What is the SGA Model Portfolio?
Established by SGA investment team, SGA Model Portfolios are thoughtfully constructed portfolios base on the risk profile of the investors.
The Model Portfolios are constructed with wealth preservation in mind, and is actively management for capital appreciation.
The investment framework is broken down into 3 major processes reflecting our unique investment philosophy.
Strategic Asset Allocation
Tactical Asset Allocation
Fund Selection
Breaking down Long Term Returns
Strategic Asset Allocation (SAA)
SAA drive 70% of Portfolio Return in the long run.
Tactical Asset Allocation (TAA)
TAA allows for adjustment of allocation in the short run. This process allow us to avoid unnecessary pitfalls.
Fund Selection
Alphas from fund manager will drive the remaining 10% of long term return. Fund managers don’t always outperform their peers and the risk-return of the funds are largely driven by Beta.
Strategic Asset Allocation (SAA)
SAA remains the core driver of returns for the Model Portfolios in the long run.
The investment team adopt a long term approach when constructing the SAA.
Our investment principles deviate from the over-reliance on the conventional correlation on asset classes. Instead it diversifies risk bask on market regime. (e.g. Deflationary, Inflationary, Growth)
We allocate weightage base on risk exposure NOT dollars and cents.
Historical Performance of SAA
Global Equities is representative by the MSCI All-countries World total return Index (ACW).
Data shown are gross of fees using total return from indices. Hypothetical performance results have many inherent limitations, One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. Investing directly into indices is impossible however, synthetic replication of indices is possible but not easily accessible by retail investors.
A diversified portfolio such as our SAA achieved similar returns with lower volatility and drawdown risks.
This resulted in a superior Sharpe Ratio for the SAA portfolio.
Portfolio was rebalanced yearly at the end of each calendar year.
Portfolio was not tactically adjusted throughout the period.
Tactical Asset Allocation (TAA)
TAA is the process of adjusting the asset allocation in the short term, based upon SGA rigorous research and analytic work.
We believe finance markets is fluid and pivot between the 3 different stages of Efficient Market Hypotheses (EMH). Therefore excess return can still be achieve through active tactical allocation using a robust investment framework.
SGA investment framework focus heavily on data analytics and we apply a quantitative method for our TAA decision.
Our Quantitative Model is on Relative basis.
Past Tactical Tilt on SAA
An important part of our quantitative method is the emphasis on markets which are performing relatively stronger within our investable universe.
We believe in investing into markets with strong momentum and not bottom fishing.
Stronger momentum tend to result in longer term trend
Fund Selection
SGA has a total investment universe of 900+ funds, including different types of share classes.
All funds are grouped and classified based on SGA internal Risk Profiling.
SGA apply a proprietary quantitative method base on the following factors over different time frames.
Funds are score and rank in a bell curve. Result are relative not absolute.
This process allow us to choose the Best-In-Class funds for all our allocation exposure.
•Funds are plotted by Persistency and Rate of Change
•Funds with a high quantitative score and improving factors will appear on the top left quadrant highlighted in green.
Creating an Optimal Alpha Portfolio
Combining the SAA and TAA to create an Optimal Alpha Portfolio
Investment Process
Global Macroeconomic Conditions
We consider a variety of macroeconomic indicators, including lending conditions, delinquency rates, inflation, unemployment rates, shipping and commercial activity, consumption levels, industrial production, commodity markets, housing starts, and many others.
Finance Markets Dynamics & Sentiment
A composite recommendation derived from momentum, volatility, implied correlation, and higher moments or return distribution. We also consider a variety of sentiment indicators from multiple sources. These include sentiment measures from a variety of surveys as well as market-implied sentiment measures.
Fund Selection
Using SGA proprietary quantitative method base on multiple factors, we are able to choose the Best-in-Class funds for our allocated exposure.
Investment Discretionary & Oversight
A robust investment framework still require an experienced oversight to ensure data integrity and a logical processing outcome.
Investment Team
Jeremy Ng, Investment Analyst
Jeremy is an established Market Strategist with a career spanning across 7 years including two of the largest brokerage firm in Singapore. He has navigated through periods of market turmoil such as the Global Financial Crisis, European Debt Crisis and the more recent Covid-19 pandemic.
Jeremy has successfully advised clients on strategic asset allocation on periods of heightened volatility to stay protected. Capital preservation is one of the key building blocks to wealth creation. Being a huge fan of history, studying market cycles has helped Jeremy in identifying major market trends and factors contributing to pivot point of economic recession or expansion. Each cycle requires a different type of portfolio composite, and with an extensive knowledge on macroeconomic conditions and market structure, Jeremy has shown that timing the market is possible with the right set of framework.
