MAPS 3Q25 Update: Up to 7% gains since our strategy shift

• In 2Q25, our MAPS Growth portfolios delivered returns ranging from 0.9% to 4.4%, while our Income portfolios saw returns of between 1.3% and 4.1%.

• Since implementing our revised methodology, our portfolios have delivered returns ranging from 3.9% to 7.0%, driven primarily by strong performance in the digital economy and developed markets.

• For equities, we are overweight Japan, underweight the US and neutral on the remaining markets. We will continue to take a selective approach as we manage our equity exposure, favouring high quality companies as we navigate market volatility. 

• As for fixed income, we remained positioned in shorter duration and investment grade bonds, which we believe are well-positioned to perform in the current environment.

Come home to SGD 60 cashback

From 15th July - 30 August 2025, fulfill both of the following steps to be eligible for cashback.

Step 1: Deposit at least S$2,000 from your bank account to FSMOne SGD Cash Account or FSMOne SGD Auto-Sweep Account

Step 2: Invest in any or a combination of the MAPS portfolios

Related Article:[Promotion] Find your way home to the best investing ideas – Get up to $60 cashback!

The second quarter of 2025 proved to be an eventful one for global markets and our portfolios. 

April was undoubtedly one of the most volatile months of the year. The S&P 500 Index plunged more than 12% while the US 10-year Treasury yield soared nearly 50bps in a matter of days following the announcement of Donald Trump’s “Liberation Day” tariffs. Despite the initial market reaction, the following weeks brought a wave of headlines, including a pause on reciprocal tariffs and the beginning of trade talks, which helped lift equity markets. 

Volatility resurfaced again in June following US strikes on three nuclear facilities in Iran. However, markets quickly recovered as it became evident that Iran’s response was limited and the conflict remained contained, boosting investor sentiment and driving equities higher.

2Q25 MAPS portfolio performance wrap

Despite significant market volatility, our MAPS Growth portfolios managed to deliver returns ranging between 0.9% and 4.4% over the quarter. Returns for the income portfolio were comparable, ranging between 1.3% and 4.1%. Across the five risk profiles, the more aggressive portfolios outperformed the conservative ones given the relatively stronger performance of equities over fixed income (Figure 1). 

Figure 1: Performance of MAPS Growth portfolios for 2Q25

Looking at the various segments, our substantial allocation to the digital economy coupled with strong fund selection contributed positively to portfolio returns. Among the three digital economy funds we hold in our portfolios, the VanEck Semiconductor ETF saw the highest returns of nearly 25%, while the remaining two funds - the Invesco Nasdaq Internet ETF and Fidelity Global Technology - delivered returns of 12% and 10.2% respectively.

Besides the digital economy, other segments that have also contributed positively to portfolio returns include Europe and emerging markets, which we increased our exposure to back in May. Notably, the Dimensional European Value Fund returned 6.7% over the quarter, outperforming the benchmark STOXX 600 Index by 0.3%. 

Related article: MAPS 2Q25 Update: Adjusting our portfolios amid growing uncertainty

Reflecting on a year since our methodology change

June 2025 also marks one year since we transitioned our portfolios from a GDP-weighted approach to a more conventional market-cap-weighted methodology – an adjustment that effectively increased our allocation to developed markets relative to emerging markets. Over this period, our MAPS Growth portfolios delivered returns ranging from 3.9% to 7.0%, while our income portfolios achieved gains of between 4.0% and 6.5% (Figure 2). 

Figure 2: MAPS Growth portfolio 1-year returns (30 June 2024 – 30 June 2025)

One of the most significant changes we implemented was to increase our allocation to the digital economy from 10% to 20%, a decision underpinned by our strong belief in the sector’s long-term structural growth story. This has played out well so far, as digital economy stocks returned more than 20% on aggregate over the past year - among the highest across all segments in the portfolio. More broadly, developed market equities, as measured by the MSCI World Index, returned 9.6%, outpacing the MSCI Emerging Markets Index, which posted an 8.8% gain over the same period.

As we look ahead, we are confident that a market-cap-weighted framework will continue to serve our portfolios well, especially in an environment where market leadership is concentrated in a handful of dominant sectors and regions. 

That said, we remain committed to a long-term investment approach, anchored in fundamentals such as valuations and earnings growth. We will also monitor global developments closely, such as the fiscal expansion in Europe, structural reforms in Japan, and evolving policies in China, and adjust our allocations accordingly. As always, our focus remains on delivering long-term sustainable returns for our investors.

Related article: Transitioning from GDP-weighting: Our new portfolio strategy revealed

Our latest market outlook and portfolio positioning 

Here is a look at our latest portfolio positioning starting with the inter asset allocation.

At present, the spread between earnings yields and bond yields is only marginally positive, indicating that equities are not offering a meaningful premium over bonds to justify the additional risk. This is not surprising as global equities are now trading close to their all-time high after a rough start earlier this year.

At the same time, the outlook for fixed income remains uncertain. Ongoing concerns surrounding tariffs, inflation, and the potential path of interest rates continue to cloud the picture for bond markets. Taking these factors into account, we do not see a compelling reason to overweight either asset class, which is why we have opted to maintain a neutral allocation for our portfolios. 

Figure 3: MAPS inter asset allocation 

For equities, we are currently overweight Japan. The Japanese economy is undergoing a structural shift from deflation to inflation, supported by rising wages that are boosting consumer purchasing power. At the corporate level, ongoing reforms aimed at improving capital efficiency are translating into stronger shareholder returns, with a notable rise in dividends and share buybacks. 

Japan is also making a strategic push to revive its semiconductor industry by attracting global chipmakers to set up operations domestically and establishing its own national semiconductor company - developments that should further enhance its long-term growth outlook.

While we have recently reduced our allocation to US equities (from neutral to underweight), we do not believe that US exceptionalism is fading. 

The country’s rich culture of innovation, well developed capital markets and the global dominance of US firms are structural strengths that have underpinned decades of outperformance in US equities. In our view, these advantages are unlikely to be derailed by recent political disruptions and are precisely why investors should not write off the US market. 

That said, we have taken a more selective approach to manage our US equity exposure, focusing on companies with strong fundamentals and greater resilience amid a slowing growth environment.  We particularly like high quality companies within the digital economy and semiconductor space, as the earnings of these companies are well-supported by the structural growth trends of digitalisation and AI. 

Although valuations across the digital economy have risen as of late, it remains a compelling investment theme, supported by structural tailwinds and strong earnings growth. As such, we have maintained a neutral stance. 

Beyond the digital economy, we are also neutral on other markets such as Europe and emerging markets. Although we were previously underweight both markets, we are beginning to see positive developments that warrant a more constructive stance.

European countries, long known for their fiscal restraint, are beginning to loosen their purse strings. In early July, the European Council granted 15 member states flexibility to increase defence spending by up to 1.5% of GDP over the next four years, even if this results in budget deficits exceeding the EU’s 3% of GDP threshold. NATO leaders have also committed to investing 5% of GDP annually on defence by 2035, a move that could unlock hundreds of billions of euros in spending across the region.

Emerging markets, such as China, may also be poised for a re-rating as the government implements decisive measures to support the economy—including interest rate cuts and stronger backing for the private sector. Over the past six months, there has been a clear policy recalibration, with increased support and resources directed toward private enterprises.

Besides China, other emerging markets like South Korea and Taiwan, are also well-positioned to benefit from structural megatrends like digitalisation and AI thanks to their globally competitive electronic & chipmaking industries.

Table 1: Equity intra asset allocation 

	Neutral	Current Weight	Current Stance
US	40.0%	35.0%	Underweight
Europe	16.0%	16.0%	Neutral
Japan	9.0%	14.0%	Overweight
Asia ex-Japan	10.0%	10.0%	Neutral
Emerging Markets	5.0%	5.0%	Neutral
Digital Economy	20.0%	20.0%	Neutral
Source: iFAST Compilations Data as of 30 Jun 2025

For our fixed income allocation, we have adopted a more defensive positioning given the vast amount of uncertainty in the global economy right now. The majority of our exposure remains anchored in shorter duration and investment grade bonds, which we believe are well-positioned to perform in the current environment.

Despite rate cuts, short-term bond yields are still relatively attractive compared to long-end yields. Rising inflation expectations and mounting concerns over the US fiscal trajectory may continue to exert upward pressure on long-term yields, making longer-duration bonds less attractive on a risk-reward basis. Our preference is to see further yield curve steepening, along with 10-year UST yields moving sustainably towards the 5% mark before gradually extending duration. 

Amidst a softer growth backdrop and trade uncertainties, we continue to favour investment grade over high yield bonds for their defensive characteristics. Investment grade bonds offer greater stability and resilience amid these uncertainties, effectively fulfilling their role as a stabiliser within our portfolios. 

From a valuation perspective, the yield pickup of high yield over investment-grade corporate bonds remains near historical lows, offering limited compensation for taking on additional credit risk. While credit spreads are tight across both segments, we believe high yield bonds are more vulnerable to spread widening if economic conditions worsen. Overall, these factors underpin our preference for investment grade bonds, as we seek to balance the potential for higher returns and downside protection. This sums up our latest portfolio positioning. 

Table 2: Fixed income intra asset allocation 

If you’re new to investing or simply don’t have the time or expertise to monitor the markets, MAPS could be the right solution for you. Start now with a lump sum investment from as little as SGD 500, or a Regular Savings Plan with monthly contributions starting at just SGD 100.

Disclaimers:

Investment products involve risk, including the possible loss of the principal amount invested. Past performance is not indicative of future performance and yields may not be guaranteed. 

All materials and contents found in this advertisement are strictly for information purposes only and should not be considered as an offer or solicitation to deal in any investment products. You should consider carefully if the investment products you are purchasing are suitable for your investment objective, experience, risk tolerance and other personal circumstances. If you are uncertain about the suitability of the investment product, please seek advice from a financial adviser, before making a decision to purchase the investment products. Please read our full disclaimer https://secure.fundsupermart.com/fsmone/policies/288123/terms-&-conditions  in the website .

While iFAST Financial Pte Ltd and/or any of its third-party providers has/have tried to provide accurate and timely information, there may be inadvertent omissions, inaccuracies, and typographical errors. Opinions expressed herein are subjected to change without notice. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.

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.