Investment Roundup

04 June 2024

“Remain cautious of the potential for shifting expectations if US inflation data surpasses forecasts”


Looking at the Fed Fund Futures, markets are currently pricing in the possibility of the first 25bps US rate cut to occur in July. While this aligns with our base case, we remain cautious of the potential for shifting expectations if US inflation data surpasses forecasts.

In a scenario where financial conditions tighten sharply due to a prolonged period of higher rates, credit markets could experience further strain. Conversely, if the anticipated July rate cut materialises, long-term investors may miss the chance to lock in near-peak yields as bond traders adjust to inflation expectations.


On a portfolio level, we tactically favour bonds over equities, given bonds’ potential to offer higher total risk-adjusted returns through capital gains as yields decline. According to UBS’ forecasts, the anticipated rate cut would yield a notable total return for UST 10-year bonds relative to its current yield-to-worst (YTW). Despite cash having the highest YTW at approximately 5%, investors might miss out on potential capital gains if they do not secure current yields at longer durations. On that note, we prefer high-quality bond segments which are likely to rally in the event of a hard landing. Our strategy involves a barbell approach to bond duration until the first US rate cut is more certain.

In the private asset funds space, senior private credit funds continue to outperform in a higher-for-longer environment with returns of 11.20% in 2023 and 3.70% in Q4 2023 respectively. This outperformance is attributed to private credit’s typical linkage to floating rates, such as SOFR, making them less sensitive to interest rate fluctuations compared to fixed-rate bonds. For long-term investors, private credit is expected to outperform public loans in a higher-for-longer scenario due to yield premiums. However, fund manager selection remains crucial, and we prefer semi-liquid funds over close-ended funds with long lock-up periods.


US equities have now rebounded back and above to its previous high level in March. The pullback in April was the first real pullback for the market in 2024. Now the question is, where do we see the market is going from now. First, we expect increased volatility. Through the probabilities in CME FedWatch tool, it seems that the market is not highly convicted on its expectation, for instance, there’s just only a 50-50% chance for the rate cut to happen in September. Therefore, we’d anticipate more bumps along the way as we advance as fresh economic data are getting release that influence Fed’ decision and market sentiment.

Additionally, the largest intra year decline for the past 40 years, so for this year YTD, the largest draw back has only been 5%. But for the last 40 years, there has been only 4 years with a smaller pullback than that number. As we think with the uncertainties in Fed policy, as well as upcoming election, and geopolitical tension, all introduce uncertainties to the market and volatility to the downside, so we doubt that the 5% dip in April will not end up to be the only 5+% drawdown in 2024. Hence, we think there is likely some correction ahead.

Meanwhile, robust earnings is what led us to be believe will provide good support for the equity market in the medium-long run for the equities. We are now at the end of Q1 earnings season and US companies have delivered a robust Q1 earnings, 78% of them have reported actual EPS above estimates, and this number is above the 5-year average of 77% and above the 10-year average of 74%. In addition, the S&P500 earnings growth for Q1, the actual YoY earnings growth rate is solid at 5.9%, with a positive surprise of 2.5%. The strong growth rate in fact is the highest YoY earnings growth rate reported by the index since two years ago Q2 2022.

Looking ahead to the full year forecast of 2024 and 2025, for the S&P500, year 2024 is expected to be growing at a solid and healthy rate of 11.3%, and the number was revised up higher than previous estimate of 10.7%, indicating market optimism and support. The full year 2025 guidance for S&P500 also been revised up 0.7% from 13.5% to 14.2%, and that double digit growth is robust leading to a continuation of healthy trend in earnings growth across sections and overall.

Overall, we think there will likely be a correction in 2024 but we think the correction be more of a healthy or temporary correction and rather than a prolonged sell-off with robust earnings and earnings growth supporting the US stock market.

This document contains material based on publicly-available information. Although reasonable care has been taken to ensure the accuracy and objectivity of the information contained in this document, Raffles Family Office Pte. Ltd. (“RFOPL”) and Raffles Assets Management (HK) Co. Limited (“RAM”) make no representation or warranty as to, neither has it independently verified, the accuracy or completeness of such information (including any valuations mentioned).  RFOPL and RAM do not represent nor warrant that this document is sufficient, complete or appropriate for any particular purpose. Any opinions or predictions reflect the writer’s views as at the date of this document and may be subject to change without notice.
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Portfolio Managers:

William Chow – Deputy Group CEO

William Chow – Deputy Group CEO

Mr. William Chow brings over two decades of asset management experience and currently oversees Raffles Family Office’s (RFO’s) Advanced Wealth Solutions division while also serving on its Board of Management and Investment Committee.

He joined RFO from China Life Franklin Asset Management (CLFAM), where as Deputy CEO from 2018 to 2021 he oversaw $35 billion in client investments. William also chaired the firm’s Risk Management Committee and was a key member of its Board of Management, Investment Committee and Alternative Investment Committee. Prior to CLFAM, he spent 7 years at Value Partners Group, the first hedge fund to be listed on the Hong Kong Stock Exchange, where he was a Group Managing Director. He started his career at UBS as an equities trader and went on to take up portfolio management roles at BlackRock and State Street Global Advisors from 2000 to 2010.

William holds a Master’s degree in Science in Operational Research from the London School of Economics and Political Science, and a Bachelor’s degree in Engineering (Hons) in Civil Engineering from University College London in the UK.

Derek Loh, Head of Equities

Derek Loh – Head of Equities

Mr. Derek Loh is the Head of Equities at Raffles Family Office. Derek has numerous years of work experience from top asset management firms and Banks – 16 Years on the Buy-side across 3 Major Cities in Hong Kong, Singapore and Tokyo. Derek demonstrates in-depth industrial knowledge and analysis, covering mostly listed equities.

As an Ex-Portfolio Manager for ACA Capital Group, Derek managed a multi-billion-dollar global fund for a world-renowned sovereign wealth fund and reputable institutional investors. Previous notable investors serviced include Norges Bank (Norwegian Central Bank), Bill & Melinda Gates Foundation and Mubadala. Derek holds an Executive MBA from Kellogg School of Management and HKUST. He is also a CPA.

Ek Pon Tay – Head of Fixed Income

Ek Pon Tay – Head of Fixed Income

Mr. Tay Ek Pon is responsible for fixed income investment management at Raffles Family Office. He has over 20 years of fixed income experience across Singapore and Japan.

Prior to joining Raffles Family Office, Ek Pon was a portfolio manager at BNP Paribas Asset Management since 2018, responsible for Asia fixed income mandates. From 2016 to 2018, Ek Pon led the team investing in Asian credit at Income Insurance. From 2011 to 2016, he worked at BlackRock, managing benchmarked and absolute return fixed income funds. Earlier in his career, he held several positions as a credit trader in banks for 9 years.

Ek Pon graduated from the University of Melbourne with a Bachelor of Commerce and Bachelor of Arts.

Sky Kwah – Director, Investment Advisory

Sky Kwah – Director, Investment Advisory

Mr. Sky Kwah has over a decade of work experience in the investment industry with his last stint at DBS Private Bank. He has achieved and receive multiple awards over the years being among the top investment advisors within the bank. He often deploys a top-down investment approach, well versed in multiple markets and offering bespoke advice in multiple assets and derivatives.

Prior to his role at Raffles Family Office, Sky worked at Phillip Capital as an Equities Team leader handling two teams offering advisory, spearheading portfolio reviews and developing trading/investment ideas.

He has been interviewed on Channel News Asia, 938Live radio, The Straits Times and LianheZaobao as a market commentator and was a regular speaker at investment forums and tertiary institutions.

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