Why Adopting an Asia Balanced Investment Strategy Could Help During These Volatile Times

balanced investing - PineBridge Acorns of Asia Balanced Fund

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These are turbulent times for investors, to put it lightly. The pandemic isn’t even over yet, and already we’re bracing for US rate hikes and higher inflation.

To make matters worse, just as global markets are starting to rebound, the war in Ukraine is making another economic fallout likely. The Fear & Greed Index indicates that the market is being driven by extreme fear, and the CBOE Volatility Index has been showing signs of an upward spike since the war broke out.

This can be highly anxiety-inducing for hands-on investors. Should you hold on to your investments and try to ride this out, or scramble to put your money elsewhere? Are you up to the challenge of managing your own portfolio in these extraordinary times, or should you turn to a professionally managed fund?

Clearly, there are lots of competing concerns that need to be dealt with all at the same time. Let’s take a look at the things you need to focus on most when investing in 2022, and how to balance them.


Why a balanced strategy makes sense

Given the circumstances, a balanced investment strategy makes the most sense right now — that is, you should invest in equities to capture upside potential and help your wealth beat inflation, while at the same time investing in fixed income securities to provide a buffer against volatility.

Investing in equities is one of the keys to beating inflation. Luckily, there are more than enough opportunities in Asian equity markets, so long as they are strategically selected using a rigorous methodology and a good risk mitigation strategy.

In turbulent markets, you also need to protect your portfolio from fluctuations. Fixed income securities like bonds can offer some much-needed cushion. Asian bonds on the whole offer competitive yields and lower rate risk sensitivity compared with global peers, and enjoy a stable regional institutional investor base. This makes them a good choice as a buffer against volatility. Take SGD bonds, for example, these securities benefit not just from competitive returns but also Singapore’s strong economic fundamentals and AAA credit rating.

In the face of accelerating inflation, rising interest rates, uncertain growth prospects and volatile markets, it’s best to cover all your bases by striking a balance between equities and fixed income exposures.

However, that’s easier said than done — to get the balance right, flexibility and active management are key to navigating changing market conditions.


Enter the PineBridge Acorns of Asia Balanced Fund

The PineBridge Acorns of Asia Balanced Fund, designed for the Singapore market, aims to offer the best of both worlds: long-term capital appreciation and a stable income by strategically investing in Asia-Pacific ex Japan equities and fixed income securities.

With a 20-year track record, the fund seeks Asia equity and bond opportunities regardless of benchmark allocations, with a maximum allocation of 60% equities and 40% bonds. Seasoned portfolio managers, Elizabeth Soon, Head of Asia ex Japan Equities, and Omar Slim, Senior Portfolio Manager Asia Fixed Income, focus on generating alpha from fast-growing Asian companies and high-quality Asian bonds primarily denominated in SGD, respectively.

Says Ms Soon: “Even before the Ukraine crisis, we expected inflation would be a concern in Asia over the next couple of years because we’re coming out from the slowdown of the pandemic and, therefore, we should see more earnings growth coming through, which can lead to inflation.

“That’s why we stress a lot on companies’ earnings and sustainability in our stock selection process,” she adds.

“Having Asia bonds in your portfolio has the potential to add income and returns for investors,” notes Mr Slim, adding that the team at PineBridge expects Singapore’s economic recovery to continue in 2022 and remain strong.

The fund offers diversified exposures to Asia-Pacific markets (excluding Japan), primarily Singapore, Taiwan, Hong Kong, China and South Korea.

Source: PineBridge Investments, as of 28 February 2022. Past performance is not indicative of future results. Bid-to-bid performance is calculated in SGD with net dividends reinvested (taking into account all charges which would have been payable upon such reinvestment). Offer-to-bid performance is calculated in SGD (taking into account a Preliminary Charge of 5% up to 30 June 2007 and 3% from 1 July 2007, and a Realisation Charge of 0%) with net dividends reinvested (taking into account all charges which would have been payable upon such reinvestment). Performance for periods exceeding 1 year is calculated on an average annual compounded basis.

The strategy has delivered strong returns in recent years despite recent market volatility. Amid the pandemic, the fund achieved a positive bid-to-bid return in the past year as of 28 February 2022, outperforming the benchmark’s return of -1.7% over the same period. It also outperformed the benchmark in the period of 3 years, 5 years and since inception, generating annualised returns of 9.4%, 7.9% and 7.0% respectively.

In addition, the fund takes into consideration environmental, social and governance (ESG) factors when putting together the portfolio, adding another layer of risk management in the securities selection process.

The fund is eligible under the CPF Investment Scheme, so you are allowed to use your CPF Ordinary Account (OA) and Special Account (SA) savings to invest in it. If you are hoping to earn higher returns than the current CPF interest rates on your OA and SA savings, investing in the fund could potentially be one way to do so.


The importance of active balanced investing today

In today’s uncertain markets, an excessively conservative or aggressive strategy might simply not work as well as before. Now, more than ever, an investing approach that balances growth opportunities with preserving your existing capital is the way to go.

Unfortunately, uneven recovery of global markets and the occasional bout of market volatility continue to make it challenging for investors to maximise their returns. It’s not easy to have to constantly rebalance your portfolio as you swing from being capital-protective to growth-oriented and vice versa.

A balanced approach, dually investing in both equities and fixed income, may help the portfolio ride out downside with the right buffers and be well-positioned to capture the upswing — potentially resulting in less missed opportunities and better returns.

Find out more about how to adopt a more balanced approach to investing with the PineBridge Acorns of Asia Balanced Fund, which is also available for CPF (OA) and CPF (SA) investments.


This document is not an offer or solicitation to purchase or sell units of the PineBridge International Funds – Acorns of Asia Balanced Fund (the“Fund”). Investors should read the prospectus and product highlights sheet of the Fund, available from PineBridge Investments Singapore Limited (the “Manager”) and its authorised distribution partners, for further details including the risk factors before investing in the Fund.
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