Asia holdings drag personal portfolio as AI sell-off hits chip stocks

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Asia holdings drag portfolio

Highlights

Portfolio value declined 6 percent from £713,000 in late June to £672,000, driven by Asia fund losses and TSMC's AI-related sell-off.
U.S. fund outperformed Asia fund by 22 percentage points in sterling terms, while UK equities and sovereign bonds cushioned broader losses.
Portfolio may shift allocation by increasing U.S. and Brazil exposure and selling gilts, following Latin America volatility and defense by UK assets.

Portfolio setback after summer peak

As reported by Financial Times, the portfolio has fallen to £672,000 from £713,000 in late June, a drop of about 6 per cent after a weak October and a steeper decline this week.

The investor says the main drag is an Asia fund, with one-fifth of that holding invested in Taiwan Semiconductor Manufacturing Company. The chipmaker has been hit in the AI-led retreat, while the main Korean exchange is down about 40 per cent from its late-June peak.

The underperformance has been notable against U.S. assets. The U.S. fund has outperformed the Asia fund by 22 percentage points on a sterling basis, highlighting the cost of keeping a lower weighting in American equities.

Latin America has also weighed on returns after Flávio Bolsonaro lost Brazil's presidential run-off on October 25, although the portfolio's 10 per cent exposure limited the damage. The investor adds that a reduced position in Japan since March has also helped contain losses despite a mid-single-digit decline in that fund.

UK stocks and bonds cushion volatility

A one-third allocation to UK equities has provided the strongest offset to weakness elsewhere. The FTSE 100 was described as the best-performing major market in October while the Nasdaq fell 7 per cent, and European markets also held up relatively well during the broader technology retreat.

A sovereign bond position has offered additional protection as concerns over the AI trade, inflation and interest rates shift investor demand back toward government debt. The investor argues bonds remain a preferred shelter when markets turn risk-averse or when traders see the rate cycle nearing a peak.

The column also points to changing market reactions around U.S. politics and geopolitical risk. Yields fell after the midterms, while an initial equity rally gave way to a later sell-off, suggesting investors are reassessing the implications of oil prices, inflation expectations and the outlook for AI-related stocks.

Despite the recent setback, the investor does not see this as the end of the long equity bull market, citing strong economic fundamentals in the U.S. and a solid earnings trajectory. Potential portfolio changes now under consideration include increasing exposure to the U.S. and Brazil, funded by selling the gilt after its defensive role.

Our earlier article on the Nasdaq-100’s selling pressure highlighted a sharp intraday drop and a market still trading below key short- and medium-term moving averages, keeping downside risks elevated. We also noted the launch of JQQQ by Janus Henderson and Centrifuge as a blockchain-native route to Nasdaq-100 exposure, a structural development that could broaden long-term institutional access even as near-term momentum remains mixed.

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