October 2025 MAPS Update: Two big portfolio moves you shouldn’t miss

• In 3Q25, our MAPS Growth portfolios delivered returns ranging from 3.0% to 9.0%, while our Income portfolios saw returns of between 2.1% and 8.3%.

• Key contributors to this quarter's portfolio return include emerging market equities and semiconductors, which rose 12.4% and 18.7% respectively.  

• In September’s rebalancing, we trimmed our overweight in short-duration bonds by 5% and redirected the proceeds to global bonds, effectively extending the portfolio’s duration. 

• We also reduced our Japan equity exposure by 2.5%, reallocating the proceeds to the digital economy where we see relatively stronger growth potential. 

3Q25 MAPS portfolio performance wrap

3Q25 saw our portfolios reach new heights, driven by solid market gains and smart allocation calls. During this period, our MAPS Growth portfolios managed to deliver returns ranging between 3.0% and 9.0%, a notable improvement from 2Q25’s range of 0.9% to 4.4%. Returns for the income portfolio were similar, ranging between 2.1% and 8.3% (Figure 1). 

On a year-to-date basis, our portfolios have also delivered solid returns. As of 30 Sep 2025, the aggressive and moderately aggressive portfolios have already surpassed their previous all-time highs, while the remaining three portfolios are not far behind.

Figure 1: Performance of MAPS Growth portfolios for 3Q25

Across the five risk profiles, the more aggressive portfolios outperformed the conservative ones thanks to the relatively stronger performance of equities (particularly emerging markets) over fixed income during this period. China led the charge in emerging markets, posting a spectacular 22.4% return (equity market total returns in SGD terms unless stated otherwise). 

Positive investor sentiment, fuelled by easing US-China trade tensions and a surge in AI-related spending drove market gains. Chinese chipmakers also benefited from stronger government support, as authorities pledged more measures to advance self-sufficiency in the sector. Beyond China, South Korea and Taiwan equities - both tech heavy markets - also performed well. Overall, our emerging market equity funds delivered returns of 11.6% on average, 2.4% higher than the MSCI AC World Index. 

The digital economy, led by semiconductors, was another standout contributor to our portfolio returns. The VanEck Semiconductor ETF jumped 18.6% over the quarter, and our 20% allocation to this segment amplified the gains. Chip stocks surged in 3Q25, fueled by a wave of AI investment news and high-profile deals, underscoring the sector’s pivotal role in powering the AI revolution.

Figure 2: Performance of major equity markets in 3Q25 

Latest portfolio actions and market outlook

In early September, we rebalanced our portfolios with two key adjustments. First, we trimmed our overweight in short-duration bonds by 5% and redirected the proceeds to global bonds, effectively extending the portfolio’s duration.

Maintaining an overweight position in short duration bonds has been a key part of our fixed income strategy throughout the Fed’s hiking cycle since early 2022. This approach has helped cushion our portfolio’s performance, as short-duration bonds outperformed while long-end Treasuries experienced sharp mark-to-market losses—even following the first rate cut in September 2024. 

Table 1: Performance of US treasuries

Recent developments have prompted us to take a fresh look at our portfolio positioning.

In September, the central bank delivered a 25bps rate cut and updated its economic projections, indicating that policy rates are now expected to be even lower than previously anticipated. However, some members of the FOMC remain divided on the path of interest rates going forward.  

With the US economy on a firmer footing, our expectation is for the Fed to continue lowering rates, creating a supportive environment for longer-duration bonds. Long-term bond yields are also at much higher levels compared to 2024, providing a buffer for investors should yields rise. 

In today’s environment, the case for adding duration has strengthened, but we are taking a measured approach and would like to see further curve steepening before increasing our exposure to long-term bonds. Following this adjustment, we remain overweight in short duration bonds and global bonds by 2.5% and 7.5%, respectively.

Table 2: Fixed income intra asset allocation

The second change we made was to reduce our Japan equity exposure by 2.5%, allocating the proceeds to the digital economy. Following this adjustment, we are now overweight both Japan and the digital economy by 2.5% each. 

Japan has been one of our largest overweight positions since 2023, a strategy that has paid off as Japanese equities (measured by the Nikkei 225 Index) recently hit an all-time high after decades of underperformance. Within our portfolios, the Eastspring Investments – Japan Dynamic fund has also delivered remarkable returns, outperforming both the Nikkei 225 and its peers on a year-to-date basis. 

Figure 3: Japanese equities have had a strong run over the past few years

While we are pleased that this call has worked out well, we are cognisant of the challenges the Japanese economy is facing. 

On one hand, strong returns have pushed valuations higher. The Nikkei 225 Index is now trading at approximately 20X forward earnings —close to their fair PE multiple—leaving limited upside potential. At the same time, the Japanese economy is also facing several challenges such as the recent political turmoil and trade related headwinds. 

Lastly, the potential for further depreciation in the yen remains a concern, given that the Prime Minister in waiting — Sanae Takaichi — is widely seen as an advocate of looser fiscal spending and accommodative monetary policy. These factors underpin our decision to reduce our exposure to Japanese equities and redirect capital to other more promising area in the market, such as the digital economy. 

We remain constructive on the long-term prospects of the digital economy. Although valuations across the sector have risen, they are well supported by earnings. Our forecasts indicate that earnings are set to grow by double digits annually over the next three years, driven by accelerating AI adoption and rising technology spending. Companies within this sector also tend to be of high quality, possessing strong earnings growth potential and robust balance sheets which add to their overall appeal. 

Within the digital economy, semiconductors are arguably the most exciting segment, with earnings expected to grow nearly 30% annually, fuelled by multi-trillion-dollar AI infrastructure investments from big tech firms. The semiconductor industry’s concentration and high barriers to entry give incumbents a strong advantage, allowing them to capture the lion’s share of rewards.

Figure 4: Chipmaker earnings are expected to surge in the coming years

Looking ahead, we remain optimistic about the digital economy and are confident that our investments today will deliver strong returns over time. This has been, and is still one of our high conviction calls, which has led us to dedicate a 20% allocation to the digital economy within the equity segment. 

Table 3: Equity 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.

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.