Performance Report March 2023
Returns since inception of 28 August 2020 to the month end 31 March 2023.
Share this article

Year-To-Date 1st Quarter 2023 Market Review 

After the brutal 2022 equity and bond markets closed with single-digit gains during 1Q23, needs were tossed back and forth by shifting expectations for Federal Reserve policy. Investors started 2023 believing that inflation pressure was under control, which could enable the Fed to end its interest-rate hikes by the 2Q03 and begin easing monetary policy by year-end. By early February, a much stronger-than-expected jobs report and data showing inflation remained stubbornly high. This had investors rethinking the notion of a friendlier Fed. However, the outlook changed practically overnight on March 9 with the collapse of Silicon Valley Bank. The crisis among regional banks sparked worries of a credit crunch that would slow economic growth, which could take pressure off the Fed to stop raising rates. But the damage was mainly limited to regional bank stocks and real estate investment trusts.


Performance of Major Indices and Commodities

Source: Morningstar Direct Data as of 31 December 2022 (Regional, market and fixed income indices are based on the respective Morningstar total return index. Gold, platinum and silver prices are based on the LBMA Price PM)

The Morningstar US Market Index gained 7.4% during 1Q23 – Up 12.5% from October 14 low but still down 13.5% from its latest high on January 3, 2022. Whilst the volatility in the bond market remains at twice its long-term levels for the fourth quarter in a row. Within the bond market, investors sought the safety of US Treasuries while shunning bonds with lower credit ratings. The Fed raised its benchmark federal funds rate twice in 1Q23, each time by 25 bps, to finish the quarter at 4.75% - 5% (highest since 2007).

In the commodities space, oil futures prices sank on worries about the strength of the US economy. 


Portfolio Performance As of March 2023

Total Returns in USD

Source: Morningstar

The annualised returns for P04-P10 continued to track its underlying benchmark closely. As for P01-P03, the performance was affected by returns in Malaysia's fixed-income mutual funds relative to Malaysia's fixed-income index (Markit iBoxx ALBI Malaysia Total Return Index).

Total Returns in MYR

Source: Morningstar

The total returns were higher as Ringgit depreciated by 4.7%, 3.1% and 2% on a 1-year, 2-year and since Aug 2020 against the USD. Whilst on a YTD 2023, Ringgit against the USD was relatively flat.


Views and Recommendation 

We expect the markets are facing a rough road over the next few quarters. It appears the Fed is either at or close to the end of tightening monetary policy, inflation continues to abate, and long-term interest rates have topped up. But we still think the economy will weaken in 2Q and 3Q.

The collapse of Silicon Valley Bank (SVB) in mid-March highlights the dangers of aggressive central bank hikes. SVB’s main problem was its large holding of long-duration bonds, which lost value as bond yields rose through 2022. It bears little resemblance to the bank failures during the financial crisis in 2008 – primarily due to losses on mortgage-backed securities. The Fed’s new Bank Term Funding Program should prevent SVB’s problems from flowing onto other banks, but the episode highlights the dangers caused by rapid monetary tightening. 

In today's high-inflationary and recessionary economic outlook, investing in diversified portfolios via dollar-cost averaging is the best option.



Past data and performance do not indicate future performance. Actual individual investor performance will vary depending on the initial investment, amount and frequency of contributions, allocation changes, taxes and fees during the time frame considered.