Equity markets drive Market Savings returns in 2023 

How Save portfolios performed so far in the market in 2023

The average National Deposit Rate in January 2023 was around 0.30% and is now 0.42%, according to the FDIC. In comparison, Save’s S&P 500 Risk-Controlled portfolio has produced annualized returns for a 1-year Market Savings program of 15.9%a,b.   

Let’s explain: 

The first half of 2023 saw a big equity rally, while bonds and commodities struggled. This is good news for equity-focused portfolios, and mixed news for multi-asset, diversified portfolios (which generate returns from all asset classes).  

For a 1-year Market Savings program, the S&P 500 Risk-Controlled portfolio is on course to deliver +15.9%a, b on an annualized basis, with other portfolios producing annualized returns ranging from 1.0% to 9.3%. For context, the average National Deposit Rate in January 2023 was around 0.30%, according to the FDIC.

An important note regarding these figures: These annualized returns extrapolate the year-to-date performance of the portfolios – they are intended to illustrate a potential 1-year Market Savings return by considering the outcome where the portfolio performance from January to July continues for the remainder of the year. They are also based on interest rate levels from January 2023 (these rates have increased since January, which is why our variable APYs* have increased since then).   

The following table shows equivalent results for all of our available portfolios.   

  1-year Market Savings program extrapolated 2023 full-year returna (as of July-end)
S&P 500 Risk-Controlled portfolio  15.9%b 
US Macro portfolio 9.3%c 
ESG portfolio  3.3%  
Global Multi-Strategy, AI-driven portfolio   2.7%  
Global Diversified Markets Moderate portfolio   1.9%  
Global Diversified Markets Conservative portfolio   1.0%  

a. Important note: These results utilize extrapolated portfolio performance; specifically, they are intended to illustrate a potential 1-year Market Savings return by assuming that the performance during 2023 up to July-end continues for the rest of the year.

b. S&P 500 Risk-Controlled portfolio has been live since 2009 and was recently made available to our customers; it was not available to customers at the start of 2023.  

c. The US Macro portfolio was launched in July 2023 and will be made available to customers shortly.  

What happened in the markets?  

The US equity market performed strongly, gaining around 20% by July-end, while government bonds were roughly flat and commodities were slightly down.  

Up-and-down and…?  

While the equity market gained nearly 10% in the first few weeks, it then declined back to flat before jumping around 20% by the end of July. Bonds started with a similar story – rallied then dropped – but failed to mount a new rally as interest rates lacked direction. Commodities also fluctuated and have spent much of the year down around -10% before making a partial recovery in July.   

What drove the portfolio returns?  

These types of markets provide potential returns but also challenges for Global Diversified Markets Conservative and Moderate portfolios, which utilize multiple major asset classes for diversification. In 2023 so far, they generated gains from equities but losses from some other assets. These portfolios also utilize trend measurement to decide which assets to overweight. This approach tends to be beneficial in the longer term but is less suited to the flip-flopping markets we saw in the first half of 2023.  

Despite these challenges, the ESG portfolio has generated more sizeable returns (+3.3% annualized for a 1-year Market Savingsa). It made gains from equities while its commodity allocation, which only includes gold, rose slightly (unlike the wider commodity universe).  

The AI-driven, Global Multi-Strategy portfolio generated sizeable gains from equities, partially offset by losses from commodities and the US sectors sub-strategy (which goes long the most preferred sectors, versus short the least preferred sectors) – this sub-strategy provided initial gains before declining while holding a contrarian, defensive position during some of the exuberant mid-year market rally. 

The portfolios discussed above in this section so far have all been live and available to customers throughout 2023, and we recently added the S&P 500 Risk-Controlled portfolio. While this portfolio was not available to customers at the beginning of the year, it has been running live since 2009 and a hypothetical account holder who selected S&P 500 Risk-Controlled would be on course to receive +15.9% at year-end 2023, if the existing performance were to continue.  

It’s also worth highlighting our new US Macro portfolio – soon to be made available to customers. This new portfolio utilizes macroeconomic signals (interest rates, inflation, currencies, and oil, among others) to determine its asset allocation, focusing on the US equity and bond markets, along with commodities. A hypothetical account opened at the beginning of 2023 would be on course to receive around 9.3% at the end of 2023, if the existing performance were to continue.    

What happens next?  

We look forward to introducing you to our new US Macro portfolio, along with providing monthly updates on the markets and your portfolio performance.  

With interest rates having increased since the start of the year, the potential APY* generation of Market Savings has increased (which is why our variable APYs* have risen since the start of the year).  

Whatever happens with the markets, we hope and expect that our dynamic portfolios provide plenty of opportunity to generate Market Savings program returns.  

We’ll provide another update at year-end on how our portfolios have performed, in addition to our monthly emails.  


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