Rates rose, chips fell, and MAPS is still ahead of its benchmarks this year

•          In 3Q26, our MAPS Growth portfolios returned between -2.5% and -1.2%, while our Income portfolios returned between -1.8% and -1.1%. That trailed our benchmarks for the quarter, but year-to-date returns of 0.2% to 18.1% (Growth) and 0.1% to 16.8% (Income) remain ahead of benchmarks across all 10 portfolios.

•          Rates and oil did the damage. The Fed raised rates by 25bps to 3.75%–4.00% in September, Brent crude rose about 40% over the quarter, and the Bloomberg Global Aggregate Bond Index fell 2.5% as bond yields surged.

•          Semiconductors paused after a record run. The VanEck Semiconductor ETF fell 8.4% in 3Q26,  rebounded 9.9% in September and is still up 68.0% year-to-date. Every MAPS portfolio beat its benchmark in September.

•         Our short duration funds cushioned the blow, with the Amova Shenton Short Term Bond fund returning -0.5% in the quarter against a 2.5% fall in global bonds. With yields becoming increasingly attractive, we will look for opportunities to extend duration when market conditions are favourable.

•         Our conviction in the digital economy remains unchanged, supported by resilient earnings growth. TSMC’s 3Q26 revenue rose 41.2% year-on-year to USD 46.7 billion, while Samsung’s preliminary operating profit surged 782.5%. Both ASML and Micron also guided for higher sales in the next quarter, reinforcing our confidence in the sector’s earnings outlook.

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Q26 was a reminder that markets rarely get to focus on one worry at a time. Inflation fears, a central bank pivot and a pause in the AI rally all landed within the same quarter, and each left a mark on portfolios.

Oil came first. Brent crude rose about 40% over the quarter and climbed back above USD 100 a barrel, which kept inflation expectations elevated. The Fed followed. In September it raised rates by 25bps to a range of 3.75% to 4.00%, and its updated projections point to a higher path for rates than it signalled in June. Bond yields did the rest, with the 10-year US Treasury yield moving as high as 5.3%.

Higher yields meant lower bond prices. The Bloomberg Global Aggregate Bond Index fell 2.5% in the quarter. Equities held up better at the index level, with the MSCI AC World Index up 0.3% (equity market returns in SGD terms unless stated otherwise). Beneath the surface, though, the AI-led chip rally paused. Semiconductor stocks fell 8.4%, and South Korea’s KOSPI dropped 19.2% in local currency terms as chipmakers led it lower. That matters, because Asia and semiconductors are where our highest-conviction overweights sit.

We trailed our benchmarks for the quarter, but not for the year

That is where our portfolios felt the pressure. As Figure 1 shows, our Growth portfolios returned between -2.5% and -1.2% in 3Q26, and between 0.2% and 18.1% year-to-date (portfolio returns are expressed on a total return basis in SGD terms, net of management fees). Their benchmarks returned between -2.2% and -0.3% for the quarter, so we trailed by 0.3 to 0.9 percentage point, and the gap grew as equity exposure rose. Our Income portfolios told a similar story with returns of between -1.8% and -1.1% in 3Q26, and between 0.1% and 16.8% year-to-date.

Figure 1: Performance of MAPS Growth portfolios for 3Q26 and year-to-date

Three developments weighed on our relative returns. The first was the pullback in semiconductors, which landed on our highest conviction overweight. The digital economy carries a 22.5% weight within our equity allocation, and the VanEck Semiconductor ETF fell 8.4% in the quarter while the Global X Asia Semiconductor ETF fell 12.9%. The second was our US underweight, as the US funds we hold (Vanguard S&P 500 ETF and the JPMorgan US Quality Factor ETF) both returned 1.0%, ahead of the iShares Core MSCI Asia ex Japan ETF, which fell 1.6%. The third was our global bond sleeve, with the PIMCO Income Fund down 4.3% as yields rose.

We stand by our equity positioning, and the year-to-date numbers show why. We never abandoned the US. Instead, we stayed selective, and our overweight in the digital economy (a sleeve anchored by US-listed technology names) has been the right decision. The VanEck Semiconductor ETF is up 68.0% this year, against 11.9% for the S&P 500. One quarter of pullback does not undo that. The same goes for Asia, where the Nikkei 225 is up 33.1% and the MSCI Asia ex Japan Index is up 24.9% year-to-date. Our overweights in both are still paying off.

There were bright spots within the quarter too. The Amova Japan Equity fund returned 3.9% while the Nikkei 225 fell 2.2%, and our short duration funds did what they were supposed to do. The Amova Shenton Short Term Bond fund returned -0.5% and the United SGD Fund returned -0.7%, against -2.5% for global bonds.

Then September showed the portfolios working as designed. As markets steadied, we took back ground, and all 10 MAPS portfolios beat their benchmarks in the month. Our Aggressive Growth portfolio finished September with a gain of 0.2%, against a benchmark return of -0.7%. Semiconductors rebounded 9.9% and the Nikkei 225 gained 3.3%, while global bonds fell a further 2.4%. Our short duration funds lost just 0.4% and 0.5%.

Looking beyond the recent market movements, our one-year performance remains on track. Our Growth portfolios have outperformed their respective benchmarks across every risk profile, returning 1.4% to 22.1% over the past 12 months, compared with -0.4% to 16.3% for their benchmarks. Our Income portfolios have also outperformed across every risk profile, returning 1.3% to 20.4% over the same period. Behind these results is not simply market sentiment, but the underlying strength of corporate earnings.

The earnings behind our digital economy overweight are stronger than share prices suggest

If you are worried about our overweight in the digital economy, the latest earnings offer reassurance. Share prices can pause for a quarter, but the companies at the heart of this theme keep delivering. Start with TSMC, which reported 3Q26 revenue of USD 46.7 billion, up 41.2% year-on-year, with an operating margin of 58.7%. It guided 4Q26 revenue to between USD 52.3 billion and USD 54.3 billion.

The memory makers tell the same story. Samsung Electronics’ preliminary 3Q26 operating profit came in at KRW 107.4 trillion, up a whopping 782.5% year-on-year, on revenue of KRW 195 trillion. Micron reported fiscal fourth-quarter revenue of USD 54.2 billion and guided for revenue of USD 61.5 billion, plus or minus USD 1.5 billion, in the next quarter. These figures reinforce the view we shared in June that the memory shortage is far from over.

The equipment that builds these chips is selling just as strongly. ASML reported 3Q26 net sales of EUR 11.7 billion and net income of EUR 5.0 billion, and guided 4Q26 net sales to between EUR 14.2 billion and EUR 15.2 billion. ASML’s management now expects its planned output for 2027 and 2028 to fall short of customer demand and is exploring ways to expand its 2028 production capacity by more than 30%. That points to chipmakers still investing to meet demand. 

A single quarter of price action does not alter the structural case behind our positioning. Our allocations have been consistent since April, and our equity overweights in Japan, Asia ex-Japan and the digital economy rest on structural drivers. Japan is still a story of governance reform and reflation. Asia’s chipmakers still sit at the center of the AI infrastructure buildout. We keep our positioning under constant review, but our conviction is unchanged.

On fixed income, we maintain a barbell positioning. We are overweight short-duration bonds at 35.0%, against a neutral weight of 30.0% for stability and income, while our 25.0% allocation to global bonds, above the 20.0% neutral weight, gives us exposure to longer-duration assets. Rising yields weighed on longer-duration bonds this quarter. However, with the 10-year US Treasury yield above 5%, we believe yields are becoming increasingly attractive. We will therefore look for opportunities to extend duration when market conditions are favourable.

Table 1: Equity intra-asset allocation

Table 2: Fixed income intra-asset allocation

What should investors do?

Stay invested. Quarters like this one are why we diversify, and why we do not chase or flee. Selling after a pullback locks in the loss and risks missing the rebound, as September showed.

Keep your Regular Savings Plan (RSP) running. Dollar-cost averaging works hardest when prices dip, because the same monthly investment buys more units.

Prepare for lump-sum deployment. If volatility deepens, a larger pullback could offer an even better entry point. Be patient, but be prepared.

Short-term volatility tests patience. Earnings reward it. If you are new to investing or simply do not have the time to monitor the markets, MAPS could be the right solution for you. Start now with a lump sum from as little as SGD 500, or a Regular Savings Plan from SGD 100 a month.

Click here to get started!

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a NIL position in the abovementioned securities. The analyst who produced this report holds a position in the VanEck Semiconductor ETF.

This research report was prepared with the assistance of artificial intelligence (AI) tools.  iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.