Monday, 8 April 2019

Dividends Collected: Mar 2019

(Slight upward adjustment made to Feb as some Feb dividends were paid by SCB only on 4 March)

Wednesday, 27 March 2019

SIA 5 yr 3.03% bonds

Applied for the SIA 3.03% 5 year bonds. Despite the placement tranche being heavily oversubscribed (higher oversubscription that Astrea IV), the demand for retail tranche was only slightly oversubscribed. 

SIA's retail tranche was upsized to $450m and therefore much larger than Astrea IV's $121m retail tranche, so you either got everything or most of what you applied for. 

As a result, I got allocated 85,000. I plan to hold them to maturity unless there are compelling stock market opportunities. My cash warchest is still in the 6 figure range despite this 85k purchase so I still have enough short term cash to snap up cheap buys. But if there is a prolonged downturn, then selling bonds to buy stocks might be a good plan.

Monday, 18 March 2019

Comfort delgro March 2019- back to 'large holding'

When I did my  Jan 2018 review of my portfolio performance, I discovered that Comfort Delgro's price fell so much (-16.7%) that it moved from being a 'large' holding to a 'medium' holding.

Recently, I happened to look at the share price and noticed it was $2.50 and will go ex-dividend shortly. Doing a quick calculation, it appears that CDG has moved from 'medium' back to 'large' so I've updated my portfolio page.

I first bought CDG as a 'defensive' stock during the last GFC and did not add my holdings until 2016. I started buying at $2.43 and averaged down all the way to $1.98 (Jan 2018). I always believed that CDG could fend off the uber threat because uber had only so much money it could lose, since the Singapore market is not that big, uber was unlikely to want to bleed too much.  

Friday, 8 March 2019

Dividends: Feb 2019

STI ETF dividends this month so S$ collected shot up. From March onwards there should be enough data to revert to the cumulative dividend line graph.

Tuesday, 26 February 2019

Withholding Taxes on US bonds held by Singapore Residents

There are no withholding taxes (WHT) on interest payments / bond coupons for bonds held by Singapore residents. This has been discussed extensively in the forums but there are still people who don't believe. Recently someone revealed that the source of this (mis)information is an anonymous blogger.

Reading his blog entry, it appears that he is not vested in any US bonds but is just blogging about it. I would rather hear from someone who actually invested in US Bonds whether or not he was charges WHT. User homer123 in HWZ is a long-time bond investor and has confirmed numerous times there is no WHT tax applicable.

Of course to be fair to that blogger, he has probably misunderstood the difference between US-listed bond ETF (which declares dividends) and US bonds, which pay interest.  Dividends are subject to withholding tax unless the ETF issuer goes through the hassle of reporting the income as exempt income, which they don't do. At least those that have been vested in Vanguard and iShares US-listed bond ETFs have reported this. This has also been my experience with the US-listed Vanguard short dated bond ETF VCSH which is why I shifted to LQDE. (VCSH is still a good place to park very short term US$ given the very low transaction costs)

The same applies to Irish domiciled bond ETFs like LQDE. They do not pay any withholding tax and this is clear from their financial statements.

The table below also states the position clearly:

The thread on WHT discussion in HWZ is here:

Read financial blogs for fun, but do not rely on them for important things like tax information. As shown in the table above, accurate information from reputable sources is available on the internet. There is no need to get the info from an anonymous blogger!

Initiate Position: WQDV

Decided to initiate a position in iShares MSCI World Quality Dividend ETF using SCB Online trading:

  • Tracks the MSCI World High Dividend Index
  • TER 0.38%
  • AUM quite small, $22m, launched in 2017
  • Distribution yield 3%+
  • Top sector holdings: (1) Healthcare (2) Consumer Staples (3) Finance. 
  • Good bid-offer spread of $0.01
I am totally underweight US so any increase in US exposure would go slightly to redress this imbalance. 

Saturday, 23 February 2019

A look back at Unit Trusts

There was some discussion in the forum about whether there was any investment that could give a steady 6%. This prompted me to look at the latest performance of my unit trust holdings. My unit trust holdings are in FSM CPF-OA as there is no platform fee for CPF holdings. I would like to highlight the two biggest unit trusts that I hold. Both are from First State Bridge. It is no coincidence that the Fund House is the same as both are managed by my favourite fund manager Martin Lau. 

First State Regional China is one of my largest holdings and part of my strategy to overweight China as I believed in the China growth story. It has given me a decent annualised 12.55% p.a. over a 10 year period. Looking at that return, I guess it is not surprising that it turned into one of my biggest holdings. 

However, there is some volatility as the 6mth and 1 yr performance are negative. Nevertheless, I will continue to hold the fund in CPF-OA. When it comes to cash investments, I have highlighted elsewhere that FSMOne is a good platform for HKSE shares so one is no longer restricted to unit trusts for China exposure.

First State Bridge is a balanced fund that seeks to hold equities and bonds in a 50:50 ratio. It is one of my favourite funds because of its defensive qualities and ability to rebalance. Despite holding 50% bonds it has been able to deliver a very respectable an annualised 9.45%  p.a. for the last 10 years. On a risk adjusted basis, this performance might well be far more impressive that the performance of the China fund.

So it does very well in a downturn but in a charging bull market may not be able to compete with high beta products. I'm vested as part of a diversification strategy and its not my habit to go 'all in' on one single unit trust (i.e. China).  FSMOne allows free switching so I can easily vary the ratio of First State Bridge and First State China that I hold.

Concluding Thoughts

It is very easy to say unit trusts are bad. But my view is that sometimes you spend money to make money. The alternative would be for my CPF-OA to be entirely used for STI ETF which was not good from the perspective of diversification. 

I certainly feel that some unit trusts are worthy of criticism, but the keyboard warriors don't seem to want to take the time and effort to study the unit trusts and separate the good from the bad - everything is just bad to them. While the debate rages on in the internet, I just keep on holding, and check on my capital gains every year! Not as satisfying as counting dividends, but it will have to do...