Friday, 21 March 2025

Withholding Tax: Another influenza gets it wrong.


There is an S&P500 ETF listed on the Singapore stock exchange with the code S27. However, it is well known on the forums that this is not the best choice if you want to invest in S&P500.


An influenzna recently posted (in support of the idea that S27 is 'good') that S27 has "no additional tax' as it is 'deducted at fund level'

The error is that the WHT is not deducted at the fund level. The word 'additional' is also misleading. The 30% WHT is a one-time deduction, whether deducted at the fund level, like Amundi Prime USA (a Luxembourg domiciled unit trust) or by the custodian, like when you buy S27 or even VOO. The word 'additional' seems to imply that the competitors to S27 have an 'additional' layer of tax, which they don't.


This is the copy of an actual investor's CDP statement that was posted in HWZ and its highly illustrative. This is a 2015 statement. I doubt the WHT tax treatment as changed since then:



(1) There is 30% withholding tax deducted from the gross amount

(2) SGX charges a S$3.73+0$.26=$3.90 handling fee on the dividend. Even if you don't use CDP as a custodian, you may still be liable for this handling fee. This is shown in the FSMOne fees page which says they will 'pass through' the dividend handling fee to you.

There is therefore a very good reason why the usual recommendation for Singaporeans who want US exposure to buy Ireland Domiciled, London Listed, UCITS ETFs, in order to take advantage of the tax treaty that reduces WHT to 15%.

Alternatively, you can look at Synthetic ETFs that replicate the S&P500 like Invesco's SPXS or Amundi's LSPU (both listed on LSE). These have 0% WHT. I am vested in LSPU.

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How about S&P500 Unit Trusts?

Amundi Prime USA is a UCITS fund that invests in S&P500 via physical replication. It is domiciled in Luxembourg and therefore subject to 30% WHT. Unlike some influenzas who might simply be cutting and pasting from other erroneous sources, I actually checked the financial statements to confirm the level of WHT.

Does it mean that a UCITS S&P500 fund that is domiciled in Ireland will have a better WHT? For example, FSMOne offers to FSM+ members the UCITS unit trust Vanguard US 500 Stock Index Acc USD IE0002639775

 




Initially, I thought that this would be subject to 15% WHT just like their ETFs. But the wise people in HWZ told me this was incorrect. I checked the financial statements of the fund and HWZ was correct once again, the WHT for IE domiciled UCITS US funds is still 30%. Only ETFs get the 15% WHT.


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The influenza didn't mention that Amundi is sold in S$, making life a lot simpler for some investors.

One more advantage of Amundi Prime USA / Amundi Index MSCI World is that it is denominated in S$. This makes it extremely convenient for my less savvy elderly relatives to invest in. In fact, I have been recommending the Amundi funds to be less financially savvy relatives and friends as a long term investment.  While the WHT is 30%, at current yields, this adds about 0.3% to costs which in the grand scheme of things, might be acceptable to some (better than stock picking individual SG REITs).

S27 is denominated in US$ which might be a hassle for some.

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US Estate Duty

S27 is US domiciled so it is subject to US Estate duty if you pass away. If you plan to hold it as a long term investment till your old age you need to take this into account. Their factsheet gives the ISIN which is US.



Ireland domiciled UCITS ETF are also subject to Ireland Estate duty which is currently zero. 


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At the end of the day, it takes less than 10minutes to first open up the relevant financial statements to confirm the facts about withholding tax before publishing on the internet. 










Monday, 17 March 2025

Market Rally is a good time to tidy up my portfolio by selling

 


There appears to be a rotation into value and a sustained rally for quite a few of my counters that had previously not moved much. As a result, I am still outperforming the S&P500. This provided me an opportunity to tidy up my portfolio by selling into strength.

In particular, I have been holding some ADRs of UK-listed stock since 2016. I have since decided to hold the 'main' stock listed in LSE instead of ADR to avoid paying ADR fees but never got around to selling the ADRs. Thanks to the rally, I have been selling my Vodafone, Prudential, and Aviva ADRs. I hope to rebuy the London-listed versions for cheaper if there is a correction as these are great dividend stocks. In the meantime, I reinvested the cash into S&P500 ETF LSPU.

On the US stock trading front, I exited INTC at $26.10, and bought more NVO, UA, and NKE. 




Saturday, 8 March 2025

Blood Pressure Monitor (spend money on health)

 


This is part of my spending money on health. I have a 10+yr old Omron Blood Pressure Monitor and the LCD screening is fading and harder to read. It often gave me blood pressure readings in excess of 120/80, even after I had lost weight and improved my other fitness measurements.

Therefore, it was time to buy a new BPM and at the 3-3 sale I got a new Omron Complete at a good price. It monitors blood pressure and has a single lead EKG. I'm pleased to note that with the new BPM, my blood pressure consistently registers below 120/80 which is normal. The exact figure also provides me with a baseline reference. 


As for the question whether the new Omron is more accurate just because it is newer, I did my annual health screening and BP was also under 120/80, so it should be.

Speaking of health screenings, I'm pleased that my HDL and Triglycerides are in the optimal range, while my LDL is in the ok range. I attribute my better HDL to increased consumption of sashimi, fish, and nuts. On the other hand, I admit to eating a bit more unhealthily during weekends, in the hope that my healthy eating on weekdays balances it out. Lets see what I can do about my LDL.






Monday, 3 March 2025

Dividends Collected: Feb 2025

 


STI ETF paid dividends this month. Total dividends year to date just a tiny bit more than 2024.

Sunday, 23 February 2025

February Update: Trying to beat S&P500

 



I had previously mentioned that I have been buying US stocks like NKE etc to learn trading.

So far I exited PLTR, ZM, NKE and LLY at small profits. PLTR and LLY continued to climb after I sold, but that's just trading for you. I immediately redeployed the funds to add to my NKE, MCD, NVO and UA positions.  (I sold NKE at $83 and re-entered below $80).

NVO has been a superstar and because I believe in the narrative that outweight Americans will simply refuse to change their lifestyle and continue to eat unhealthy food (MCD) and whenever a Doctor says they are overweight, they will just take Ozempic, but they will continue eating MCD and gain back the weight. 

NKE's new CEO is back on focusing on sports performance and the Zoom Fly 6 is a great mass market carbon plated shoe. I know because I bought a pair.

Anyway, since I am planning to allocate most of my fresh funds to VWRD, I have decided that I will make 10% of my portfolio net worth available for US stock trading (i.e. shorter holding periods). Hope to learn something about investing in the process and at the same time, maybe I can finally beat the S&P500. So far so good, but I will never underestimate the S&P500.



Sunday, 16 February 2025

Lion Global All Seasons Fund revisited (SRS strategy)

 






I have $15,300 to deposit into SRS every year, so if I were to do a monthly RSP that is roughly $1,200 a month

While I have talked about Amundi Index MSCI World being a good choice, its performance is heavily dependent on the US stock market. MSCI World does not include emerging markets (unlike MSCI All World or FTSE All World).

So I have taken a look at Lion Global All Seasons Growth again. The AUM has slowly been inching upwards and its expense ratio as of June 2024 was 0.39% meaning that they someone managed to lower the ER further.

Given current S&P500 levels, my plan is to do a 50/50 split of Amundi Index MSCI World and Lion Global All Seasons into SRS. 

Saturday, 8 February 2025

The Failure of Dividend Investing?

 




Recently in the forum, there was a query whether Dividend Investing has 'failed', with reference made to the portfolio of certain dividend investor. 

In order to determine whether something has failed, you need to set a standard. If the standard is the recent performance of MSCI World, its pretty obvious that someone who only buys Singapore dividend stocks will have 'failed'. However this begs the question why MSCI World is the benchmark for an SG investor who may have other priorities, such as saving up S$ to buy a new home and pay for renovations.

At the same time, it is important to take a hard look at our portfolios and admit when we need to make improvements. Those that simply held onto their highly concentrated SG-REIT portfolios instead of diversifying ended up losing more money than they should have. 

At the start of 2022, I admitted to myself that I had underperformed S&P500 and my 2022 New Year's resolution was to start buying more S&P500 and World ETFs:

    January 2022 strategy

I am glad I took a hard look at my portfolio and started buying World/US ETFs. As a result, the concentration of REITs in my portfolio dropped drastically.


Measuring Failure for Dividend Investors?

Personally, I feel that success or failure of dividend investing is linked to whether one is able to invest in stocks (including ETFs) that are able to grow their earnings and therefore pay more dividends.  Capital gain is not so critical to me since my preferred holding period is forever.

I took a look at the 9 largest SGX-listed stocks that I hold (all of which are 'dividend stocks') to analyse whether they have been able to grow their dividends. Overall, the dividend growth looks healthy. The 3 REITs in the top 9 list showed small dips in their 2024 dividends but nothing catastrophic (compared to their share price declines).

So my quick conclusion is that dividend investing has not "failed" though it has underperformed S&P500.