Expectations for a market rebound in the third quarter failed to materialise as commodity-related sectors like offshore oil exploration and services and marine (shipping lines and services) posted disappointing earnings. Singapore's index has plunged 14% since January 1, the steepest drop among regional peers.
Amid an environment of weak growth, the Deutsche Singapore Mid Cap, the First State Singapore Growth and the Nikko AM Singapore Dividend Equity funds were the lesser losers for the trailing three-year period, data from FE shows.
While these three funds have exposure to the offshore and marine sectors, the bulk of their holdings are concentrated in consumer-led areas such as banking, healthcare, real estate and telecommunications.
Deutsche Asset & Wealth Management noted in a disclosure that sectors such as healthcare and land transport also present opportunities due to potential policy tailwinds.
The healthcare sector is especially important given the city-state’s aging population. Healthcare stocks such as Raffles Medical Group and Haw Par Corporation have delivered average returns of 11% year-to-date, according to the company websites.
The two companies are among the top ten holdings in the Deutsche Singapore Mid Cap and the First State Singapore Growth funds.
The Nikko AM Singapore Dividend Equity maintains a strong exposure in the telecom sector through Singapore Telecommunications – a stable dividend-paying company.
According to FE data, the three worst performing funds – the JP Morgan Singapore Fund, the UBS (Lux) Equity Fund and the Fidelity Singapore Fund – are noticeably underweight on healthcare stocks. Most of their holdings are concentrated in the financial, industrial and consumer services sectors.
In the case of the Fidelity Singapore product, Morningstar noted that the portfolio manager, Wing Chan, prefers to invest in small-caps and mid-caps. Chan’s skewing towards less mainstream holdings impacts the fund’s short-term and mid-term performance.