Comments:
February 2021 was literally a rollercoaster for the global market. It went through a steep rally up due to the global vaccine rollout and general optimism for a swift global recovery. At the middle of the month, the markets went through an equally steep decline all the way to the end of month due to a large spike of the US 10 yr treasury yield that got investors worried about inflation in a time of a pandemic. That said, I cannot complain because my funds ended in slightly above positive territory (+0.3%) despite the volatility.
The United ASEAN fund led the rally at +3.3% as investors are getting out of growth (tech) stocks and into value (property, energy, telco, etc) stocks. All of which this fund are invested in. This rotation is said to be due to the rising bond yields. It is getting more expensive to borrow money so growth stocks (that depend on borrowing money) gets affected. Investor then prefer to be invested in value stocks that do not borrow cash as much.
The United Global did ok (+2.3%) though it did not fair as well as the S&P 500 (+2.6%) in the month of Feb-21. It could be due to United Global holding a bit more growth than value stocks hence is affected by the rotational play as described above.
The TA Global Tech (+2.2%) did end up higher than expected despite the rotational play. It even did better than the XLK ETF (+1.37%). Upon closer look, we see that the TA Global Tech actually holds quite a bit of value stocks (semiconductors, IT services, hardware, etc) in its portfolio than XLK ETF. So the rotational play benefited TA Global Tech more.
Performance of the Principal Greater China (0.0%) and StashAway (+1.4%) were disappointing if we compare them to the Hang Seng Index (+2.5%). This could be due to the funds holding a bit more growth stocks in their portfolio as compared to Hang Seng which has a good spread of growth and value stocks.
My company stock (Europe based industrial) was the biggest loser this month (-8.0%). It is hard to put a finger on this huge decline. This company is far from popular tech names so there is very few articles or write ups on its stock rise & fall. We will just have to take it that it had a bad month.
The rise in US Treasury yield is a result of oversold bonds. We can see this also takes effect in the local level as AmBond also dipped -0.9%. I have also reallocated about RM2k from my bond fund into my bank account. I had to urgently withdraw some cash for work expenses this month and realised that I may have set my liquid emergency cash a bit too low. So I decided to up my bank holdings from RM3k to RM5k. Live and learn.
This was the month I contributed a lump sum of RM3,000 into my PRS fund for the year 2021 to take advantage of the tax benefits. That is why my savings was not much (RM554 only) despite receiving my bonus this month as well.
Forward Strategy:
I will continue to Value Cost Average (VCA) into my funds, keeping them at a fixed weightage as follows; United Global Equity (20.0%), StashAway (20.0%), TA Global Tech (20.0%), Principal Greater China (15.0%), United ASEAN (12.5%) and Manulife REITS (12.5%).