Fund Report - StashAway (May 20)

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A post shared by butainvestor (@butainvestor) on Jun 1, 2020 at 7:44pm PDT

Fund Description: 

StashAway is a Malaysian robo-advisor app which allows me to access index funds in the NYSE. I am currently invested in the most aggressive portfolio hence why you see a lot of sector-specific funds.

Comments:

StashAway made a big move to reoptimize its portfolio some time in the middle of May. The previous allocation of 88% US & 12% EU has suddenly turned into 40% US, 40% Asia & 20% Gold, essentially shifting their focus out from USA (more specifically the USD). Reason for this is StashAway foresees that the USD may lose its value as a result of their aggressive Quantitative Easing measures (i.e. money printing). They cited that the USD depreciated 21% against the RM between 2009 & 2011.

   So how does refocusing investments in Asia help us against the potential USD depreciation? Let us take a NYSE-based ETF that deals in RMB (China). Currently, RMB100 can only buy USD10 worth of ETF in NYSE. After the USD has depreciated, the same RMB100 will be able to buy USD15 worth of ETF in NYSE. The 50% in depreciation of USD does indeed decrease the value of the ETF but it is offset by the 50% purchasing power of the RMB. Compare this to a pure NYSE-based ETF investing in US markets, there is no other Asian currencies to help hedge against the USD depreciation.

   I am coming to terms with their decision to move the portfolio from West to East however, I am still in disagreement with the 20% gold holding. There are a few reasons to this: 

1. It does not align to my goals to hold a fully aggressive portfolio
2. As the economy recovers from COVID19, this GLD holding is essentially missing out on the rebound
3. It feels like they are buying GLD at a peak as investors begin to regain confidence in the stock market and divest from safe haven assets.

   It is definitely not helping their case as every fund made month on month gains EXCEPT Gold. Anyway, I am exploring the possibility of opening up a foreign brokerage account and directly investing in ETF from the NYSE. That said though, it is not looking very promising i.e. very complicating because Malaysia does not encourage the use of foreign brokerage.