Our Returns in the First Half of 2023

20 July 2023

How to safely take a bull (market) by the horns

The first half (H1) of 2023, and Q2 in particular, saw a rally in global equity markets as Big Tech bounced back. Global bond markets meanwhile, posted more modest returns. Our investment framework, ERAA®, continued to signal a stagflationary regime – one of economic contraction and high inflation. Such an environment warranted caution – and due to our defensive asset allocations, our portfolios have outperformed in the lower risk indices and have seen lower drawdowns when faced with volatility in higher risk indices.

Digging into the current rally, it’s important to note that just a handful of large-cap tech stocks – Apple, Microsoft, and Nvidia come to mind here – have provided the bulk of broad-based equity returns. The most prominent drivers behind this are: i) investor excitement over AI, ii) the resilience of the US economy, and iii) a supportive liquidity environment as central banks like the Fed and ECB have combated banking crises with large liquidity injections.

Looking ahead, our analysis shows that the above supportive factors for US equities will likely start to fade – our 2023 H2 Market Outlook contains the details. Our portfolio positioning remains unchanged as ERAA® continues to signal stagflation. In particular, as interest rates continue to rise, we remain overweight on short-dated US treasuries, which are providing a strong cushion.

With that in mind, let’s look at how our portfolios performed in H1:

  • General Investing portfolios powered by StashAway
  • Thematic portfolios
  • DRB portfolios
  • What we’re watching in the second half of 2023

General Investing portfolios powered by StashAway - Gains across all risk levels

During H1, StashAway’s General Investing (GI) portfolios posted positive returns across StashAway Risk Indexes (SRIs). They were up between +8.8% and +17.7%, or +12.6% on average in MYR terms.

Tech continued to drive equity market returns in H1

Equity returns were aided by the market rally stemming from tech. Our relatively defensive positioning resulted in underperformance versus same-risk benchmarks for our higher-risk SRIs, but they have benefited from the tech tailwinds. This has resulted in double-digit returns, all the while scoring better on volatility.

For our lower-risk SRIs, we outperformed our same-risk benchmarks in H1 due to our overweight positions on short-duration bonds (which saw higher yields as central banks continued to raise interest rates) and gold (which benefited from a flight to safety following the banking crises in March).

Our portfolios were also aided by Japanese equities’ positive performance amid their attractive valuations and brighter prospects for the economy. Our allocations to defensive sectors like health care were detractors but remained in positive territory due to positive impacts from currency.

Gold was a safe-haven during the market turmoil in H1

Gold’s low correlation to other asset classes means it provides a safe-haven during times of uncertainty. We saw this dynamic play out in H1, with our allocations to gold benefitting from a flight to safety amid the banking crises in the US and Europe. In total, gold posted returns of 11.3% (in MYR terms) during the period.

Short-duration bonds remained a key support for lower-risk portfolios

In fixed income, ERAA®’s overweight allocation to short-term US Treasury bills (T-bills) allowed us to take advantage of a high risk-free rate. As a result, this continued to be a stable source of returns – especially for our lower risk SRIs, which have higher exposure to bonds. Short-term yields rose further over the course of H1 as the Fed continued to raise interest rates – with T-bills yielding about 5.3% per annum at the end of the period.

As the Fed is poised to hike rates further – and likely keep them there – we continue to be overweight on the asset class. Our allocations to longer-duration US Treasuries and investment-grade bonds also supported our lower-risk SRIs.

Our defensive allocations minimised portfolio volatility and drawdowns 

In general, defensive assets like fixed income and gold shone during the periods of market volatility in H1. This underscores the importance of staying invested in a diversified portfolio. The relatively defensive nature of our asset allocations delivered an annualised volatility of 6.5% versus 7.9% for our benchmarks during H1. This lower volatility shielded against drawdowns, which supported performance over a longer period. Our lower-risk portfolios in particular widened their outperformance versus their benchmarks, visible in the chart below.

Moreover, lower volatility means higher risk-adjusted returns, which account for the amount of risk you take on to achieve returns. In H1, our GI portfolios posted an average Sharpe ratio of 2.0 versus 1.8 for their benchmarks (a higher ratio reflects better risk-adjusted performance). 

General Investing portfolios powered by BlackRock

During H1, our General Investing (GI) portfolios powered by BlackRock leveraged on the themes we’ve covered to post positive returns across the board. They were up between +10.4% and +18.9%, or +15.4% on average in MYR terms. Compared to GI powered by StashAway, the higher average performance of these portfolios comes from fewer risk levels available. The Conservative portfolio here allocates 20% to stocks, which is equivalent to the SRI 10% portfolio in GI powered by StashAway. For a detailed commentary on the latest reoptimisation by BlackRock, read here.

Responsible Investing portfolios - Gains from broad exposure

Our Responsible Investing (RI) portfolios, which optimise for both long-term returns and ESG impact, were up between +11% and +19.4%, or +14.3% on average in MYR terms.

Similar to our GI portfolios, our RI portfolios benefitted from their exposure to broad-based equities, with significant weights to large-cap tech. In particular, their allocations to the tech-focused future mobility sector – which has large allocations to Tesla and Nvidia, beneficiaries of the large run-up in AI-related stocks – were strong contributors to their performance over the period. Allocation to healthcare was a detractor but remained in positive territory due to impact from currency.

Among balancing assets, exposure to both short-duration and long-duration bonds contributed positively to performance, especially for lower-risk SRIs. And as with our GI portfolios, gold supported returns across portfolios. [FOR MY ONLY: Additionally, the ringgit depreciated 5.6% against the dollar during this period; this impact was captured in local currency returns posting.]

Thematic portfolios - Tech rally momentum

The H1 rebound in equities, especially in tech, was the biggest driver of total returns for our thematic portfolios. Our tech-focused thematic portfolios – Technology Enablers and Future of Consumer Tech – both posted double digit returns, having rode the momentum. Meanwhile, our Healthcare Innovation portfolios posted modest gains, while our Environment and Cleantech portfolios saw slightly stronger returns. Our balancing assets (namely our allocations to bonds and gold) also provided some support for our returns in H1.

Technology Enablers

Our Technology Enablers portfolio posted gains of +26.7% on average in MYR terms during H1. Market excitement in the tech sector during the past several months mainly revolved around the themes of AI and large language models (LLM). This has benefitted this portfolio in particular, due to its significant allocations to related industries such as semiconductors and cloud computing technology. Our balancing assets – namely, short-term bonds and gold – also contributed to returns, especially in the lower SRIs.

Future of Consumer Tech

Our Future of Consumer Tech portfolios posted gains of +24.5% on average in MYR terms during H1. Similar to our Technology Enablers portfolio, our Future of Consumer Tech portfolio also enjoyed the spillover effects of AI and LLM from the broader tech rally. Furthermore, blockchain-related companies and the fintech sector supported portfolio performance as payments companies and digital banks saw a gradual recovery following the resolution of banking crises in March. As with our Technology Enablers portfolio, defensive allocations to bonds and gold also contributed to portfolio returns.

Healthcare Innovation

Our Healthcare Innovation portfolios posted gains of +9.9% on average in MYR terms during H1. These portfolios had a relatively subdued performance in H1. The main drivers of its performance were software-related healthcare companies, which offset weakness from other sub-sectors, such as pharmaceuticals and biotechnology. As with our other Thematic portfolios, balancing assets also contributed to portfolio returns – particularly among the lower SRIs.

Environment and Cleantech

Our Environment and Cleantech portfolios posted gains of +13.2% on average in MYR terms during H1. These portfolios performed relatively well in H1 with strong performance across sub-sectors like environment services, waste management, and energy infrastructure. Green bonds also generated positive returns for the portfolio. These factors offset poorer performance from the global clean energy and renewables sub-sector, which were due to supply chain disruptions and limitations in clean energy infrastructure.

DRB portfolios

Our DRB portfolios all posted strong, positive performance in H1. They were up between +8.5% and +20.7%, or +14% on average in MYR terms. As with our GI portfolios, the equity rally over H1 supported our DRB portfolios. Exposure to broad-based stock market indexes across our SRIs – which have significant weights to large-cap tech companies – was a key contributor to returns. Among balancing assets, allocations to gold and bonds minimised volatility in our portfolios – especially during the mini banking sector crises around the end of Q1. Currency also played a strong role in returns over the period: the 10.2% depreciation in the ringgit against the British pound (the trading currency for the ETFs in this portfolio) was positive for returns.

What we’re watching as we head into H2

As we head into the second half of the year, we’re cautious but optimistic. With inflation still too high for comfort in many developed market economies – particularly in Europe and the US – those central banks are likely to keep interest rates higher for longer. Elsewhere, China is struggling with recessionary conditions but Japan may be a bright spot as it’s showing signs of rising out of long-term deflation.

As ERAA® continues to signal a stagflationary economic regime, we’ve maintained our asset allocations – short-duration bonds, defensive equities, and gold continue to play key roles in weathering this macro cycle. For our full take on what’s coming in the next half of 2023, read our H2 Market Outlook.


Our same-risk benchmarks are proxied by MSCI AC World 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 MYR 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.

This information should not be relied upon as investment advice, research, or a recommendation by BlackRock regarding (i) the iShares Funds, (ii) the use or suitability of the model portfolios or (iii) any security in particular. Only an investor and their financial advisor know enough about their circumstances to make an investment decision. Past Performance is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy.

For StashAway General Investing portfolios that are powered by BlackRock, BlackRock provides StashAway with non-binding asset allocation guidance. StashAway manages and provides these portfolios to you, meaning BlackRock does not provide any service or product to you, nor has BlackRock considered the suitability of its asset allocations against your individual needs, objectives, and risk tolerance. As such, the asset allocations that BlackRock provides do not constitute investment advice, or an offer to sell or buy any securities.

BlackRock® is a registered trademark of BlackRock, Inc. and its affiliates (“BlackRock”) and is used under license. BlackRock is not affiliated with StashAway and therefore makes no representations or warranties regarding the advisability of investing in any product or service offered by StashAway. BlackRock has no obligation or liability in connection with the operation, marketing, trading or sale of such product or service nor does BlackRock have any obligation or liability to any client or customer of StashAway.

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