3 April 2025 Tariffs: "I was here when it happened"

 

This blogpost is to record for posterity, what I was doing when US tariffs against the rest of the world were announced. 

Bought VWRD, VUSD, NKE, UA, LULU.

Dividends Collected: March 2025

 

Slight drop in dividends vs 2024. Some Vanguard ETFs that paid dividend in March 2024 are now paying in April 2025.

Money Market Funds instead of T-bills for cash management?

 I have previously posted about my cash /cash-equivalent strategy which involves among other products, a monthly T-bill ladder. Given the differing maturity dates and application dates, and reduced T-bill rates, I wondered whether maintaining a cash T-bill ladder is worth the hassle.

After looking into Money Market Funds, I decided to add MMFs to my cash management strategy and to discontinue my monthly T-bill ladder and add the maturity proceeds of existing T-bills to an MMF.

This does not mean I will have zero T-bills. I still plan to have a single $50,000 cash T-bill which I will roll over every 6 months. If my MMF funds get too large, I may transfer out some to buy a 1-year $50k T-bill. That should be manageable and simplify my life. At the same time, I'm not too overexposed to MMFs.

Which MMF?

My starting point is always the cheapest/lowest expense ratio. In this case, the Fullerton SGD cash fund with an expense ratio of 0.17% is my no.1 choice. I've started purchasing this using the FSMOne platform (since there are no unit trust platform fees for Diamond+ tier members) and plan to cap my exposure at $100k. 

Unfortunately, my research has not shown me a good no.2 choice as the other MMFs have significantly higher expense ratios.  Lionglobal has a TER of 0.31% and UOB has a shocking TER of 0.42%. Recall that the Lionglobal All Seasons Balanced Fund has a TER of 0.48%. The standard version of All Seasons has 70% fixed income and 30% equities and I would rather buy that than a UOB MMF with 0.42% TER. On the other hand as a UOB shareholder, I would like to thank all customers who purchase UOB funds.

After I reach $100k in Fullerton SGD fund and have bought my $50k x 2 T-bills, I will then have to do more research what is the next vehicle for holding my excess cash.  I might even consider a balanced fund like Lion Global All Seasons (standard). With 70% fixed income and 30% equities, I can do some mental accounting and treat each $1k investment as a $300 DCA into equities and $700 DCA into fixed income, given the low expense ratio.

What Lesson to be Learnt from Chocolate Finance?

I see lots of news articles and commentaries about 'lessons' to be learnt from Chocolate Finance. For full disclosure, I never put any money in Chocolate Finance. I read that CF was started by the ex-CEO of Singlife and I knew it was 'pattern like badminton.' If you recall, Singlife offered a 'savings account' with an attractive interest rate, but cut the rates after a short while. I promptly pulled out all my cash. The Singlife customer base made it attractive enough for Singlife to be acquired.

If you read CF's website, you will know that the high interest rates were just a loss leader to increase customers number and were totally unsustainable. CF's website states that they take your money and buy a variety of MMFs. To be sustainable they can only pay you the returns from the MMF (minus any costs they may incur). If they are paying you more, they are using investors' money to do so.

So the lesson I learnt from CF is that since CF is just buying MMFs, I should just cut out the middleman and buy MMFs directly. 

 

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. 

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. 

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.

Dividends Collected: Feb 2025

 

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