Syfe Portfolio Performance Review H1 2025: Dollar Down, Diversification Up

By
Syfe Investment Team
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Key Takeaways: 

  • Income+ portfolios continued to deliver attractive payout yields. The annualised distribution yield rose to 5.6% for Income+ Preserve (from 5.4% in Q1) and 5.9% for Income+ Enhance (from 5.5% in Q1).
  • REIT+ outperformed benchmarks and fared better than many global equity indices with YTD gains of +4.3%.
  • Cash+ Flexi portfolios exceeded current projected returns of 2.5% (SGD) and 4.2% (USD).

After a turbulent first quarter, the second quarter of 2025 saw global markets face fresh uncertainty but ultimately show resilience. The quarter began with fears over sweeping US trade tariffs that rattled equities and bonds, but sentiment improved as the US temporarily suspended most new tariffs and recession worries eased.

In the US, shares rebounded as optimism returned to the “Magnificent 7” and AI-related stocks staged a strong comeback, supported by solid Q1 earnings. However, the US dollar weakening has been the biggest macro story this year, which weighed on broader US market returns and highlighted the value of global diversification.

Meanwhile, global bond markets shifted focus from rate cuts to fiscal concerns, as major US tax and spending measures worsened the debt outlook. Long-term yields climbed, while credit markets held up surprisingly well.

Commodities were mixed: oil faced oversupply despite geopolitical risks pushing prices up temporarily, while precious metals gained favour as investors sought safe havens amid trade tensions.

For Syfe investors, Q2 reinforced why staying diversified matters. Our managed portfolios remain designed to help you stay invested with confidence—whether you’re seeking growth, steady income, or downside protection.

Here’s a closer look at how Syfe’s key portfolios have performed so far in 2025, and what shaped these results.

Key performance highlights for Syfe Portfolios in H1 2025:

Core Portfolios: Anchored in the US, Globally Diversified

Performance Spotlight

  • After the tariff-driven turbulence that global equities faced in Q1, which resulted in a notable pullback in US stocks, the equity market saw an overall rebound in Q2. In particular, mega-cap tech stocks led the bouncebacks with continued AI investments. 
  • However, a significant USD depreciation in the first half majorly impacted local currency returns for international investors.
  • Our Core Equity100 portfolio navigated this difficult environment effectively by capturing the rebound in the US market while mitigating USD weakness with strong gains from our strategic global allocations into developed and emerging market equities. 
  • Overall, the Core Equity100 portfolio rose +3.7% in Q2 after a -3.6% drop in Q1 in SGD terms, resulting in flat YTD returns. Comparatively, the S&P 500 dropped -1.11% YTD in SGD terms demonstrating how our globally diversified strategy absorbed these shocks better than a portfolio over-concentrated in US equities.

Source: Syfe research, as of 30 June 2025

Looking Ahead: Stay the Course But Diversify

While short-term uncertainties like shifting trade policies could still trigger swings, the market rebound in the second quarter highlights the importance of staying invested. Also, having a globally diversified portfolio strategy can help mitigate against continued USD weakness.

Syfe’s Core portfolios are well positioned for the rest of 2025. With a strong base in US equities to capture growth and diversified exposure across regions and sectors, they help cushion market shocks and adapt as conditions change. We recommend investors to employ systematic investment approaches such as Dollar Cost Averaging (DCA) or Enhanced DCA to navigate uncertain market conditions with confidence and manage short-term swings effectively.

Income+ Portfolios: Dominant Outperformance, Steady Yield

Performance Spotlight

  • Bond markets stayed mixed but our Income+ Portfolios, powered by PIMCOs active management, continued its dominant outperformance in the first half. Income+ Preserve returned +3.3% while Income+ Enhance gained +3.6%, significantly beating benchmarks and peers. This highlights both portfolios’ consistency in delivering steady, resilient returns.
  • On top of returns, Income+ portfolios have also continued to deliver on their promise of attractive payout yields. In Q2 2025, the annualised distribution yield rose to 5.6% for Income+ Preserve (from 5.4% in Q1) and 5.9% for Income+ Enhance (from 5.5% in Q1) – within their respective target ranges.
  • In a market where income matters again, investment-grade credit and active strategies can make a real difference. Our Income+ portfolios reflect this view, with attractive yields, currency-hedged and high-quality.

Source: Syfe research, as of 31 May 2025

Looking Ahead: Well-Positioned To Capture Global Opportunities 

Income+ portfolios remain well-positioned to navigate shifting bond market conditions. With a core allocation to high-quality fixed income, maintaining an average credit rating of A+ for Income+ Preserve and A- for Income+ Enhance, these portfolios continue to provide resilience and income stability, even as concerns over US debt sustainability and higher Treasury yields add near-term headwinds for bonds.

The portfolios maintain a core allocation to high-quality fixed income, with flexibility to adjust holdings (including inflation-linked bonds) if market conditions warrant it.

A key advantage of the Income+ portfolios is their built-in flexibility. Managed by our investment team and driven by PIMCO’s active strategies, the underlying funds are re-optimised periodically based on forward-looking market views. This dynamic approach allows Income+ to respond swiftly with a dynamic and flexible approach capturing opportunities when markets rebound while keeping downside risks in check when conditions turn more volatile.

REIT+ Portfolios: Resilient Dividends, Positioned for Upside

Performance Spotlight

  • Syfe REIT+ (100% S-REITs) portfolio stood out against an uncertain global market outlook and showcased resilience in the first half of the year with impressive YTD gains of +4.3%. 
  • It also continued its benchmark (iEdge S-REIT Leaders Index) beating run and fared better than many global equity indices.
  • At the same time, dividend yields from our portfolio remained strong with current yields standing at 6.0% p.a.

Looking Ahead: Poised for Rebound As Rates Ease

With local interest rates easing and the USD weaker, many investors are looking closer to home for steady income. Singapore REITs (S-REITs) stand out with attractive yield spreads compared to cash and other low-risk instruments.

Our REIT+ (100% S-REITs) portfolio focuses on top-quality, SGD-denominated REITs avoiding USD exposure and the FX risks that have recently weighed on overseas returns. Instead, investors earn income in SGD while tapping into resilient, high-quality real estate assets.

Currently, the REIT+ portfolio offers a dividend yield of about 6% p.a., significantly higher than the 1.8% yield on the latest Singapore Savings Bonds and well above most cash deposit rates. We’re also seeing strong investor demand for S-REITs, with prices yet to fully reflect the drop in local bond yields, creating an opportunity for both attractive income and potential capital upside as rates fall further.

In short, S-REITs remain a compelling option for investors who want to generate reliable local income and capital appreciation in a rate-cutting environment.

Specialised Portfolios: Expand, Protect, and grow

Thematic Portfolios 

  • The Disruptive Technology has rebounded significantly with +19.4% after a sharp decline of -4.7% in Q1. AI remains a key long-term megatrend. The Disruptive Technology portfolio is strategically structured to capture the full-potential of AI revolution, with targeted exposure to generative AI, robotics, fintech & blockchain and cloud computing.  
  • After a strong 2024 showing of +14.1%, driven by optimism surrounding China’s AI sector, and a shift in policymakers’ stance toward the broader technology and AI sectors, the China Growth portfolio continued its positive run with +3.5% YTD returns in spite of tariff-related uncertainty.
    Our China Growth Portfolio remains well positioned in China’s structural and innovation-led growth space, and is well placed to capture future opportunities.
  • The ESG & Clean Energy portfolio also showed strong relative returns with +8.1% gains in Q2 and +5.8% YTD, with the sector poised to see long-term growth with greater initiatives in clean technology. 

Protected Portfolio

  • Amid shifting market conditions, the Downside Protected Portfolio continues to do what it’s built for: helping cushion sharp drawdowns while staying positioned to participate in recoveries.
  • In Q1 2025, when the S&P 500 fell by -4.3%, the Protected Portfolio limited losses to just -0.3%, demonstrating its downside protection in a broad equity sell-off. During April’s volatile period (when both US equities and bonds declined simultaneously), it again held up well, with only a modest drawdown of -0.4% as of mid-April.
  • Importantly, the portfolio has also shown its ability to capture gains over time. The Downside Protected Portfolio has delivered a +3.2% YTD return compared to the S&P 500’s -1.1%. This underscores its dual role: helping to limit sharp drawdowns while participating meaningfully when markets recover.

Cash+ Flexi: Positive and Stable Returns

Performance Spotlight

  • In H1 2025, The Cash+ SGD Flexi portfolio returned +1.4% (2.9% annualised), while the Cash+ USD Flexi portfolio delivered +2.2% (4.4% annualised), exceeding the current projected returns of 2.5% and 4.2% respectively.
  • This performance shows the resilience of the portfolios’ high-quality money market funds, despite challenging market sentiment driven by geopolitical and trade risks.
  • Cash+ Flexi is an attractive, low-risk option for short-term funds, with the added benefit of liquidity and withdrawals in 1–2 working days.

Looking Ahead: Optimise your Idle cash

With markets expecting more rate cuts this year and cash yields likely to fall, now could be a good time to put idle cash to work. Historically, monetary easing supports asset classes like high-quality bonds, REITs, and equities by lowering borrowing costs and encouraging investment. 

After setting aside enough for short-term needs, consider gradually reallocating excess cash into longer-term opportunities like diversified equities, income-focused bonds, or S-REITs. Spreading investments out through DCA can help manage short-term swings while keeping money deployed. This balance lets your portfolio work harder and capture opportunities as rates decline.

Our Thoughts For H2 2025 

President Trump’s “Liberation Day” tariffs sparked early volatility but the temporary suspension has given markets room to refocus on the real impact: how higher tariffs could weigh on company profits, consumer spending, and global growth. While the trade climate remains uncertain, there are offsets in the form of ongoing tax cuts, deregulation, and resilient private investment, especially in areas like technology.

As we move into the second half, the market’s direction will hinge less on headlines and more on how these opposing forces shape the broader economy. Against this backdrop, maintaining a globally diversified portfolio remains the most practical approach for managing both upside opportunities and downside risks. A balanced mix across regions and sectors can help cushion portfolio returns against short-term policy swings and position investors to capture opportunities as parts of the global economy continue to grow. In our latest Market Outlook article, we discussed in detail the four key themes that will shape the second half of 2025.

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