May Strategy: ETF + SG Reits

 

I was pleasantly surprised that my portfolio return managed to hit 10%+ in May 2024. May is supposedly a bad month for investing ("Sell in May and Go Away").  My original target for2024 was "high single digit", if the rally keeps on going, I may need to revise my end-2024 target to 15-20%.

It is obviously not going to be a straight line upwards. Markets always jump the gun when it comes to predicting interest rate cuts, so there should be a short correction when the market realises that the rate cut, while inevitable, is not as early as they would like it to be.

SG REITS

SG REITs have been doing terribly of late. My two target REITs are Frasers LCT & Capitaland Ascott. Many pundits and influenzas are saying buy REITs now. However, that is basically the same as saying that interest rates will be cut, which is something that seemingly the entire world already knows. So when rates are finally cut and REITs rise, they will point out their 'correct' stock calls and maybe try to sell you an investing course.

My policy is to buy either VWRD and VUSD the same day I decide to buy any SG REIT. This prevents me from dumping all my cash into SG REITS and allows to be compare maybe at the end of the year, which purchase did between, REIT or ETF....

Returns on regular DCA of STI ETF over 10 years

 

I came across this blog where the writer calculated the returns from diligently dollar cost averaging into the STI ETF over the 10 years. The results are not fantastic but 4% CAGR still beats CPF OA. 

Finance Opti: Is STI really the Super Terrible Index? My returns after investing 10 years

Its great that there are financial bloggers who produce substantive quality content as opposed to financial influenzas who try to stretch out publicly available information you can read in 1minute into multiple long form youtube videos.

As I have shared in this blog and in internet forums, my approach to buying STI ETF is to only buy in when it is below $3. This means that I bought during the GFC, 2016, and 2020 (Covid-19) crashes/corrections. My reason for buying is that it is a safe bet that STI will recover to >3000, and when I buy STI ETF at a discount, it means I am paying "less" for the yield that it offers.

I primarily use CPF-OA to buy STI ETF since there are various restrictions concerning what you can use CPF-OA for. With Endowus and other Robo-advisors today, perhaps the restrictions are not as bad as when I first started out of course.

Link to my 2017 blogpost: BuyafterCrash: STI 3,000: What's the plan?

Link to my 2020 STI ETF purchases: BuyafterCrash: Averaging down progress

Link to my 2016 STI ETF purchases: BuyafterCrash: Returns after regularly Investing in STI ETF in 2016

Dividends Collected: April 2024

 

April is usually a quiet month for dividends. 

There is a large year-on-year increase because of the maturing of my CPF T-bills (1yr and 6mth). On maturity, I recognise the interest paid as part of my passive income. As mentioned previously, I use the term 'dividends' loosely when I should be saying "passive income." I also decided to recognise DBS bonus shares as scrip dividend with a cash value. This will be a one-off bump in passive income.

Spending money on health & fitness

 I have written previously about why one should be prepared to spend money on health and fitness. No point achieving financial independence if you don't have the health or fitness to allow you to enjoy your freedom.

While fitness and health is more a question of time and willpower, having extra passive income to spend gives you optionality in how you pursue fitness and health.

I am a fan of Nike Air Pegasus (incidentally so is Dividend Warrior - he posted an unboxing video of his Pegasus 39) as it has been around for ages and is seen as a 'reliable workhorse' shoe even if it it not the fanciest or the best. 

More / Better shoes / Apparel?

My main running shoe is the Pegasus but recently I wanted to buy another pair to leave in office for lunchtime runs. I think I bought my current Pegasus for $79 at a sale but recently, there was an even bigger sale of Pegasus 39 in a less popular colour for $53.94. I immediately grabbed a pair even though the colour was not my favourite. I also bought a Winflo 9 (very nice colour) for someone at $59 (Pegasus is a more 'expensive' shoe than Winflo but $59.94 is still a decent price for Winflo).

Photo of a Peg 39 in a nicer colour than the one I bought

I confess that I'm probably not done with my shoe buying as I probably need a more cushioned shoe for longer runs. Unfortunately, the higher end shoes of all the main brands with max cushioning, don't have as much discount as mass market shoes like the Pegasus (apparently Nike's most popular running shoe). I'll still try to wait for a good sale though. 

Since it was 40% off, I also got some running shorts. I think the critical feature of running shorts for me is a pocket that can 'safely' keep a key or a credit card. A velcro tab is ok, but a zipper may be the safest. 

Better Earbuds

Next, I am exploring running earbuds. My current Xiaomi earbuds are decent but for running, I find myself having to regularly 'adjust' them. So I am looking at perhaps something more expensive but dedicated to runners, and also whether I should get one with built in memory so that I can play music without having to carry my phone.  

Cash Management Update: Topping up FSMOne.

I had previously written about my cash management strategy which is perhaps not optimal and reflects a certain "laziness" on my part as I don't spend time chasing the best interest rate available. 

While my plan was to 'freeze' my cash holdings, the amount of cash has been creeping up because I can't bring myself to invest my entire cashflow into equities. Perhaps out of habit, I always 'save' a portion of my cashflow as cash - though I would add that a big market crash always sees a reduction in my cash holdings, as I like to buy after a crash.

One justification for doing so is that from an asset allocation perspective, saving a portion as cash ensures that my cash holdings is a certain % of my total portfolio.

At the same time, if there are easy improvements to my cash management that take very little effort, I should try to implement them.

I have decided to make the FSMOne auto-sweep account one of the places where I am going to hold my cash savings. I have been slowly topping it up further and my target is to start with $75k in it. 

In terms of liquidity, if I need to move the cash out of the iFast platform, it will take a few days. But if I need the cash for a stock market buying opportunity, it is instantly available in FSMOne to purchase SGX, LSE, HKSE, NYSE etc shares, so to that extent there is 'instant' liquidity.

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Previous cash management post for reference: BuyafterCrash: SSB T-Bill Cash Strategy

April Strategy: Europe's turn to outperform?

 

You can discern from my Portfolio page that I am overweight UK and European equities which has resulted in underperformance in the past. It is not because my UK/Euro equities lost money (they are also overall green thanks to my top Euro holdings being ETFs, Financials and Commodities). It is that I tended to pick Euro stocks that are supposed to be boring dividend payers rather than growth stocks with higher expected capital gain.

While I have Vodafone in the red, it has not been one of my top holdings though I have been adding to it after it crashed further, as I had mentioned in an earlier blogpost).

I was cheered by the fact that European markets have moving up slowly and steady with the UK FTSE 100 hitting a record. 

As a result, there appears to be a marked divergence between my portfolio performance and Vanguard World. I predict that our local forums and maybe even some local bloggers will start posting about investing in European stocks (eg: late to the party / FOMO sort of posts like "XXX has risen 100%, should you still invest???")

However, I will never underestimate the power of the S&P500, which means that I will continue to put at least 50% of my free cash flow into World/US ETFs.

Strategy: April 2024 - REIT 'correction'

 While Global Indices show a slight down trend, SG REITs have been falling sharply.

Today, Frasers Logistics Trust ("FLCT") went below $1.00 and I am happy to accumulate more under $1.00 so I bought more at $0.97. My average buying price is above $1 so this is one of my 'red' counters. 

I had noticed that earlier this week, a lot of local bloggers have been posting about SG REITs and some even shared their purchases of local REITs. That is usually a sign that there is going to be a correction. 😐

Nevertheless, I feel that fair value is above $1 so I will continue to accumulate at current prices. Previously I mentioned it was ok to buy even between $1.01-$1.05 and had been buying in that price range as well.

At the same time, I also bought more VWRD last night. As mentioned many times, I have resolved to be disciplined about adding to both my Global ETF holdings and individual stocks. 

Long time ago, I may have gone all in on cheap SG REITs but now, I am more diligent about dividing my purchases between individual stocks and ETFs.