Monday, 10 February 2020

Strategy: Feb 2020

It isn't mid-February yet but I have continued my buying. In particular, I am looking at ramping up my position in Shell (B Shares). Shell price went down because of poor results but the investment thesis seems intact. The oil and gas sector is likely to be disrupted but I believe that Shell is in a good position to transition into an energy company (we'll always need energy even if we might not always need oil) rather than an oil company that dabbles in other types of energy.

I bought WQDV at the start of the month and just bought VHYD. So I'm glad I manage to stick to my plan to regularly DCA these 2 ETFs monthly. My 2800.HK RSP with FSMOne seems to be working. The account indicates that the RSP money has been put on hold but the units have not been delivered to the account yet, I guess that occurs after T+3.

Apart from this, I added a little bit of Sembcorp, Frasers HT, Comfort Delgro, and HSBC.

While N-Cov will certainly have an impact on earnings on companies in affected countries, the market is not crashing, perhaps buoyed by the US market which seems to keep on going up. While there is no sudden crash, a stock market adjustment to lower earnings (and likely lower dividends) should logically be inevitable, once there is a clearer idea of how badly earnings are affected.

So while I will occasionally top up small amounts of SG shares, my focus will be international shares and ETFs. I'll still buy STI ETF if it drops below $3, but I'm not counting on it. 

Tuesday, 4 February 2020

Dividends: Jan 2020

I report iShares/Vanguard Quarterly dividends in Jan/Apr/Jul/Oct for consistency. Some years the dividend is in late Dec, some years its in early Jan.

HK$ and A$ dividends also paid out in Jan but I follow previous practice in only graphing the 3 top currencies and subsequently, the total value in S$ terms.

Jan 2019 dividend was slightly higher due to a US$489 BHP special dividend. Excluding this special dividend, Jan 2020 saw a small dividend increase.

Wednesday, 29 January 2020

Jan 2020 report: Novel-Coronavirus

N-Cov is a worry for people as well as the markets. Everyone should take sensible precautions; though sensible precautions may translate to lower consumer spending as people spend more time indoors.

I carried out my plan to increase my ETF purchases. While I did buy individual stocks, I also started my regular ETF and accumulated the following ETFs this month

  • VUKE  VanguardFTSE100 
  • VDPX  Vanguard Developed Asia
  • VHYD  Vanguard World High Dividend
  • WQDV iShares World Quality Dividend
  • VDCP  Vanguard US Corporate Bonds

Next month I will add the 2800.HK ETF to the list when I begin RSP via FSMOne.

My plan to do dollar cost averaging of ETFs every month is not affected by N-Cov. However I still have a "warchest" ready to be used if STI somehow falls below 3,000. But I'm not counting on it. 

On the individual stocks front, I decided to buy a little bit of Spanish Bank BBVA to further diversify my bank holdings and added more Telefonica.  Vodafone was hit by the bad news of the Indian Supreme Court upholding a huge fine. Still, I'll keep on holding it for the dividends.

Tuesday, 7 January 2020

Strategy: Jan 2020 (FSMOne RSP)

For 2020, I will be focusing more on ETF purchases and have identified a few ETFs that I plan to purchase monthly. 

VHYD Vanguard World High DividendYield
WQDV iShares World Quality Dividend
VDCP Vanguard USD Corporate Bond
LQDE iShares USD Corporate Bond
VDPX Vanguard Asia Pacific
2800.HK HKSE Tracker

The first 5 are in US$ and monthly purchases of US$1k each would add up to US$60k a year. The last ETF is in HK$ and I will apply via FSMOne to RSP about S$900 a month.FSMOne RSP appears to be very attractive - minimum HK$5 comms for monthly RSP means that small purchases of 2800.HK become very feasible. 2800.HK is a bit annoying when it comes to regular trading because it has a larger lot size of 500. FSMOne's RSP ignores the lot size and will even allocate you fractional amounts of 2800.HK.

There are a few other ETFs that I plan to top up on a quarterly basis. Other than that, the rest of the free cash I guess is for picking individual stocks and/or timing the market.


More on FSMOne RSP
I really have to congratulate FSMONe with coming up with such an innovative low cost product. It is really amazing how they are able to cater on the same platform to (i) investors who don't mind paying platform fees but presumably want a 'high touch' service as well as (ii) cost conscious investors who go for the cheapest option. 

FSMOne ETF Regular Savings Plan allows you to buy a small amount of selected ETFs like the Tracker Fund 2800.HK and pay only a min comm of HK$5 (plus GST/exchange fees).  There are no other hidden costs to this and there is no lock in period. You can terminate the RSP anytime. Furthermore there are no penalties for failed RSP. 

For example, if you don't have enough money for a particular month in your account, the RSP simply doesn't take place that month but the plan doesn't terminate. It will carry on the next month unless the RSP is unable to deduct for 3 months. There is no penalty imposed. 

Some may complain that the selection of ETFs is limited (there are 38 that are eligible for RSP), but to me, this is still a good start and I'll be applying for 2800.HK RSP. If this is popular, I hope that more ETFs will become eligible for RSP.

Monday, 30 December 2019

2019 Interactive Brokers Portfolio Performance

Usually by this time people will be publishing their portfolio returns in the forums, but this year seems to be quieter. 

I guess many investors are quiet because they failed to beat MSCI World or equivalent World index  - including myself (the graph above shows my IBKR performance in comparison to Vanguard Total World Stock Index - because IBKR doesn't have an MSCI World comparison). 

Because I am overweight UK, someone even asked me how much money I lost due to Brexit. So perhaps I should count myself lucky that I didn't lose money this year. 

My interactive brokers graph shows a sharp rise in December due to the UK election result that helped narrow the gap but it was not enough

My 2020 resolution will be to buy more ETF and less individual stocks in order to reduce volatility

Friday, 27 December 2019

Year-end Parking of some spare cash

SCB Fixed Deposit
As I have been adding to my war chest on and off through the course of this year, I found myself with more cash on hand than desirable. When I visited SCB at the I found out that their 9 month promotional FD rate had gone up from 1.85% at the start of Dec to 1.88%. Since I had the cash, I opened a $25k 9mth 1.88% FD with SCB. The term is short enough and more of a wait and see, earn a like $100+ extra interest in 9 months over my savings account.

As I have mentioned before, the promo is not found on the SCB website but the bank RM will be able to apprise you of the latest promo rate. It also stands to reason that day to day, rates may be changing faster than the website can be changed.

Refund to CPF
I also decided to try out the CPF website feature which allows you to refund money to the CPF that you had borrowed for housing. Previously you had to mail in a cheque I believe. But with Paynow integration of the CPF website, you can do an instant transfer and the refund will appear immediately on your online statement. I just refunded $5k to CPF just to see how it works. You have 2 choices Paynow or ENets. I actually tried both. Paynow is instant, by scanning a QR code, while ENets actually logs you into your banks i-banking site to make a payment but payment is only next working day. 

Wednesday, 25 December 2019

Investing your CPF-OA. Unit Trust or Singapore shares?

When it comes to CPF you are limited to investing in local share/STI ETF  and the only way to get foreign exposure is through unit trusts

I use my CPF to buy STI ETF and unit trusts. So far, it seems that my unit trusts have outperformed STI ETF even though they have higher management fee. I decided to diversify into unit trusts instead of spending all my CPF on Singapore shares. 

This is of course not a recommendation to only buy unit trusts, the point is that diversification is important. Simply going for the option with the lowest management cost (i.e. STI ETF) would have led to underperformance.

I guess sometimes you have to pay money to make money....

10-year annualised return

  • STI ETF 4.59%
  • First State Bridge unit trust: 6.61% (this is a fund containing 50% bonds and thus less volatile, yet it can beat STI ETF which is 100% equity)
  • First State Regional China: 8.85%

Roboadvisors for CPF?

There is some discussion in the forums of a 'roboadvisor' Endowus that you can invest in using CPFIS. Basically, for CPFIS, it has managed to negotiate with some CPF approve unit trust managers for a rebate of about 0.5% to the management fee. On the other hand, they charge a 0.4% wrap fee. So all-in, I guess you save about 0.1% in expenses by using Endowus. Of course, you have no control over which CPF unit trusts they invest in which may be a good or bad thing, depending on your perspective.

0.1% cheaper expense ratio is not enough to make me want to switch, especially since I pick my unit trusts based on my assessment of the fund manager. But I could see myself recommending Endowus to a friend/relative who is not financially savvy and would prefer 'autopilot' investing. My current recommendation would have been LionGlobal All Seasons fund for autopilot investing, but the small fund size means the fund is at risk of closing. That consideration also applies to any startup Roboadvisor - if they do not grow their AUM, they may not become financially viable, and investors may pull out.

A commitment to lower costs is promising and I hope that it spurs FSMOne/ Poems to negotiate with fund managers for similar rebates.