From Fed Decisions to Tech Earnings: The Ripple Effect on Wall Street

2 August 2024

July has demonstrated the ripple effects of major financial events on the stock market, highlighted by the Federal Reserve's interest-rate decision and earnings results from major tech companies in the "Magnificent Seven." Investors are closely monitoring these developments to determine if the recent market downturn has ended, balancing hopes for rate cuts with concerns about the waning momentum of AI-driven gains in Big Tech. On Wednesday, the Federal Reserve kept rates steady but hinted at a possible September cut, citing progress on inflation. Meanwhile, Wall Street is assessing how long it will take for tech companies to see returns on their substantial AI investments. The month’s key events have underscored the risks associated with the AI trade, prompting a shift from large tech companies to smaller caps and highlighting ongoing volatility.

Short-term Volatility

Despite this month’s market volatility, our SqSave reference portfolios demonstrated resilience, with only marginal underperformance compared to their benchmarks and peers. Our algorithm’s strength lies in its focus on longer-term performance, enabling us to mitigate such short-term noise. Over the past three months, our portfolios have not only outperformed our peers, but also matched benchmark performance.

YTD Performance Beat All Tracked Peers

Year to date, our portfolios have outperformed all tracked peers across risk preference levels and either exceeded or matched benchmark performance, underscoring our commitment to delivering robust results. This follows an outstanding 2023 Investment Performance

SqSave Reference Portfolios Returns (SGD terms as of 31 July 2024)*

*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 peers are estimates. Abbreviations: BMK: Benchmark, Port: Portfolio, Eq: Equity and F.I.: Fixed Income.

Lower-Risk Portfolios’ 1-year Return Beat Peers and Benchmarks

Conservative and Balanced Portfolios beat their benchmarks and peers for the trailing 1-year period.

Balanced Portfolio 2-Year Annualised Return at 9.4%, Way Exceeding Peers

Our Balanced Portfolio achieved a 9.4% annualized return for the trailing 2-year period, significantly outperforming the median return of 0.9% from our peers' balanced portfolios over the same period. This superior performance reflects the effectiveness of our lower-risk algorithms in managing drawdowns as intended. Through insights gained from our algorithms we have learned valuable lessons about the impact of human emotions versus the benefits of disciplined, unbiased smart beta investing.

Outperformed over 3-Year Time Horizon

All 5 SqSave portfolios outperformed benchmarks across three years, underscoring the sustained long-term design of our quantitative investment approach.

Back to the Future

Our algorithms have demonstrated strong performance during significant market events, such as the Covid pandemic and lead-up to the Russian-Ukraine war As the sole digital platform providing monthly updates on our investment performance, we will continue our rigorous Ai-driven beta quantitative approach applying insights from past performance to refine and enhance our future strategies.

SqSave 5^th Anniversary Promotion

Amidst the ripple effects of market volatility, we recognized the need for a stable and attractive investment alternative. That’s why, as part of our 5th Anniversary Promotion, we’re excited to offer 5% p.a. returns on up to S$10,000 for MoneyBox, surpassing current market rates! It’s our way of thanking you for your steadfast support over the years and providing a secure place to grow your assets with a competitive return.

Learn more about us and view our full disclaimer. For the full MoneyBox Promotion T&Cs, please click here.

¹Deposit portions above $10,000 will earn prevailing MoneyBox returns. (as of June 30, 2024, the 1-year return is 4.3% p.a.)

Yours sincerely
Investment Team
SqSave

SqSave is the regulated digital investment service operated by Pivot Fintech – a Licenced Fund Management Company regulated by the Monetary Authority of Singapore.

Disclaimer

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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