Top 10 Investments added by FSMOne investors in 3Q2024: Are more Rate Cuts on the way?

Perhaps the biggest news that dominated the entire quarter was the US Federal Reserve’s decision to cut the federal fund rate by 0.50% after the Federal Open Market Committee (FOMC) meeting in September.

Similarly, China eased its monetary policy by lowering the 7-day reverse repo rate and reserve requirement ratio (RRR). The move aims to halt the economic slump, coinciding with the 75th anniversary of the People's Republic of China's founding and the auspicious Year of the Dragon.

Our FSMOne analysts have analysed the recent rate cuts in both countries. For more insights on portfolio positioning in light of these developments, please refer to the following write-ups

The Fed has cut rates by 50bps – what should you do?

China Eases Again: Can the Economy Be Revived This Time?

Following the rate cuts, markets reacted well with the major indices such as S&P 500, NASDAQ Composite, CSI 300 Index and Hang Seng Index all ending the quarter in positive territory.

On the fixed income front, investors sought to lock in higher yields through longer-dated bonds since start of the quarter with bond prices rising in general as the September FOMC neared.

Most Popular Unit Trusts in 3Q2024

In case you are following this quarterly update for the first time, short-duration bond and money market funds are excluded in the top 10 rankings.

Dividend paying funds proved once again their popularity among Singapore investors with 8 of the 10 funds paying out either quarterly or monthly dividends.

With a portfolio exposure into both US equities and high yields, Allianz Income and Growth Cl AM DIS H2-SGD retained 1^st place for 3Q2024. Unsurprisingly, the fund was also crowned best-selling multi-asset fund at our recently concluded FSM Choice Awards 2024.

Both share classes of the ever-popular PIMCO Income Fund made the list this quarter: PIMCO Income Fund Admin Cl Inc SGD-H came 2^nd while PIMCO Income Fund Cl E Inc SGD-H was 3^rd. The Admin share class of the bond fund has lower expense ratio of 1.05% and we are pleased to announce that we have lowered the minimum investment amount for this share class from SGD10,000 to just SGD1,000!

Global balanced funds JPMorgan Investment Funds - Global Income A (icdiv) SGD-H, which current has one of the highest dividends for balanced funds and Schroder Multi-Asset Revolution A Dis SGD, which is investable for both CPF-OA and SA, made it to 4^th and 5^th respectively.

Rate cuts in China also generally spell good news for Asian high yields, which are dominated by Chinese issuers. As a result, Blackrock Asian High Yield Bond A8 SGD-H climbed two places to 6^th in 3Q2024.

Nikko AM Japan Dividend Equity JPY remained the favourite among investors utilising FSMOne’s margin facility for the JPY Positive Carry strategy. The fund dropped two spots to 7^th place possibly due to the Bank of Japan’s potential rate hikes.

Coming in 9^th place is the Asian focused balanced fund, First Sentier Bridge A DIS SGD. Like the Schroder Multi-Asset Revolution A Dis SGD, the fund is also approved for CPF-OA and SA investments.

Rounding up the list is global technology fund Blackrock World Technology Fund A2 GBP and gold fund Schroder ISF Global Gold A Acc USD at 8^th and 10^th places. Both technology stocks and gold prices have seen rallies in recent weeks.

Table 1: Top 10 Most Popular Unit Trusts

Rank	Product Name (Unit Trusts)	YTD Return in SGD Terms
1	Allianz Income and Growth Cl AM DIS H2-SGD	7.42%
2	PIMCO Income Fund Admin Cl Inc SGD-H	4.01%
3	PIMCO Income Fund Cl E Inc SGD-H	3.82%
4	JPMorgan Investment Funds - Global Income A (icdiv) SGD-H	6.49%
5	Schroder Multi-Asset Revolution A Dis SGD	10.53%
6	Blackrock Asian High Yield Bond A8 SGD-H	12.77%
7	Nikko AM Japan Dividend Equity JPY	4.68%
8	Blackrock World Technology Fund A2 GBP	28.63%
9	First Sentier Bridge A DIS SGD	8.46%
10	Schroder ISF Global Gold A Acc USD	29.85%

Data as of 10^th October 2024

Most Popular ETFs in 3Q2024

No big surprises in 3Q2024 for ETFs as our investors continued with the tried and tested to capture any potential upsides following rate cuts.

Investors continued to have strong views on the semiconductor sector with both Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL) and Direxion Daily Semiconductor Bear 3X Shares (NYSE:SOXS) coming in 1^st and 4^th. The Fed’s rate cut might have tilted the market sentiment on semiconductors to a more bullish tone. However, investors should still note leveraged ETFs entail additional risks and are less suitable to hold long term. Those looking for non-leveraged exposure can consider the 7^th-placed VanEck Semiconductor ETF (NASDAQ:SMH).

An entry from our ETF Focus List, the usual mainstay Vanguard S&P 500 ETF (NYSE:VOO) moved up 2 spots to 2^nd place. The well-liked ETF offers investors broad-based US equity exposure tracking the S&P 500 index.

Another leveraged ETF to make it on the list is the GraniteShares 2x Long NVDA Daily ETF (NASDAQ:NVDL), which remained the 3^rd spot once again. The ETF seeks to double the daily percentage change of NVIDIA Corporation.

Following China’s rate cut, many investors also sought to capitalise on the resurgence of China technology stocks with the SGX-listed Lion-OCBC Securities Hang Seng TECH ETF (SGX:HST) coming in 5^th.

Following the Fed’s half-point rate cut, REITs have experienced a strong rally. Many investors have positioned themselves for the rally by previously investing in the Asia-focused NikkoAM-StraitsTrading Asia ex Japan REIT ETF (SGX:CFA)and Lion-Phillip S-REIT ETF (SGX:CLR), which landed at 6^th and 10^th respectively. We are still selective of REITs in general and you can find out more about the S-REITs we prefer in our recent write-up:

A full rebound for Singapore REITs may be premature despite first Fed rate cut

Besides the Vanguard S&P 500 ETF (NYSE:VOO), investors were also keen to gain exposure to large-cap US technology firms through both Invesco JPMorgan U.S. Quality Factor ETF (NYSE:JQUA) and Invesco QQQ Trust (NASDAQ:QQQ). Both ETFs made it to this quarter’s list on 8^th and 9^th places.

Table 2: Top 10 Most Popular ETFs

Rank	Product Name (ETFs)	YTD Return in SGD Terms
1	Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL)	19.94%
2	Vanguard S&P 500 ETF (NYSE:VOO)	21.92%
3	GraniteShares 2x Long NVDA Daily ETF (NASDAQ:NVDL)	371.04%
4	Direxion Daily Semiconductor Bear 3X Shares (NYSE:SOXS)	-65.68%
5	Lion-OCBC Securities Hang Seng TECH ETF (SGX:HST)	26.06%
6	NikkoAM-StraitsTrading Asia ex Japan REIT ETF (SGX:CFA)	1.34%
7	VanEck Semiconductor ETF (NASDAQ:SMH)	45.23%
8	JPMorgan U.S. Quality Factor ETF (NYSE:JQUA)	19.34%
9	Invesco QQQ Trust (NASDAQ:QQQ)	19.77%
10	Lion-Phillip S-REIT ETF (SGX:CLR)	2.41%

Data as of 11^th October 2024

Most Popular Stocks in 3Q2024

The top 2 stocks from last quarter maintained their momentum into this quarter as DBS Group and NVIDIA Corp took 1^st and 2^nd places once again. Announcement of new chief executive Ms Tan Su Shan taking over in March next year has not slowed down the Singapore-based banks’ momentum at all, while NVIDIA’s stock split also likely made the stock more affordable for investors to buy into.

Yangzijiang Shipbuilding on Aug 12 reported a net profit of 3.1 billion yuan (S$553.7 million) for the first half of the year, an increase of 77.2% year-on-year. As a result, the firm squeezed past our usual mainstays and made it to 3^rd place.

4^th placed Oversea-Chinese Banking Corp Ltd maintained its standing from last quarter. The bank recently announced that group COO Mr Lim Khiang Tong will retire from his role. Following his retirement, his responsibilities will be split among group CFO Mr Goh Chin Yee, head of group operations and technology Mr Praveen Raina as well as head of group strategy, innovation and sustainability Ms Elaine Heng.

Despite the rate cuts, we remain selective on S-REITs, and it can be observed that there were only 2 S-REITs that made the list in 3Q2024 with CapitaLand Integrated Commercial Trust taking 5^th place and our top pick CapitaLand Ascendas REIT booking 9^th spot.

Tesla Inc dropped another place from the previous quarter to 6^th this time round. In the EV maker’s recent delivery report, they missed their estimates on deliveries. Tesla is facing increased competitive pressure, especially in China, from companies like BYD and Geely, along with a new generation of automakers, including Li Auto and Nio. In the US, EV competitors like Rivian are maturing, while legacy automakers Ford and General Motors are selling more electric vehicles after walking back more ambitious goals for electrification.

Singapore Airlines Ltd, on the other hand, climbed several places to 7^th with investors looking for that year-end surge in air travel which will likely push up revenues for airlines. In late August, Indian aviation authorities approved the foreign direct investment by Singapore Airlines into the merger between national carrier Air India and smaller rival Vistara. The deal is now expected to be completed by end of 2024, having already been delayed from the original target of March.

Take the last 2 spots are United Overseas Bank Ltd at 8^th and Seatrium Ltd at 10^th. Singapore's third-largest lender by assets also made senior leadership changes in September. Head of retail Mr Eddie Khoo will be replaced by current head of group technology and operations (GTO) Ms Susan Hwee while Mr Lawrence Goh will be promoted to GTO head. Seatrium shares saw an uptick started its share buyback programme from late August to early September. The company had earlier this year obtained shareholder approval to buy back $100 million with of stocks.

Table 3: Top 10 Most Popular Stocks

Rank	Product Name (Stocks)	Dividend Yield (Trailing 12 Months)
1	DBS Group Holdings Ltd	5.19%
2	NVIDIA Corp	0.02%
3	Yangzijiang Shipbuilding (Holdings) Ltd	2.60%
4	Oversea-Chinese Banking Corp Ltd	5.74%
5	CapitaLand Integrated Commercial Trust	6.26%
6	Tesla Inc	-
7	Singapore Airlines Ltd	7.42%
8	United Overseas Bank Ltd	5.44%
9	CapitaLand Ascendas REIT	5.36%
10	Seatrium Ltd	-

Data as of 11^th October 2024

Most Popular Bonds in 3Q2024

Singapore Treasury Bills (SITBs) remain popular among investors probably due to their lower minimum investment and short tenor with BS24116E; SITB ZERO 18Feb2025 Govt (SGD) and BS24113N; SITB ZERO 07Jan2025 Govt (SGD) coming in 1^st and 6^th in 3Q2024.

Astrea 8 bonds that were launched in July 2024, continue to be one of the more popular retail bonds amongst our investors. The Temasek-linked private equity firm Azalea Asset Management ASTLC 4.350% 19Jul2039 Corp (SGD) - Class A-1 – Retail and ASTLC 6.350% 19Jul2039 Corp (USD) - Class A-2 – Retail took 2^nd and 3^rd spots respectively.

In August also saw the introduction of Bonds Financing on FSMOne! Investors who invested in bonds via our margin facility were mainly attracted to higher yielding bonds for positive carry over their cost of borrowing. Hence, it came as no surprise that Additional Tier 1 (AT1) bonds with higher coupons and yields were highly sought after as seen from HSBC 6.950% Perpetual Corp (USD), INTNED 7.250% Perpetual Corp (USD) and STANLN 5.300% Perpetual Corp (SGD) which took 5^th, 7^th and 10^th places respectively.

FWDGHD 8.400% 05Apr2029 Corp (USD), which is available on Bond Express came in 4^th this quarter. We like FWD as the insurer remains a stable issuer with consistent insurance sales growth and overall strong capital position. For Accredited Investors, they can invest with a minimum investment nominal of USD$5,000 on bond express.

Idea of the Week: Bonds yielding over 7% from a fast-growing Asian insurance provider

Jewellery retailer and pawnbroker Aspial Lifestyle announced an exchange offer for its bond maturing in January 2025 to new notes MSFSSP 6.250% 24Sep2027 Corp (SGD). The issuance was also popular among new investors for its short 3-year tenor and attractive yield.

Keppel Infrastructure Trust (KIT) also issued a new perpetual bond with a call date on its 10^th year. As a business trust focused mainly on energy transition, environmental services and distribution & storage, KIT’s credit metrics have generally weakened over time. However, KITSP 4.900% Perpetual Corp (SGD) was still a popular new issue and took 9^th spot on the list.

Table 4: Top 10 Most Popular Bonds

Rank	Product Name (Bonds)	Indicative Yield-to-Worst
1	BS24116E; SITB ZERO 18Feb2025 Govt (SGD)	2.245%
2	ASTLC 4.350% 19Jul2039 Corp (SGD) - Class A-1 - Retail	3.332%
3	ASTLC 6.350% 19Jul2039 Corp (USD) - Class A-2 - Retail	3.567%
4	FWDGHD 8.400% 05Apr2029 Corp (USD)	6.788%
5	HSBC 6.950% Perpetual Corp (USD)	6.664%
6	BS24113N; SITB ZERO 07Jan2025 Govt (SGD)	2.097%
7	INTNED 7.250% Perpetual Corp (USD)	6.941%
8	MSFSSP 6.250% 24Sep2027 Corp (SGD)	6.157%
9	KITSP 4.900% Perpetual Corp (SGD)	4.347%
10	STANLN 5.300% Perpetual Corp (SGD)	4.494%

The Fed has finally cut rates for the first time in years and markets reacted positively to the news with major indices hitting new highs. However, higher core inflation and a strong September jobs report have raised questions among investors about whether the Fed will cut rates again in November. With 2 FOMC meetings coming up in November and December, investors could be in for a bumpy ride towards the end of the year.

Once again, we reiterate our stance on a globally diversified portfolio to capture potential market upsides and weather through volatility. For equities, we like developed markets such as Big Tech and Japan while we prefer short duration bonds for fixed income exposure.