Portfolio Review 4Q12

Currently holding on to 8 counters (see Portfolio Review 1Q10 for 1-3, Portfolio Review 2Q10 for 4, Portfolio Review 4Q10 for 5-6 and Portfolio Review 1Q11 for 7):

1. FrasersCT
2. PLife
3. Starhill
4. Cache
5. First REIT
6. Sabana
7. Cambridge
8. Sembmarine
   • Buy
     High beta with decent yield amongst STI component stocks (cf. SIAS article)
     Record order book estimated at more than S$13b as of end December 2012
     Price driven down by recent bad news (i.e. Q3 profit decline on margin concerns and Jurong Shipyard accident)

Next portfolio review due after 31 March 2013.

Note to self: only simple P/L calculated


Positioning for 2013
It is commonly said that there are five main asset classes, with virtually every financial product being able to be classified into one of these classes or as a hybrid straddling across classes -

• Cash
• Equity
• Fixed income securities
• Real estate
• Precious metals

 We all know that portfolio diversification is key to managing volatility, and that it is advisable to rebalance one's portfolio through the different stages of life. At the moment, I have exposure to all of the above classes save for the last two: real estate (unless REITs can be considered) and precious metals.

My main gripe with precious metals is that they do not generate any cash flow. On the flip side, advocates of precious metals will say that they tend to be a good store of value, especially in times of uncertainty, and certainly there is a good deal of uncertainty in the world today from fiscal cliff concerns in the US, debt woes in the Eurozone and political instability in the MENA region caused by the Arab Spring.

Add on to my REITs / shares / bond funds / foreign currencies? ... Precious metals or not? Gold, silver or platinum? ETF or physical? ... Some questions for me to ponder over

Merry X'mas and Happy New Year to all! =)

REITs Screening Criteria III

It was with some interest that I read articles expressing Citigroup's and UOB KayHian's positive sentiments towards S-REITs.

In an earlier post, I had highlighted the following as my selection criteria:

Stability

1. Low gearing, i.e. < 35% (also the limit for REITs without a credit rating)
2. Presence of a sponsor, preferably a strong one, eg. Capitaland, F&N, etc
3. Portfolio mainly in Singapore, as I will have a local knowledge of the industry in that case

Value-for-money

1. Discount to NAV, i.e. paying less for more
2. High yield, preferably > 8% p.a.
3. Quarterly distributions (as opposed to semi-annually), this is just a personal preference to improve my own cash flow

With the run-up in prices recently, "discount to NAV" and "high yield" have become harder to find. To illustrate the point, here is a comparison of two snapshots in time of selected REITs according to the criteria above:

The difference couldn't be more stark in the yield column. From my own calculations, Sabana remains the only REIT with annual yield just slightly above 8% (note: not reflected in the list above due simply to the fact that Sabana's IPO was only in Nov 2010). And according to this blog, current yield levels for S-REITs range from the mid-4% to slightly above 8%.

My thoughts? Even for yield stocks, buy only when one is comfortable with the rate. For myself, I prefer to wait out with respect to S-REITs at this point in time and look for value elsewhere if it can be found.

Portfolio Review 3Q12

Currently holding on to 7 counters (see Portfolio Review 1Q10 for 1-3, Portfolio Review 2Q10 for 4, Portfolio Review 4Q10 for 5-6 and Portfolio Review 1Q11 for 7):

1. FrasersCT
2. PLife
3. Starhill
4. Cache
5. First REIT
6. Sabana
7. Cambridge

Next portfolio review due after 31 December 2012.

Note to self: only simple P/L calculated

Stock & Unit Trust Portfolio Update Jun 2012

Continuing on from Stock Portfolio Update Jan/Feb/Mar 2012,

• 27 Jun 2012
  Initiated Regular Savings Plan into UOBAM United Emerging Markets Bond Fund unit trust on dollarDEX platform

* note that dividends will no longer be reflected in this series of posts

Portfolio Review 2Q12

Currently holding on to 7 counters (see Portfolio Review 1Q10 for 1-3, Portfolio Review 2Q10 for 4, Portfolio Review 4Q10 for 5-6 and Portfolio Review 1Q11 for 7):

1. FrasersCT
2. PLife
3. Starhill
4. Cache
5. First REIT
6. Sabana
7. Cambridge

Next portfolio review due after 30 September 2012.

Note to self: only simple P/L calculated

Portfolio Review 1Q12

Currently holding on to 7 counters (see Portfolio Review 1Q10 for 1-3, Portfolio Review 2Q10 for 4, Portfolio Review 4Q10 for 5-6 and Portfolio Review 1Q11 for 7):

1. FrasersCT
2. PLife
3. Starhill
4. Cache
5. First REIT
6. Sabana
7. Cambridge
   

Next portfolio review due after 30 June 2012.

Note to self: only simple P/L calculated

Averaging down by selling

Lately, I have been reducing my stock holdings as the STI has been steadily climbing in March 2012 to hit around 3000 near the end of the month. In particular, I released those which I had bought at relatively high prices in the past. As a result, my average price for some of the counters which I am holding has become lower.

In the past, I have only ever considered the notion of averaging down by buying more shares of a particular counter. But averaging down by selling instead... as long as the market is heading up, why not? One, yield of personal portfolio should increase; two, paper gains can be locked in and realised.

Stock & Unit Trust Portfolio Update Jan/Feb/Mar 2012

Continuing on from Stock Portfolio Update Oct/Nov 2011,

• 6 Jan 2012
  Initiated Regular Savings Plan into Franklin Templeton IF Templeton Global Bond Fund A(mdis) SGD-H1 and First State Bridge unit trusts on dollarDEX platform
• 18 Jan 2012
  Received dividends (re-invested) from Templeton Global Bond Fund
  
• 29 Feb 2012
  Collected dividends from FCT, PLife, Starhill, Cache, First REIT, Sabana and Cambridge
• 14 Mar 2012
  Reduced Cambridge existing holdings
• 20 Mar 2012
  Reduced Sabana existing holdings
  

Diversification of portfolio through unit trusts

For some time, I have thought about diversifying my portfolio geographically (outside of Asia) and across different asset classes (apart from equity). With my limited capital, unit trusts present one of the low-cost avenues for achieving this.

Between the two online unit trust fund distributors Fundsupermart and dollarDEX, I opted for the latter to avoid paying the "platform fee" which Fundsupermart had imposed in 2010.

Since fixed income instruments such as bonds are currently mixing from my investment mix, I decided to initiate a Regular Savings Plan into two funds:

• Franklin Templeton IF Templeton Global Bond Fund A(mdis) SGD-H1 - note: mdis denotes monthly distribution and SGD-H1 denotes the SGD hedged version since the mother fund is managed in USD terms
• First State Bridge - note: this is an Asian balanced fund

Personally, I like the monthly distribution characteristic of the former, and the Asia-centric nature of the latter as this will give me the option of exiting my ILP in future but still retain some exposure to Asian equities.

Meanwhile, I am also on the lookout for a proven and low-cost precious metals fund to benefit from the long-term uptrend of gold and silver prices.

Happy Chinese New Year and good fortune to all !

Aviva SAF Insurance II

For a while now, I have been considering increasing my critical illness coverage to complement my private MediShield plan (including a rider to cover the deductible and co-insurance portions) which I had signed with GE.

Of my existing plans, there were two immediate options open to me: tagging onto my Aviva SAF Group Insurance or onto my ILP. However, as my ILP was meant almost exclusively for investment purposes (as opposed to insurance), my preference was for the former.

Cost-wise, up till age 45, the charge for critical illness coverage under the Aviva SAF Group Insurance was $5.00 monthly per $50,000 coverage (max $300,000 coverage). Thereafter, the monthly premium progressively increases from year to year until the cut-off age of 65.


For reference, some details for two of the more prominent critical illness plans are as follows:

GE Early-Payout CriticalCare Plus - advertised as providing payout at the earlier stages of critical illness, $63 a month based on a non-smoking male, aged 30 at next birthday with a sum assured amount of $100,000 for a policy term of 30 years

PRUmultiple crisis cover - advertised as providing up to three critical illness claims, inclusive of 2 cancer claims, $1.76 a day for a female non-smoker aged 35 on her next birthday covered for $50,000 over 50 years


Just for comparison purposes, the monthly premiums for a 30-ish male/female non-smoker to be covered for $50,000 are estimated to be (* please consult a qualified agent for accurate quotes and kindly do not take these values at face value):

Aviva SAF Insurance: $5.00
GE Early-Payout CriticalCare Plus: ~$31.50
PRUmultiple crisis cover: ~$52.80

For cost-conscious consumers, the Aviva plan is clearly the most basic and hence least expensive. If one should desire the additional benefits which the other two plans bring, then there is of course an additional price to pay. To each his own...

AUD / NZD Update December 2011

Rate cuts by Reserve Bank of Australia (RBA) while Reserve Bank of New Zealand (RBNZ) holds its rate steady. A sign of the slowing economy ahead?

RBA: Cash Rate Target

Effective Date	Change in cash rate Percentage points	New cash rate target Per cent
7 Dec 2011	-0.25	4.25
2 Nov 2011	-0.25	4.50
3 Nov 2010	+0.25	4.75
5 May 2010	+0.25	4.50
7 Apr 2010	+0.25	4.25
3 Mar 2010	+0.25	4.00
2 Dec 2009	+0.25	3.75
4 Nov 2009	+0.25	3.50
7 Oct 2009	+0.25	3.25
8 Apr 2009	-0.25	3.00
4 Feb 2009	-1.00	3.25
3 Dec 2008	-1.00	4.25
5 Nov 2008	-0.75	5.25
8 Oct 2008	-1.00	6.00
3 Sep 2008	-0.25	7.00

RBNZ: Official Cash Rate (OCR)

Effective Date	Change in OCR Percentage points	New OCR Per cent
10 Mar 2011	-0.50	2.50
29 Jul 2010	+0.25	3.00
10 Jun 2010	+0.25	2.75
30 Apr 2009	-0.50	2.50
12 Mar 2009	-0.50	3.00
29 Jan 2009	-1.50	3.50
4 Dec 2008	-1.50	5.00
23 Oct 2008	-1.00	6.50
11 Sep 2008	-0.50	7.50