MARKET BRIEF
The stock market selloff deepened into September. Historically, September holds the record as the worst-performing month for US stocks since 1928. Including this year, we haven't seen a positive September since 2020. That is 4 years in a row. The last comparable streak was from 1999 to 2003 when the S&P 500 came in underwater for September over 5 consecutive years.
For multi-asset managers looking outside of equities for diversification benefits, it was minimal. Because most of the assets are headed south much like what happened in August. The only exception is commodities and much of that is driven by oil prices which have risen almost 10% this month sustained by deep cuts in oil production with Saudi Arabia leading OPEC on this.
The different stock sectors paint the same picture. The selloff was broad-based. Even defensive sectors such as staples, utilities, and healthcare were hit. The only sector bucking this trend is Energy.
But energy prices were nonetheless just the sideshow, the dominating narrative this month was again a focus on rates. Market sentiments turned worse visibly after the FOMC when the Fed sent a more hawkish message than what markets anticipated. Most notably, the Fed expects one more hike before the end of the year and to hold the rates higher for longer. In the aftermath, stocks fell, volatility spiked, Treasury yields jumped to new highs, and the dollar rose. At this moment, Treasury yields 5 years out are significantly higher than they were prior to the FOMC. 10Y yield is almost 4.6% and 20Y is 4.9% now.
As we move forward, things will hang in a delicate balance. The higher rates will eventually bite and it is likely we will see the narratives switching more often between one of soft landing to recession.
PORTFOLIO UPDATES
Our model positions in large-cap US stocks, long-term Treasury bonds, Gold, and short volatility were all hit this month. The worst hit was long-term Treasuries which went down 8% this month, but the damage was mitigated because it was the smallest position in our model. Our model’s sector picks fared in line with the broader S&P 500. Financials did relatively better, materials on par, while industrials fell more. Our short volatility position gave back some of the profits it made last month but it is still sitting on a healthy pile of profits year to date. The best and also our only positive performer this month was commodities excluding Gold. It was our next largest single position after Gold and was up modestly.
Overall, the multi-strategy model is down -4.2% for the month and +8.9% YTD.
Download our AQ Multi-Strategy Model Newsletter
* This is the model performance of portfolios constructed using more advanced strategies than those taught in our courses. They can be implemented with the assistance of an iFAST Global Markets (Singapore) senior investment adviser. Note that live performance may vary due to execution price slippages, the difference in sizing precisions, etc. All performances are measured in USD terms.
Find out ways you can invest through a coffee session!
AllQuant brings to the table a new solution for busy professionals. We put all our 30 years of joint experience across asset management, banking, proprietary trading, and hedge funds to work. And we designed an actively managed multi-strategy model portfolio that is resilient enough to weather different market conditions.
You can now build such a portfolio through iFAST Global Markets without lifting a finger. In this collaboration, we are combining AllQuant’s expertise in hedge fund strategies and iFAST’s advisory capabilities and bringing it to your doorstep.
Ready to start your investment journey? Chat with us over a cup of coffee through a session facilitated by iFAST Senior Investment Adviser, Ou Da Wei, to find out more.
Disclaimer & Disclosure
We are not financial advisers or fund managers. The information published on this Site is provided for informational purposes only. It is not intended to be, nor shall it be construed as, financial advice, an offer, or a solicitation of an offer, to buy or sell an interest in any investment product. Nothing on this site constitutes accounting, regulatory, tax, or other advice.
Any performance shown on this Site is model performance and is not necessarily indicative nor a guarantee of future performance. You should make your own assessment of the relevance, accuracy, and adequacy of the information contained on this Site and consult your independent advisers where necessary.
AllQuant is carrying out introducing activities for iFAST Global Markets (Singapore) as an independent entity and is NOT an agent, servant, employee, representative, or in partnership with iFAST Global Markets (Singapore). AllQuant will be receiving remuneration or introducing fees from iFAST Global Markets (Singapore).
Comments