Navigating the storm – Four portfolio moves to strengthen your MAPS positioning

• We are further reducing our US equity exposure by 2.5% and upgrading Asia ex-Japan to overweight (+2.5%). US equities continue to trade at elevated valuations, limiting room for further upside. Asia ex-Japan on the other hand offers more attractive valuations with greater scope for re-rating.

• Within the digital economy, we are replacing the Invesco NASDAQ Internet ETF with the Global X Asia Semiconductor ETF to gain more complete exposure to the global semiconductor supply chain. Asian companies play a critical role in fabrication, memory, and equipment, and this allocation closes a gap in our coverage. The majority of our digital economy exposure still remains anchored by the VanEck Semiconductor ETF and the Fidelity Global Technology Fund.

• On fixed income, we are increasing short-duration bonds by 2.5% and reducing global bonds by the same amount, bringing the portfolio’s bond duration down from 3.8 to approximately 3.6 years. With oil prices elevated and inflation expectations rising, shorter-duration bonds offer better protection against interest rate volatility.

• Lastly, we are switching our Japan fund from Eastspring Japan Dynamic to Amova Japan Equity. The new fund offers broader diversification with a stronger small-to-mid cap tilt that is well-positioned to benefit from domestic demand growth.

1. Paring back US exposure, favouring Asia ex-Japan

Our decision to further underweight US equities reflects a valuation gap that has only widened in recent months. The S&P 500’s forward PE ratio sits at approximately 21.6x as of mid-April 2026, above its long-term average. While US corporate earnings remain resilient, the index’s elevated multiples leave limited room for upside and increase the magnitude of potential drawdowns should earnings disappoint.

At the same time, Asia ex-Japan equities continue to trade at a meaningful discount to developed markets, even as the region’s earnings outlook strengthens. We expect Asia ex-Japan earnings to grow by roughly 30% in 2026, driven by the AI-led capex cycle flowing through North Asia, particularly Taiwan and South Korea, as well as improving domestic demand across ASEAN.

In addition, corporate governance reforms in South Korea, modelled on Japan’s playbook, are beginning to unlock shareholder value, with buybacks as a share of market capitalisation rising meaningfully.

Asia’s economic architecture has evolved fundamentally from earlier cycles. Deeper regional supply chain integration and a shift towards consumption led growth have enhanced the region’s resilience to external shocks. We believe the recent pullback, driven largely by sentiment around the Iran conflict has created an attractive entry point. Following this adjustment, our US equity allocation moves to 32.5% (underweight) while Asia ex-Japan rises to 12.5% (overweight).

2. Broadening our semiconductor exposure across the global supply chain

Our conviction in the digital economy remains unchanged. What we are doing is broadening how we access this theme. The global semiconductor industry is not a US-only story. Asian companies play a critical role across fabrication, memory, and equipment, yet our digital economy allocation has until now been predominantly US listed companies. With the inclusion of the Global X Asia Semiconductor ETF, we are closing that gap and gaining more complete exposure to the entire semiconductor value chain. That being said, the core of this sleeve remains firmly anchored by the VanEck Semiconductor ETF and the Fidelity Global Technology Fund.

Global semiconductor capex is projected to reach approximately USD 200 billion in 2026 – a 20% increase from 2025 – with memory companies and foundries accounting for the bulk of spending. TSMC alone plans to spend between USD 52 billion and USD 56 billion this year. Asia controls roughly 75% of global semiconductor manufacturing capacity. It is not merely a beneficiary of the AI buildout – it is the infrastructure.

The Global X Asia Semiconductor ETF provides targeted exposure to the region’s leading chipmakers, including SK Hynix, Samsung, and TSMC – companies that sit at critical chokepoints in the AI supply chain. At approximately 14.3X 2026 estimated earnings, the ETF trades at a substantial discount to US listed semiconductor peers, offering an attractive risk-reward profile for what we view as a long-term structural allocation.

3. Shortening duration as inflation risks persist

Beyond equities, the oil shock has also prompted us to make an important adjustment to our fixed income positioning.

The closure of the Strait of Hormuz sent Brent crude surging from around USD 70 per barrel in late February to above USD 110 in early March. Although emergency reserve releases and military efforts to secure the waterway have provided some relief, energy prices remain elevated and inflation expectations have moved meaningfully higher.

The bond market has responded accordingly. The 10-year US Treasury yield finished the first quarter above 4.3%, expectations for further Fed rate cuts have been pushed out to 2027, and some central banks have even signalled potential rate hikes. In this environment, longer-duration bonds carry more risk than they initially appear.

We are increasing our allocation to Singapore-centric short duration bonds by 2.5%, funded by a corresponding reduction in global bonds. This brings our portfolio’s overall bond duration down from approximately 3.8 years to 3.6 years, a more defensive posture that limits our exposure to further interest rate volatility while still capturing attractive income at the short end of the curve.

We remain overweight global bonds at 25.0%, reflecting our view that once the oil shock subsides, the longer-term trajectory for rates is still lower. But in the near term, caution is warranted.

4. Upgrading our Japan fund pick 

Japan remains one of our highest-conviction positions. As the rally in Japanese equities broadens beyond large-cap exporters to domestically oriented businesses, we are switching from the Eastspring Japan Dynamic fund to the Amova Japan Equity fund – a move designed to better capture this next phase of the market. The Amova fund offers broader diversification across the market cap spectrum, and a stronger tilt towards small-to-mid cap companies well-positioned to benefit from domestic demand growth. 

The structural case for Japan is unchanged. The economy’s transformation, underpinned by corporate governance reforms, rising wages, and a sustained shift from deflation to reflation continues to gain momentum. The Tokyo Stock Exchange is set to begin delisting companies that have not made sufficient governance improvements in 2026, reinforcing the urgency for corporates to improve capital efficiency and shareholder returns. We remain confident this market will reward patient investors.

Updated asset allocation

Table 1: Equity intra-asset allocation

Table 2: Fixed income intra-asset allocation

What should investors do?

The good news is that we have already acted. The four adjustments outlined above are designed to reduce risk, capture emerging opportunities, and position you well for the recovery. Here is what you can do to complement that:

Stay invested. The four moves we have made are aimed at strengthening your portfolio, not sounding the alarm. Corporate earnings remain the long-term anchor of equity returns, and that foundation is unchanged. Staying invested, especially through volatile times, is how long-term wealth is built.

Continue with Regular Savings Plans (RSPs). Dollar-cost averaging works hardest for you during periods of elevated volatility. Lower prices today mean purchasing more units at lower cost, a powerful advantage when markets recover.

Prepare for lump-sum deployment. A deeper correction from peak levels could present an even more compelling entry point. Be patient, but be prepared.

Your MAPS portfolios are built for the long term. Our team remains calm, disciplined, and focused on the fundamentals that drive lasting returns. If you are already invested, stay the course and consider topping up through your RSP. If you have been waiting on the sidelines, the current pullback offers a more attractive entry point than we have seen in over a year.

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.

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.