MAPS Portfolio Note: Yesterday’s selloff changed the price, not the thesis

• Yesterday’s selloff was triggered by two things: concerns that AI infrastructure spending may not generate near-term returns, and a Bank of America note warning of up to three Fed rate hikes this year. Neither development changes the structural investment case.

• Pullbacks like these are a feature of markets that have risen sharply. The semiconductor sector has seen gains of more than 140% over the past 12 months. Corrections of this nature, however uncomfortable, do not undo a structural multi-year earnings cycle.

• The VanEck Semiconductor ETF has been part of our MAPS portfolios since 2019. Over the past five years, it has delivered cumulative total returns of close to 400%, making it the best-performing fund across our portfolios. That track record is built on structural earnings growth, not sentiment. Sentiment drove yesterday’s decline. Earnings will drive the recovery.

• We are not making immediate changes. If the selloff deepens, we may increase our digital economy allocation at lower valuations. Better prices would simply give us a stronger entry point for a thesis we already believe in.

The selloff is sentiment-driven, not earnings-driven

Let us be direct about what happened yesterday. Two concerns rattled markets: first, the wave of AI infrastructure investment being made by big tech may not translate into near-term returns; and second, a Bank of America research note suggesting rates may rise, not fall, over the rest of the year. Both are legitimate points to weigh. Neither undermines the structural case for what we own.

Consider the earnings picture. Samsung Electronics, one of the largest holdings in the Global X Asia Semiconductor ETF, delivered an exceptional first quarter in 2026. Its semiconductor division reported approximately a 50-fold increase in operating profit compared with 1Q25, with 1Q26 earnings alone exceeding the division’s total profit for the entire 2025 financial year. 

SK Hynix also delivered record results, with management noting that demand fulfilment rates are at record lows and customers are already securing supply for 2027. The company expects memory shortages to persist through 2030 and plans to triple its capacity over the next decade.

TSMC guided second-quarter revenue to between USD 39.0 and USD 40.2 billion, roughly 10% above its already record first quarter. Apple’s CEO confirmed just last week that memory prices are so elevated that price increases across its product lineup are now unavoidable.

These are not the numbers of an industry under demand pressure. Yesterday’s market move was driven by sentiment, not by any deterioration in the underlying fundamentals. Prices have changed, but the thesis has not. Semiconductors remain the essential infrastructure of an increasingly digitalised world, and the earnings data leave little doubt that demand is only accelerating.

Seven years of conviction, and the returns to show for it

We want to put yesterday’s move into the context that matters most. The VanEck Semiconductor ETF has been a core holding in our MAPS portfolios since 2019, and one of our highest-conviction investments in the structural growth of the digital economy. Over the past five years, it has delivered cumulative total returns of approximately 400%, making it the best-performing fund in our portfolios since its inclusion. Yesterday’s correction, as sharp as it felt, comes off the back of a 12-month period in which the fund returned more than 140%. After gains of that magnitude, a single-day pullback is entirely within the expected range of market behaviour.

Investors should be assured that our portfolios are well diversified and positioned to weather this kind of environment. Despite our constructive view on the digital economy, our overall allocation is only modestly overweight by 2.5%, with exposure diversified across both US and Asian markets. This balanced positioning allows us to participate in long-term growth opportunities while reducing the impact of short-term volatility in any single sector, market, or region.

On the fixed-income side, our tilt toward short-duration bonds should help to cushion the portfolio as rate hike expectations rise. Short-duration bonds currently make up the largest allocation in our fixed-income sleeve at 35%. 

We see an opportunity taking shape and we are monitoring it closely

We are not making immediate changes. The fundamental case for our current positioning is unchanged, and reactive moves during a sentiment-driven selloff are rarely the right call.

But we are watching closely. If the selloff deepens and digital economy valuations compress further, we may see a compelling opportunity to increase our allocation to this segment. AI infrastructure buildouts, accelerating semiconductor demand, and the ongoing digitalisation of the global economy are all multi-year structural drivers. Lower valuations would simply give us a better entry point for a thesis we already believe in. 

For investors, the most important thing right now is to stay the course. The fundamentals underpinning your portfolio have not changed, and selling into a sentiment-driven decline locks in losses on positions that continue to be supported by extraordinary earnings momentum. The investors who held steady through the February–March selloff earlier this year have since been rewarded.

If you have a Regular Savings Plan in place, keep it running. Dollar-cost averaging is most powerful during periods of elevated volatility, and lower prices today mean acquiring more units — positioning you well for the recovery ahead. Should the selloff deepen further, it may also present an opportunity for you to make lump-sum investments at considerably more attractive prices.

Your MAPS portfolios are built for the long term. Our team remains focused on what has always driven lasting returns: corporate earnings. And on that score, the picture has rarely been clearer.

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 from as little as SGD 500, or a Regular Savings Plan from just SGD 100 a month. If you'd like to know more, feel free to email us at askmaps@fundsupermart.com. 

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.