there’s a 99% chance that you won’t lose more than your selected StashAway Risk Index (SRI) percentage in a given year. But rising inflation caused the biggest declines in fixed income markets in decades, as you can see in the chart at the top of this article. This contributed to our lowest-risk SRI 6.5% portfolio – which has higher exposure to bonds – breaching its SRI level.

We don’t expect this decline to persist, especially given the Fed’s determination to rein in inflation. Its rapid pivot toward monetary tightening has increased the risk of a US recession, where bonds actually tend to do well. Indeed, bond markets are showing signs of stabilisation – especially in longer-dated bonds –  as investors expect the Fed will eventually have to cut interest rates to support growth.

Our Responsible Investing portfolios’ fixed income allocations helped them outperform their benchmarks

Our Responsible Investing (RI) portfolios, which we launched at the start of this year, focus on ESG. Like our General Investing portfolios, our RI portfolios provide the same diversification and risk management, and employ the same same-risk benchmarks. On average, the RI portfolios outperformed their respective benchmarks by 2.7 percentage points in SGD terms.

1H2022 returns - Responsible Investing portfolios

Similar to our GI portfolios, our RI portfolios’ allocation to inflation-protected and floating-rate bonds was a source of resilience to the broader bond-market selloff. Exposure to short-term Treasury bonds provided additional support for our lower-risk RI portfolios.

The RI portfolios’ allocation to the future mobility sector (about 11% on average) was the largest drag on performance during the first half. As with other growth stocks, rising interest rates hit equities in the electric and autonomous vehicle industries, like Tesla and Uber, particularly hard. Exposure to international government bonds (about 12% on average) was another source of downward pressure.

The broad selloff in tech and growth stocks weighed on our Thematic portfolios  

Our Thematic Portfolios, launched in late 2021 and early 2022, provide investors with access to specific long-term trends that have a high potential to shape our future. Unlike our GI and RI portfolios, Thematic portfolios are designed to provide concentrated sector exposures, so they’re not comparable against broad global benchmarks.

Many thematic portfolios were affected by the violent valuation reset in technology and high growth stocks over the past few months, caused by the rising interest rate environment.

1H22 returns - Nasdaq valuations

For reference, the forward price-to-earnings (P/E) ratio of the tech-heavy Nasdaq Composite Index corrected from 31x at the beginning of the year to 21x by the end of June - a whopping 10 percentage point decrease that we last saw during the dotcom bubble.

The good news is that valuations have now reset to their 20-year average levels. And, the tech sector should continue to see long-term earnings growth driven by continuous innovation and mass adoption of key technologies. As history has repeatedly shown, these valuation resets provide excellent opportunities to invest in long-term growth trends.

1H2022 returns - Thematic Portfolios

Technology Enablers 

Our Technology Enablers portfolios posted an average decline of 27.3% in SGD terms during the first half of the year, due to significant drops in internet infrastructure, cloud computing and AI-related stocks. But our allocations to “balancing assets” like gold and bonds provided downside protection, and helped to avert steeper drawdowns across our Thematic Portfolios.

Future of Consumer Tech 

Our Future of Consumer Tech portfolios were down 28.6% on average in SGD terms during the period. Similar dynamics were at play, given the portfolio’s broad exposure to the technology sector.

Healthcare Innovation

Our Healthcare Innovation portfolios declined by 22.8% on average in SGD terms. Here, large drawdowns in the genomics and healthcare technology sectors weighed on returns.

Environment and Cleantech

Our Environment and Cleantech portfolios faced much smaller declines compared with the other themes so far this year, or -7.8% on average in SGD terms. Global clean energy stocks – one of the few sectors posting positive returns during the period – were the main driver, as well as smaller drawdowns in environmental services and other green industries. Our lower-risk portfolios posted weaker performance due to their higher allocations to fixed income, including green bonds.

Here's what we’re watching in the third quarter of 2022

We’ve navigated through the rough waters of the first half of 2022. But what lies ahead for the coming quarter?

The latest signals from our investment framework, ERAA®, suggest both the global and US economies are edging closer to a stagflationary economic regime – marked by high inflation and low growth. But as central banks like the Fed continue to aggressively hike interest rates to rein in inflation, the risk of a recession in the coming year has risen significantly. For the US, economists forecast a 33% probability over the next 12 months.

Even though we may enter a period of stagflation, it could be relatively short before transitioning into a recession. In 2008, for example, the US faced a short period of both high inflation (as supply-demand imbalances boosted oil prices) and economic stagnation (as the sub-prime mortgage crisis dragged on growth). But ultimately, the crisis-induced collapse in demand quickly cooled price pressures and moved the economy into recession.

1H2022 returns - economic regimes

In the next few months, we may see similar dynamics play out, with global central banks’ efforts to tame inflation causing demand to slow (in fact, inflation expectations in the 5 to 10 year horizon have already started easing). In addition, while Europe’s full import ban on Russia oil and gas is significant for global energy prices, this import ban is already likely reflected in asset prices.

Market volatility is here to stay

Aggressive rate hikes from the Fed and the potential for the US to fall into recession mean markets will likely remain volatile in the months ahead. Economic regimes may also shift quickly as central banks and policy makers try to steer their economies through the storm.

This period of higher market volatility can provide an opportunity to re-assess your risk profile. In addition to maintaining a diversified portfolio, ensuring your asset allocation matches your risk tolerance is one way to help you stomach the market’s ups and downs.

But rest assured that as we move through the economic regimes, ERAA® will continue to optimise your portfolios to minimise your downside risk and maximise your longer-term returns. Meanwhile, our investment team will continue to monitor market and economic data, and we’ll keep you updated on the latest developments through our CIO Insights newsletters and market commentaries.


Our same-risk benchmarks are proxied by MSCI World Equity Index (for equities) and FTSE World Government Bond Index (for bonds). The benchmarks we use have the same 10-years realised volatility as our portfolios.

Model portfolio returns are expressed in gross terms before fees, withholding taxes, and reclaims on dividends. They are provided only as a gauge of pure performance before other items.

Actual account returns may deviate from the model portfolios due to differences in the timing of trade execution (e.g. during the day vs close), timing differences and intraday volatility of reoptimisation and re-balancing, fees, dividend taxes and reclaims, etc. All returns are in SGD terms.

Past performance is not a guarantee for future returns. Before investing, investors should carefully consider investment objectives, risks, charges and expenses, and if need be, seek independent professional advice.

This communication is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to purchase any financial product or subscribe or enter any transaction.

This communication does not take into account your personal circumstances, e.g. investment objectives, financial situation or particular needs, and shall not constitute financial advice. You should consult your own independent financial, accounting, tax, legal or other competent professional advisors.

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