Portfolio Update - October 2015

*As of 31 October 2015

Counter	Average Price	Yield on cost(%)	Weightage
Accordia Golf Trust	0.6400	8.91	32.42%
Croesus Retail Trust	0.9207	7.43	33.32%
OCBC Bank	9.0895	4.00	9.87%
UOB Bank	18.9951	4.00	6.87%
Accordia Golf Trust	0.6247	8.91	5.65%
Neratel	0.5850	6.84	0.64%
Ascendas Hospitality	0.6175	8.29	0.22%
Cache Logistics	0.9924	8.20	1.08%
Mapletree Logistics	0.9974	7.40	0.36%
Capitaland Commercial	1.3250	6.15	0.48%
IREIT Global	0.6465	9.55	0.47%
Asian Pay TV Trust	0.8016	10.18	0.87%
Keppel DC REIT	1.0000	6.46	0.73%
Soilbuild Business REIT	0.8025	8.05	0.29%
Saizen REIT	0.9250	6.30	0.67%
SPHREIT	0.9500	5.80	0.69%
STI ETF	2.9720	3.00	5.38%
Total		7.19	100.00%

Legend

CDP

SCB

Total Invested Capital = $27,635.86

Total Expected Dividends/month = $165.50

Average Dividend Yield = 7.19%

For this month, it was overall a bullish month as the STI pushed on with a stunning rally to almost 3100, before slipping back below the 3000 level on weaker sentiments.

The highlight of the month was the re-purchase of Accordia Golf Trust (AGT) once again. I have previously been a shareholder of Accordia back in the early part of 2015 and subsequently liquidated my position after the share prices ran up due to the dividend announcement. The share price of AGT has weakened considerably since as currency risks due to AGT non-hedging of its Japanese yen distributions has dampened investor sentiments on the units. The weakening of the Japanese yen has been constantly the dampener for this stock I believe, as I don't see what not to like about the trust other than its foreign exchange woes. And I like to imagine, if the same stock is listed in Japan and I am a Japanese resident, then I would have no qualms in investing most of my wealth into this stock. I mean, who doesn't like a REIT-like structure with freehold properties, which theoretically could generate high returns of more than 9% annually while having low interest rates in its disposal as Abenomics continues in Japan and a comfortable gearing similar to most REITs in Singapore, yet trading at a discount to its book value? Unfortunately, investors are risk averse, and with the JPY/SGD pair fluctuating madly recently with a general downwards bias (partly due to Abenomics), it is no wonder investors chose to dump this stock. Anyway, I have to stop myself from rambling along. The time for AGT to announce its dividend is round the corner in November, 12 November to be exact. So, as prices are still on a weak side, and cheap relative to the price I had previously bought them, I took the chance to get some units. 

Observant readers may notice I have some units of AGT already in the SCB custodian account. This are units which were accumulated during the recent crash in the stock market, and forms part of the mini-portfolio which I had planned to play around with. In terms of weightage, it is obvious that AGT is on the heavy side in both my CDP and SCB portfolio. I would be doing further tweaks once I obtain further clarity on the AGT results in November.

For the SCB portfolio, I have added smallish positions on Asian Pay Television Trust (APTT), SPHREIT and Saizen REIT. APTT would be announcing dividend in early November, so I am accumulating more on share price weaknesses. SPHREIT was more for a portfolio balancing as I am currently lacking in a retail REIT. I would be purchasing more on weakness as I like SPHREIT's low gearing and slight discount to book value vs the other retail REITs which are trading at a premium to book value. Saizen REIT was a bet, a bet that the firm offer which it received on 23 October was close to the current NAV of Saizen REIT. Even if it didn't materialise, I am happy to continue receiving a yield of 6+% for the units. As at $0.925, the units were still trading at a discount even after the steep increase when news of the offer emerged. And indeed it is, as just this morning, the news broke that the firm offer was a slight premium to the NAV. Now, I am feeling regretful I didn't buy more :P

So far, I am satisfied with the mini-portfolio performance, partly because most of the units were bought during the turmoil in August-September. My best performing counter, excluding Saizen REIT, would have to be Ascendas Hospitality, rising almost 10% within this short span of 2 months. The worst performer would be the recently purchased SPHREIT, which I haven't allowed it the chance to perform just yet.

Lets see how it goes then.

Portfolio Update - September 2015

It's been along time since I wrote a post, owing to the long vacation I took in September to October. I have not updated my portfolio so here's an up to date version.

*As of 17 October 2015

Counter	No of Shares	Average Price	Amount Paid	Yield on cost(%)	Weightage
Croesus Retail Trust	10,000	0.9207	9,207.00	7.43	61.93%
OCBC Bank	300	9.09	2,726.86	4.00	18.36%
UOB Bank	100	18.99	1,899.51	4.00	10.85%
Accordia Golf Trust	1,500	0.61533	925.19	8.91	6.22%
Neratel	300	0.585	175.92	6.84	1.18%
Ascendas Hospitality	100	0.6175	61.90	8.29	0.35%
Cache Logistics	300	0.9924	297.71	8.20	1.70%
Mapletree Logistics	100	0.9974	99.74	7.40	0.57%
IREIT Global	200	0.6465	129.31	9.55	0.74%
CapitaCommerical	100	1.325	132.81	6.15	0.76%
Asian Pay TV Trust	100	0.81	81.19	10.18	0.55%
Soilbuild Business REIT	100	0.8025	80.44	8.05	0.46%
STI ETF	400	2.99	1,197.00	3.00	8.05%
Total			17,504.05	6.25	100.00%

Total Invested Capital = $17,504.05

Total Expected Dividends/month = $91.17

Average Dividend Yield = 6.25%

The month of September was another opportunity for me to add more stocks to my portfolio. The expectation that September was the month when the Fed would finally raise interest rates has led to further turmoil to an already torrid period for stocks. This was the month which I expected to pick many interest rate sensitive stocks on the cheap, particularly the REITs.

Observant readers would have noticed that I have added smallish positions in REITs with juicy dividends like Cache Logistics, IREIT Global and Mapletree Logistics into my SCB micro-portfolio. In addition, I have added some UOB shares. I would have further increased my positions in these counters and more if not for the SCB platform failing to log on while I was enjoying my vacation overseas. When I finally returned to Singapore and got the log on issues rectified, the market had rebounded. And yes, the crash in the STI coincided with my holiday and it always seemed like markets crashes during the times I decide to go on a holiday. Maybe anyone can simply wait for me to go for a vacation so that they can start to pick up stocks haha

In other news, I had pared positions in Soilbuild Biz REIT, Ascendas Hospitality and Capitaland Commerical Trust owing to the run up in share prices. The market, however, continued to surge forward and now the decision to divest them was regrettable, but that is completely on hindsight. On the bright side, I have chosen to divest only half of my smallish positions in these counters and the run up still benefited my micro-portfolio, albeit a teeny weeny bit as compared to my past profits. As I mentioned in an earlier post, I am hopeful to see this portfolio grow from micro to regular status soon as I continue to accumulate more shares. My accumulation of shares has taken a break at this moment, as prices had already run up due to the reduced expectation of interest rate hikes for this year. I do not know if markets may present another opportunity this year, but I would be more than happy to add more when it happens.

In other news, Croesus Retail Trust has announced rights, 22 shares for every 100 shares owned, due to the proposed acquisition of a Japanese suburban mall. The acquisition would most likely be only slightly beneficial, but I would not be complaining because the Croesus Management chose to consider rights instead of private placement, which the latter would be undesirable for existing unitholders like ourselves. I would be subscribing for the rights and applying for excess rights wherever possible to further reduce my average purchase price. However, I expect interest in Croesus rights to be on the high side, so I don't have much expectations for getting any excess rights. So I may even consider increasing my position in the mother shares should prices become even more attractive, as I believe that current prices are already attractive. However, I expect the rights to have a depressive effect on the mother shares for some time, so I would consider increasing my positions only after the rights exercise is completed.

On the STI ETF front, no shares were purchased as the market failed to hit the next price level which would trigger my next round of purchases, even though the market made a new low in September.

For the next few months to end year, it is generally a stronger period seasonally, as history has proven it, look at what happened during the Euro crisis of 2011, and even during the depths of the GFC of 2008, markets consolidated or even went higher as compared to the September-October period. So I expect to see some consolidation for the next 3 months, assuming no further bad news were to rear it ugly head to cause markets to go lower. Safe time to enter now? I wouldn't dare to put my money to back my words, given the still poor economic backdrop, but if you have a long term horizon, we should not be bothered about short term volatility.

At the moment, I have about close to $20k invested in the market. My warchest is still rather sizeable, even after accounting for the vacation expenses. I would put the amount of money vested in the market roughly close to a comfortable 40%, while 60% remain in the warchest.

Let just sit back and watch how the show unfolds.

My STI ETF Strategy

I believe in Singapore's economy and its good governance. I am sure many opposition supporters will flame me for this, but lets face it, Singapore has come a long way from a third world country, and I have faith in the Singapore economy, though stagnating growth is more likely than not.

And it seems like the STI ETF is a great proxy to ride on Singapore's market. Well, we can continue to invest in the STI ETF via the many plans offered in the market by banks such as POSB, OCBC, Philips which takes a monthly contribution to invest into Singapore's index ETFs regularly. For more information, you could refer to a more comprehensive post by Bowen from Giraffe Value here. Personally, I feel that such "forced" investment plans are only for those who feel that they will not be disciplined to invest regularly, particularly in turbulent times like this, they might face the jitters and stop investing altogether. But if you feel you have the discipline and the plan to invest despite market conditions, then I would recommend that you DIY. 

DIY has a huge benefit, mainly because the "forced" investment plans do charge you a fee for doing the buying for you, I mean everyone don't work for free right? So if you DIY, it is guaranteed to reap much savings. I did mention in a previous post that this DIY is actually through Standard Chartered's (SCB) online trading platform. The no minimum charge works wonders for Dollar Cost Averaging (DCA) and the charges are a way a lot lower than the other "forced" investment plans. Of course, we need to know that SCB will be holding the shares in a custodian account for you instead of the STI ETF shares being put into your CDP account. I have no qualms about SCB holding the shares for me, after when we put money into a bank, we are kind of taking the same risk, if we neglect the SDIC coverage of $50k per bank. So the choice is yours, whichever makes you sleep well at night should be the better option.

The first step of investment is to decide how much to invest. The amount you can feel comfortable investing and probably losing as much as 50% of. Yes, and I mean half of your value invested wiped out, that is the likely scenario if a full blown crisis is to occur. If you feel you are ready, then put that cash to work. For myself, I have tentatively allocated only ~$10k for the purchase of STI ETF shares.

Next, I have to decide when and how we deploy our funds. The "how" part has been answered earlier. For myself, I have decided on DIY and DCA through SCB. The "when" is a bigger and more important question to answer.

The above is what I would do if the STI ETF were to hit certain price levels, which I have done a bit of research on the probabilities and a suitable proportion of investable funds to put in when the market has reached that certain valuations. Some inspiration I took from was from this article.

Observant readers would notice that I did not completely follow the guide given in the article. But the article did most of the work for me. If you haven't read the article, basically what the writer did was to use the historical frequency of crashes of certain magnitudes and then put a certain sum to invest based on the frequency of occurrence. Because we can't possibly have money waiting in the warchest wasting away waiting for another big crisis to come, we allocate majority of the funds to crashes which occur more frequently and with moderate magnitudes. This clearly made sense to me.

However, upon further analysis, I noticed one thing. The historical frequency is more applicable to the US stock market, since when I compared that to the performance of the US market, aka the DJIA, the occurrence of huge crises was indeed 2-3 times per century, for example the Great Depression, and more recently the Global Financial Crisis (GFC) of 2008. They don't happen too often in the US but upon looking to our local index, the frequency of crashes looked much more often, maybe because we are a young market compared to the US. But we had the Asian Financial Crisis (AFC) in 1997-98, a long bear market from 2000-04, and another big crash in 2008-09 just a decade after. And if we look deeper, the AFC has almost no material impact on the US market at all! Of course, the situation is much different now, with the China market crash dragging global indices lower.

So in view of this observation, I have decided to set the 50% decline as occurring once every decade. For the amount set aside for the supposed every few decades and 2-3 times a century, the amount will be spilt into similar proportions as given in the table and added to the funds invested. Furthermore, as I felt the reference point of $3.50 of STI ETF as a little overvalued, I removed the tranche of funds which was to invest after a 10% drop, starting the investment only after the market has fallen 15% from $3.50. After all this are done, voila! I have created my own customised table for systematic purchase of STI ETF. Do note once again that this is for my reference only, follow at your own risk!

Of course, feel free to take my table as reference to formulate your own strategy. If you have more funds to allocate, then simply bump up the investable amount by the same proportion. It seems a lot clearer and less "risky" when you do put pen and paper together your strategies. It is through this that fear would not be excessively paralysing when it comes to market crashes, and also no need to hope for market to crash crazily just so that you can use all your funds! Do know that extreme market crashes cause misery and hardship to everyone including yourself. Many might lose their jobs in the process so its really no point to hope for a crash.

So, as the moment, I am holding 500 shares of STI ETF at the time of writing. If the market continues to surprise us further, then you can reasonably know who is picking up more STI ETF. (: