SqSave Outperforms Benchmarks over Past 1Y & 2Y Periods
8 Nov 2022
On a longer-term trailing 1 and 2-year basis, SqSave’s returns have mostly outpaced their benchmarks. In particular, our low to mid-risk portfolios have outperformed their benchmarks by 22.4%, 18.3%, and 10.4%, respectively. Following yet another month of wild market gyrations, SqSave’s reference portfolios managed to recoup some of their year-to-date downbeat performance.
Our ML engine has managed investment risks in a consistent manner across our various risk profiled reference portfolios, via AI-driven methods. Reflecting this, in August, our AI shifted portfolio allocations towards a more defensive positioning, to help cushion against further renewed downside emerging. Currently, some of our portfolios have shifted to more progressive allocations. Our observation shows that our dynamic asset allocation algorithm can adjust the risk exposure to protect downside volatility when market sentiment is bearish and re-adjust risk exposure upwards when the markets are reflecting a change towards an uptrend.
Looking forward, we expect most markets and asset classes will continue to remain volatile for the near-term. This is as participants continue recalibrating fair global asset prices amidst downward corporate earnings and economic growth expectations. The primary factors in this guessing game remain squarely on the future path and ultimate peak of US and global interest rates, coinciding with paces of persistent, albeit finally moderating global inflation pressures. Meanwhile in Asia, though China’s economic trajectory seems largely dependent on its own internal policies, these remain foremost among investors concerns, amidst uncertainty over when China is finally willing and able to announce a sustained easing of its economically suffocating zero-COVID measures. Notwithstanding this gloomy near-term picture, we remain confident that your portfolios remain well positioned and ready to outperform once markets eventually emerge into a sustained recovery as has been the case with all past economic cycles.
As mentioned above, our algorithms have done well based on trailing one-year and two-year performance (see table below).
SqSave Performances vs Peers (SGD terms as at 31 Oct 2022)*
*Inclusive of ETF expense ratios and net of SqSave management fees. SqSave uses AI to design and manage diversified investment portfolios for each investor. Because SqSave is not an investment fund, there is no single return measure. Instead, every SqSave investor has his/her own investment performance as each investor is managed separately by our SqSave AI. As investors can withdraw and top-up any time, investment returns will be affected by individual investor decisions. Hence, SqSave uses reference portfolios which are actual portfolios managed on an ongoing basis, without any interference with withdrawals or top-ups, to measure investment performance. ** Performance numbers for competitors are estimates. Abbreviations: BMK: Benchmark; Ret: Return
Some added noteworthy takeaways from the above performance updates are highlighted below:
- Over latest trailing 1Y and 2Y periods, all our portfolios have beaten their respective benchmarks, except the Very Aggressive portfolio for the trailing 2Y period.
- Our reference Conservative risk portfolio, as of latest YTD month end, is managing downside well at -6.9%, while competitor #3 delivered a -15.3% YTD return.
- Our mid-risk Growth reference portfolio shows a -14.9% return over latest trailing 1Y period, while closest comparative competitor portfolios #1 to #3 showed returns of -12.5%, -18.8% -14.5%, respectively.
- In the highest-risk Very Aggressive portfolio category, SqSave is behind on a one-year trailing basis. We believe this relates to market’s inability to as yet recover from its prevailing bearish year-to-date 2022 trend.
- In October 2022, all our reference portfolios outperformed competitor #2, while some portfolios underperformed competitors #1 & #3. We feel less emphasis, however, should be placed on such near-term return differences, which change month to month.
SqSave Quantitative Investment Team
The contents herein are intended for informational purposes only and do not constitute an offer to sell or the solicitation of any offer to buy or sell any securities to any person in any jurisdiction. No reliance should be placed on the information or opinions herein or accuracy or completeness, for any purpose whatsoever. No representation, warranty or undertaking, express or implied, is given as to the information or opinions herein or accuracy or completeness, and no liability is accepted as to the foregoing. Past performance is not necessarily indicative of future results. All investments carry risk and all investment decisions of an individual remain the responsibility of that individual. All investors are advised to fully understand all risks associated with any kind of investing they choose to do. Hypothetical or simulated performance is not indicative of future results. Unless specifically noted otherwise, all return examples provided in our websites and publications are based on hypothetical or simulated investing. We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because hypothetical or simulated performance is not necessarily indicative of future results.
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A growing sense of despair seems to be taking hold across world markets as fears of recession abound, induced by the US Federal Reserve Bank’s aggressive interest rate hikes to fight inflation. Year to date until end September 2022, the S&P 500 and NASDAQ Composite Indices have reached bear market lows of -24.8% and -32.4%, respectively.
Our algorithms are not focused on short term monthly movements, but we monitor closely. That said, August was a poor month for our algorithms. Even then, we focus on more than one month as our algorithms are not designed to be trading oriented. Our data analytics for investing focus on at least a one-year time horizon.
While our lower risk portfolios did very well in the first few months of 2022, our mid to higher risk reference portfolios registered strong positive returns in July 2022.