Home | Review of H1 2021 | Tactical Calls Review

Our leading high conviction call, US Financials, gained from higher longer-term interest rates and lower bad loan provisions. We initiated a new call on US Consumer Discretionary equities – which will benefit from economic reopening – and closed our call on US Consumer Staples as defensive sectors become less appealing. The US market and Sustainability remain our top Megatrend ideas.

Open Calls

Our best-performing high conviction call was US Financials, which benefited from the rise in longer-term interest rates and a reduction of bad loan provisions made in 2020. This was followed by European equities – which continue to be a laggard – and high-quality global growth equities. Asia ex-Japan equities were weighed down by policy uncertainty in China.

Among our Megatrend ideas, the US market and Sustainability were the top themes, driven by strong momentum despite high valuations. This was followed by Global Healthcare and Artificial Intelligence (AI) & Innovation, as vaccine development and digitalisation remained key drivers in H1 2021. Being the first major economy to recover from COVID-19, China has begun tightening liquidity measures and increasing its regulatory grip on its technology giants. These measures unsettled Chinese equity markets.

We initiated a new high conviction call on US Consumer Discretionary equities which have greater potential in capturing opportunities from economic reopening. However, investors need to be selective within this sector as Amazon and Tesla hold a significant combined weight of 36% within the benchmark index. The two companies are often associated with growth investing, which tends to underperform in the early phase of economic recovery.

Closed Calls

We closed our high conviction call on US Consumer Staples and switched to US Consumer Discretionary equities as the global economic recovery began to pick up pace.

High Conviction Calls

Data from January 2021 to 15 June 2021

Call
Start
End
Total Return (%) Total Return (%) Legend
CallAsia ex-Japan Equities
Start04–Jun–20
EndOngoing
Total Return (%) Total Return (%) Legend
CallEuropean Equities
Start10–Oct–20
EndOngoing
Total Return (%) Total Return (%) Legend
CallUS Financials
Start08–Jan–21
EndOngoing
Total Return (%) Total Return (%) Legend
CallGlobal Quality Equities
Start01–Apr–17
EndOngoing
Total Return (%) Total Return (%) Legend
CallUS Consumer Discretionary
Start09–Jan-21
EndOngoing
Total Return (%) Total Return (%) Legend
CallUS Consumer Staples
Start01–Sep–19
End08-Jan–21
Total Return (%) Total Return (%) Legend

Megatrends

Data from January 2021 to 15 June 2021

Call
Start
End
Total Return (%) Total Return (%) Legend
CallChina Equities (H-Shares)
Start01–Jan–19
EndOngoing
Total Return (%) Total Return (%) Legend
CallChina Equities (A-Shares)
Start01–Oct–18
EndOngoing
Total Return (%) Total Return (%) Legend
CallGlobal Healthcare
Start01–Jan–17
EndOngoing
Total Return (%) Total Return (%) Legend
CallSustainability
Start01–Oct–20
EndOngoing
Total Return (%) Total Return (%) Legend
CallUS
Start08–Jan–21
EndOngoing
Total Return (%) Total Return (%) Legend
CallAI & Innovation*
Start01–Jan-19
EndOngoing
Total Return (%) Total Return (%) Legend

* Performance of Allianz Global Artificial Intelligence Fund is used as the proxy for artificial intelligence and innovation equities due to the unavailability of a suitable benchmark index.

^ Source: Bloomberg. All percentages shown are expressed in their respective local currency terms, and reflect the Total Returns (%) from call start date to 15 June 2021 or call end date, whichever is earlier.

+ Source: Bloomberg. All percentages shown are expressed in their respective local currency terms, and reflect the Total Returns (%) from 1 January or call start date, whichever is later, to 15 June 2021.