By Nick Hedley
Singaporean investment manager Temasek increased its allocations towards U.S. Treasury exchange-traded funds (ETFs) and technology stocks including Toast in the first quarter, according to a new securities filing.
As yields surge and Russia’s war on Ukraine fuels recession fears, some investors are growing more bullish on certain segments of the bond market.
Marc Seidner, chief investment officer for non-traditional strategies at PIMCO, said in a recent research note that while the fast rise in yields has resulted in price losses on existing bonds, “it has also created a better starting point for new investments in terms of both potential income and diversification attributes.”
The 10-year U.S. Treasury yield has risen to about 3.25% from 1.63% at the start of the year. As a result, “Treasuries could provide positive real yields – in a comparably safe and liquid asset – if you believe the Fed can get inflation back down even close to its target level,” according to PIMCO.
Temasek, which had a net portfolio value of S$381 billion (US$275 billion) at the end of March, significantly increased its exposure to the Schwab U.S. TIPS ETF, which tracks an index of inflation-protected U.S. Treasury securities.
It also added to its positions in the iShares U.S. Treasury Bond ETF and the Invesco KBW Bank ETF.
At the same time, Temasek increased its stake in Toast, a U.S.-based cloud-based restaurant management software company, and in Salesforce, Amazon, DoorDash and Singapore-based tech group Sea.
Temasek exited its investments in Markit, the iShares Broad USD Investment Grade Corporate Bond ETF, and Intel Corporation, while trimming its stake in Airbnb.
Temasek has been increasing its allocations beyond Asia in recent years. As of March 31, 36% of its portfolio was invested outside of the region, up from 22% in 2010.