JP Morgan Webinar: Achieve Diversified Return Opportunities while Managing Portfolio Volatility
The global economic recovery continues at an uneven pace, depending on the various stages of vaccination and containment of local outbreaks across the world. InsureDIY invited Mr Daryl Leong from JPMorgan Asset Management on 3rd of August to share with our clients how we can seek to achieve diversified return opportunities whilst managing portfolio volatility at this time.
Daryl Leong (Daryl) is a client advisor. He joined J.P. Morgan Asset Management’s Singapore Funds Sales team in 2018 covering clients across banks, insurance companies, financial advisors and investment platforms. Prior to joining J.P. Morgan, Daryl was an Investment Advisor at Standard Chartered Bank, where he conducted Investment Advisory for high-net worth clients in the Private Bank across Singapore and South East Asia. Prior to that, he began his career as a Management Associate at Standard Chartered Bank. Daryl obtained a BSc (Hons) in Economics and Finance from Singapore Management University.
Shujun Lim (Shujun) joined InvestDIY in 2015 as a Director and licensed Financial Adviser. Prior to joining InvestDIY, Shujun was in the Strategic Planning Team with an MNC insurer in Singapore and was also previously a Consultant providing advice to financial institutions.
Shujun is a qualified Actuary and obtained a BSc in Economics and Statistics from University College London.
Excerpts from the Webinar
Achieving diversified returns opportunities & Managing portfolio volatility
The World’s average vaccination rate is slightly above 10%, even included all the higher percentages from the developed markets. When we look at investments, try to avoid going on specific country exposure or region exposure, but board global exposure, to diversify your risks due to the varying levels of the containment of the Covid as well as correspondingly growth as well.
Moving forward, we definitely expect the interest rate to still remain low because as long as Covid is still around, the global economy growth is still challenged. The interest rate has to remain low to stimulate the economy. The US Central Bank has said that they aim to hike rates perhaps in the later part of 2022 into 2023, expectations towards 2025 to hit the 1.5% range. We do think that the recent US inflation is transitory and it should go down, as the inflation was almost non-existent when Covid hit last year. Thus the growth from then to now seems large. There are also other factors contributing to the inflation rate such as the supply and demand of automobile in the US which consists of a very large portion of the inflation calculation in terms of consumer spending power. The increase in car prices has caused temporary spike in terms of the inflation.
Real deposit rate (deposit rate minus inflation) post crisis average for Singapore is -2.9%, which means that holding cash is eating away your spending power if you avoid investment. The need for income is still there.
Sharing some points on the investing principle – protecting downside is extremely important, not to time the market, but the time in the market, i.e long term investing. Including equity in your portfolio in the gently rising interest rate environment as there is a positive relationship between yield movement and stock returns. It is also important to diversify the equity investment into growth and value equity. Going for a 50/50 equity/bond mix gives you a decent returns in the long run, and experiences less volatility than if you just go for pure equity.
InvestDIY solution: Achieving diversified returns
Our investment approach allows customers to allocate assets between bonds and equity. We give customers the flexibility to find out what their risk profile is and build a portfolio accordingly, or to augment their existing portfolios through thematic investments. We believe in leveraging on the expertise of world class fund managers on our panel and believe in diversification which Daryl has already spoken extensively on the benefits of. We focus on areas where we can leverage structural growth. What this means is that we believe in gaining exposure in sectors like info technology which is undergoing rapid growth. Lastly, we believe in the importance of active monitoring. Our investment team actively monitors the market and makes recommendation on rebalancing portfolios quarterly, and also whenever there are big market movements. There are no extra rebalancing costs to customers.
For example, just last week we have de-weighted our China exposure to reflect what is currently ongoing in the China market with the increased regulatory scrutiny. However, we have still retained an allocation to continue to participate in China’s long term structural growth.
InvestDIY is a brand of InsureDIY. We are a MAS licensed broker, operating in Singapore since 2016. We offer a full range of Insurance, Investment and Finance products online for your convenience and also have a regional presence with offices in Hong Kong and Malaysia.
QnA: How are you different from robo-advisers?
Shujun: A lot of robo-advisers focus on ETFs as they think ETFs provide lowest costs available to access the markets. However we believe good fund managers can outperform the benchmarks. ETFs will only get performance in line with the benchmark, there’s no alpha.
A few other robo-advisers work with fund managers. One of them works with only 2 fund managers and the other one works with 6 fund managers. We have open architecture – we choose the best fund managers out there, we assess more than 41 fund managers with more than 2,000 funds. For every solution we offer, we choose the top 3-4 fund managers.
Do I need to set up a trading account with InvestDIY?
Yes, your funds will be traded on the platform FAME by Phillip Securities, this is different to POEMS as FAME is the platform to trade with if you invest with a financial adviser like ourselves.
Apart from the 0.5 – 0.6% p.a. wrap fee are there any other fees charged by InvestDIY?
No upfront sales charge, no switching / rebalancing fee.