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

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. 

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.

Dividends: December 2019

Edit 2 Jan 2020 - AHT merger with ART - there was a nearly $2k capital refund at the last day of the year. Then FHT paid their dividends on 28 Dec (SCB slow?), so there was a 2.6k upward revision

Note: Vanguard/iShares dividends recorded in Jan/Apr/Jul/Oct. (Last year Vanguard paid in Jan, this year they are paying in Dec. For consistency I'll keep the months the same year on year)

I managed to double the dividends I collected in 3 years (i.e. my 2019 dividends is more than double my 2016 dividends) The above sum does not include CPF interest. I thought about including it but in the end I decided to exclude it from the graphs in order to maintain consistency with previous years. However, once it is paid out in January, I'll add it to the final figure of dividends collected for 2019.

2019 Total Dividends + CPF interest= $117k

UK Elections - Conservatives Win

UK Elections - Conservatives Win
Stocks rally

• Relief that its finally over.
• Belief that there will be a deal rather than no-deal. 
• Threat of nationalisation removed, National Grid, SSE, BT, Royal Mail rally.

Nice 1 day gain in my interactive brokers account. Probably one of my largest 1-day gains since the financial crisis.

Lloyds is probably one of the biggest beneficiaries, adding about +8% to its share price on the news. In my previous post I talked about accumulating Lloyds. The position is a decent size but because it is a pure UK play, I hesitated to add too much, preferring to diversify with SAN and ING

https://buyaftercrash.blogspot.com/2019/10/brexit-deal-announced-with-eu.html

Synthetic ETF - 0% withholding tax on US dividends.

"ETFs that synthetically replicate major US equity benchmarks have clear structural advantages over physical ETF models, which has delivered outperformance and helps explain the big difference in demand.

Foreign investors in US stocks are generally subject to a withholding tax on dividends of up to 30%, although many can reduce this to 15% through the application of tax treaties. However, under US tax law, namely the HIRE Act 871m, swaps written on indices with deep and liquid futures markets, e.g. the S&P 500, are not required to pay withholding taxes on dividends.

This means that while a European-domiciled physically replicating S&P 500 ETF will generally be able to achieve a maximum of 85% of the dividend yield, a synthetic fund can theoretically achieve up to 100% of the full gross dividend amount. With the S&P 500 yielding around 1.9% (2% on average over the past decade), this exemption means synthetic funds can potentially achieve up to 30 basis points of additional performance each year."

https://www.etfstrategy.com/why-investors-are-flocking-to-synthetic-sp-500-etfs-10339/

*************

The linked article indicates that investors are willing to take on the counterparty risk of synthetic ETFs in exchange for the advantage of 0% withholding taxes on dividends.

Personally I am agnostic since I am well diversified. If there is sufficient liquidity for the LSE-listed synthetic ETF that guarantees me a few basis points extra every year due to 0% withholding it might be worth a small position. However, avoid the near-zero trading volume SGX ones (which also charge dividend handling fee). 

Dividends November 2019

November is a quiet month. I got a one-off boost due to the Prudential demerger. PUK ADR holders also received M&G shares, but since there is no US listing, the ADR manager sold the M&G shares and ADR holders got the sales proceeds.

I had to correct my Oct 2019 dividends as I missed out the cash value of the OCBC Scrip dividends which were paid in Oct 2019.

Once I add the CPF interest for 2019, I should be crossing the passive income 100k mark for the first time.

Short term Fixed Deposits - you might get a better rate from RM.

SCB RM informed me that they could offer 9month S$ FD at 1.85%. That's 0.2% higher than the website rate. Actually its not surprising since the financial markets are shifting from day to day whereas the website rate may be several days, if not weeks old. Yet you don't want to be updating the website every day as that might confuse customers (and also the web team and the loans/investment team might be different people and there is also lag in doing these updates).

Previously, I was also offered an US$ FD by SCB RM that was not advertised on the website.

When you look at China Taiping, Singlife, and NTUC offering 3 year endowment plans below 2.5% (and miserable SSB rates), 1.85% for 9 months actually looks pretty good. I asked the RM whether SCB on maturity will  rollover the FD into some default (i.e. lousy) interest rate if customers forget to give an instruction to discontinue, the RM stated that the money will go back to the main account. (You can actually check this in internet banking - my current US$ FD states the current instruction on maturity - i.e. it will go back to my High Account). So a 9month FD with no catches, definitely worth putting some excess money over it (after hitting the 'cap' of $70k for the OCBC 360 account).

Interest rates (and perceptions on its direction) of course vary from day to day, so its not guaranteed that such an offer is available everyday. I also guess that the usual term and condition of "fresh funds" applies, but not an issue as my plan is to transfer excess cash from OCBC 360.

Mapletree Commercial Trust rights issue

I've been  holding MCT since IPO but I had never bought any new shares from the secondary market. Any additions to my holdings were through a previous rights issue (I think) + Scrip dividend from long ago (I think they stopped offering scrip dividend sometime back for this counter)

Results of the rights issue are in:  

806 allocated + 1839 excess rights at $2.24. Good opportunity to round up my holdings as I had odd lots from Scrip dividend.

Current price is $2.40. For some reason the price briefly dropped below the rights price but seems back to normal now. 

Regular investment beats stock picking, beats holding cash & waiting for crash?

In a recent HWZ thread, those that DCA IWDA (MSCI developed World ETF) regularly in 2019 reported a year to date 20%+ money-weighted return in their Interactive Brokers Statement. 

As I am heavily exposed to UK stocks, I had no idea whether I would be losing or making money at this stage. I decided to have a look and was pleasantly surprised that I had a year to date return in my IBKR account of 14%+. Obviously, it underperformed a broad-based ETF, but given the various UK problems, I'm glad that its still a positive return and hope there is some upside after the Dec 2019 UK elections.

I guess that I can console myself that my 14% return is still better return than all those who are holding cash and waiting for the big crash and recession of 2019 that never came (well, there's still December for crash to happen).

Dividends Collected: Oct 2019

Quiet month for S$ Dividends, but Vanguard paid out its quarterly US$ and GBP dividends in October. 

Nearing the year end, I took a look at my dividend situation in 2018. it seems that this year I am on track for a decent increase in annual dividends collected, though in % terms, the increase is likely to be smaller as the absolute amount of dividends increases.

Edit: Oct 2019 dividends collected. Missed out the $ value of OCBC scrip dividend (I chose SCRIP but reflect the dollar value of the dividedn)

Parking SRS in 2.5% endowment, but HSBC is so slow

Looking at the current market uncertainty after a small recovery, I decided to put my 2019 SRS funds into a 2.5% 3-year endowment advertised by HSBC. This is apparently the first time HSBC is entering this space. You can apply online like Singlife.

Unfortunately, as the HWZ discussion thread shows, there has been some delay in HSBC in processing the applications. Its been 2 weeks and SRS still hasn't been deducted.

When Singlife debuted their endowment plan with a promotional 3.03% rate capped at $6k, there was huge interest. Nevertheless, they processed your applications within 48 hours. Why is a huge organisation like HSBC (ok the fine print says HSBC insurance, probably a subsidiary) taking so long to process something that Singlife only took 48 hours to do?

__________________

UPDATE: HSBC took 1 month to issue the policy. You get an e-mail of what appears to be a black and white scan of the policy. This can be compared to Singlife who issued a computer generated PDF in colour. The Singlife documents looked far more professional.

This is the first time into the online space, hope they will learn from the lesson and look forward to more policies because the rate they offered is attractive, even if the service was slow. 

Brexit deal announced with EU, Parliament not voted yet, premature rally?

I've been holding Lloyds since Brexit and it recently fell to Brexit levels. Of course my response is to buy more! 

Today, LYG back up to $3.12 while LLOY is at 61.56p after EU and UK announced a Brexit Deal. Parliament still has to vote on it if and rejected, are prices going to drop again? At this level I'm holding and not buying more. Did all my buying under $3. Bought a mixture of LLOY and LYG depending on whether I had spare US$/ GBP.

For 2019, I started buying Lloyds again in May 2019

May -  LLOY 59.43p
July  -  LLOY 52.3p
Aug  -  LLOY 49.8p / LYG $2.52 / $2.40 / $2.32  (catching the falling knife?)
Sep -   LYG  $2.63

Strategy: October 2019

I am in regular DCA mode with part of my free cash flow being diverted to warchest. ETFs are in play as a 'safer' option (i.e reduce non-systemic risk). Bought VDPX and VUKE this month.

This is a change from previous month where I used up my free cash flow to purchase equities. As the year ends, I also need to make my yearly SRS contribution and decide what to do with it. SSB 10-year rates are under 2% so it doesn't look good, on the other hand, there is no lock-in for SSB so one could switch SSBs when the time is right.

Prudential Demerger documents are out. Pru will demerge M&G. Since M&G will not be an ADR, the ADR manager will sell the M&G shares and return the cash. Prudential's dividend coverage is better than Aviva though it % yield is lower. Still an attractive buy.

Aviva remains in focus and I accumulate more this month. 

My OUEHT shares have been converted to OUECT. Next up will be my AscendasHT being converted to AscottRT due to the merger.

Dividends Collected: Sep 2019

I included the cash from the scheme of arrangement which converted OUEHT shares into OUECT shares. SIA 3.03% bonds paid their interest this month as well.

Strategy: Sep 2019

In the news is the drone attack on the Saudi oil processing facility. 

SCB alltime lowest premium for USD I've seen:

IBKR selling 1.37695

SCB selling 1.38243

(1.38243-1.37695)/1.37695 = 0.398% premium over IBKR (not including IBKR's $2 comm)

Changed some USD to buy my semi-regular DCA of VDCP using SCB.

Noticed that many shares have recovered from their lows. ING back to >US$10, SAN back to >US$4.

Strategy: Sep 2019

Exited BT ADR since it was going to be terminated.
Bought some LLOY, VOD to round off August 2019.

For September 2019, using the BT ADR proceeds to slowly top up my other shares. So far have bought RDSB, PUK, SAN, HSBC and VDEM

I think prices are attractive enough for me to use up my free cash flow to continue buying.  I am not building up warchest, neither am I drawing down warchest.

Warchest is reserved for STI 2,999.....

Dividends Collected: August 2019

Some of my top holdings, STI ETF, CDLHT, CDG  pay out their dividends this month.

More on Withholding Tax

Investmentmoats published an article about Withholding tax, here is some extra info not covered by the article.

For Singapore investors, I'm sharing some withholding tax knowledge that I have acquired (I'm not sharing my actual experience, and I cannot speak for investors from other countries):

(1) There is a difference between Shell-A and Shell-B, both listed on LSE and available as ADR. Singapore investors buying Shell-B pay ZERO withholding. Similarly, there is more than 1 BHP counter, and one of them has ZERO withholding, the other you pay the ozzie withholding. 

 (2) Australia withholding has the complicated franking credits. If you are an individual stock investor, you are unlikely to get the benefits of these credits, but somehow the ASX listed ETFs are able to do some tax magic and use these credits, so your effective dividend withholding becomes less than 15% when you invest via ETF. 

 (3) Spanish shares – zero withholding for scrip dividend (always choose scrip dividend where available). (4) technically, US listed bond ETFs purchased by foreigners should also be liable for zero withholding on ‘dividends as these ‘dividends’ are actually interest payments’, but you have to do the tax reclaim yourself because the ETF doesn’t declare it as qualified income for you. But I’ve never seen anyone successfully do this individually. Another blogger posted something recently about stashaway doing a tax reclaim on US-listed bond ETF withholding tax and refunding it to the blogger. 

 (4) Irish domiciled US corporate Bond ETFs pay ZERO withholding tax (see their annual report) 

August: 2 day drop then recovery?

8/9 August: 2 day dip after the tariff threat but even without any announcement the markets recovered by themselves. Whether it is a temporary pause before the downturn continues remains to be seen but as I type this on National Day morning, ASX 200 is +0.23%% and Nikkei +0.85%. Spent about $15k this month already. Looking to deploy $5k more then I'm done.

Shell price is quite weak despite the recovery by the markets. I have only held a tiny position in Shell after the GFC and always wanted to increase my holdings but its price really ran away. This looks like a good opportunity to build up my Shell holdings.

Strategy: August 2019

More trade war fears with new China tariffs scheduled to take effect on 1 September 2019. Fed cut rates by 0.25%.

The likelihood of a Hard Brexit with no-deal appears to have increased and many of my UK counters are affected and so has the pound. 

I took this opportunity to buy a little more of each of my counters LLOY, AV, SAN, ING, VOD, BT, RDSB.

Hope to be able to buy more shares and average down next week 5 August.

Dividends Collected: July 2019

A quiet month for Singapore dividends, but collected A$, US$, GBP, HK$ dividends from various counters. 

Dividend also include the first coupon payment for my Singapore Savings Bonds. I should have bought more SSBs when the average interest rate was above 2.5%, but I was keeping my warchest for a crash....

Strategy Report: July 2019

June 2019, I was worried about a market downturn and didn't buy any shares. I used my funds to subscribe to 18k Astrea V and 3k Frasers Centrepoint preferential offer/excess rights.

For July 2019, I turned cautiously optimistic enough to put part of my free cash flow into equities with the rest going to build up my warchest. Spent about 10k purchasing:

• Vanguard 3085.HK
• Aviva
• Sembcorp
• Frasers Hospitality Trust
• iShares LQDE

Purchases were done before traders started to believe that Fed would cut rates, so I benefited from the 'rate cut rally'.

Yesterday the news reported nearly 0 growth for the quarter, suggesting a slowdown, but STI still inched up due to the rate hike rally. 

Risks are still present, but I think the situation is not so bad that I should stop buying altogether.

Dividends Collected: June 2019

Mid-Year Dividend Review

2018 to 2019  20.17% Year on Year increase

Frasers Centrepoint Trust Preferential Offering

FCT is one of my "medium" size holdings in my portfolio It is a counter that I have been holding since the Great Financial Crisis. It has done very well and given me capital gains and regular dividends. Most of my FCT holdings are in CPF as I believe it was one of those that rarely had rights issues (rights issues are a hassle for CPFIS investors- more on this below).

2019 appears to be the first time in my 10+ years of holding the counter that it has embarked on a rights issue/preferential offering, presumably to buy Punggol Point. And unlikely highly dilutive issues like OUECT, the FCT preferential offering was merely 31 units for every 1,000 at the price that was reasonably close to the market price (at least, when compared to something like OUECT).

I was pleasantly surprised when I received all the excess rights that I applied for, which indicated that quite a few investors failed to apply for their rights. For CPF, there were huge problems with the timeframe - CPF investors like myself got the CPFIS letter 1 day before the deadline. I had to call the bank and fortunately they indicated that applications by fax would be accepted. 

Even more fortunately, I have a 5-year old multi-function Samsung printer that still has a fax function (I wouldn't be surprised if newer models have no more fax function).  I wonder if this caused some CPF investors to forgo their rights (if they didn't manage to send in their applications in time).

One thing I learnt about CPFIS. You are charged by the CPFIS bank (in this case OCBC), for every 1,000 excess rights that you apply for even if the application is not successful.

RESULTS
CDP: Entitled to only 124, applied 876 excess and got all 1,000.
CPF: Entitled to 713, applied 1287 excess and got all 2,000

Astrea V 3.85% Structured bonds

Astrea V structured financed securities were offered to the public. My family member and I applied for some. Unlike Astrea IV, there would be balloting if you applied for amounts above $50k (and in return you stood to get a higher allocation if successful rather than the tiny amount Astrea IV allocated). 

I got 18,000 while my family member got none. I would therefore say that my strategy of two applications to maximise chance of allocation was successful (if you do the maths of expected returns based on the Astrea V allocation table, two applications are better than one because the quantity allocated/quantity applied ratio is a decreasing one).

I wrote about Astrea IV here. This is a structured finance product, rated Asf  by Fitch and A+ by S&P. Astrea IV was oversubscribed by 7.4x despite the negativity by the anonymous internet brigade, and a similar situation occured with Astrea V. 

For Astrea IV, I looked at the yield of BBB+ investment grade SGD bonds of similar tenor and noted that their yields were much lower than the Astrea IV's 4.35%, suggesting that the price of Astrea IV would go up and the yield would go down to where other investment grade products were situation. Turned out to be correct. 

Astrea V at 3.85% is lower than Astrea IV's initial yield, but its still higher than Astrea IV's current yield to maturity, and it's not rocket science that Astrea V's price will go up at least in the short term.

Some keyboard warriors also cast doubt on ratings agencies' ratings of structured finance products. Here is S&P's writeup on their structured finance ratings:

Structured finance: 'sf' identifier

111. The 'sf' identifier shall be assigned to ratings on "structured finance instruments" when required to comply with an applicable law or regulatory requirement or when S&P Global Ratings believes it appropriate. The addition of the 'sf' identifier to a rating does not change that rating's definition or our opinion about the issue's creditworthiness. For detailed information on the instruments assigned the 'sf' identifier, please see the appendix for the types of instruments that carry the 'sf' identifier.

Dividends Collected: May 2019

May is a good month for dividends with UOB and DBS paying dividends this month. OCBC pays in June 2019.

Recovering from my 2018 MTM Losses

As a write this, there was a brief 1 day panic on 6 May regarding the US-China trade war. It seems to have subsided somewhat the next day. Anyway, I was reviewing my interactive brokers portfolio and noted that if dividends were counted, my portfolio in 2019 had basically recovered all of the Mark-to-Market (MTM) losses in calendar year 2018. The MTM loss was $95k+, so it was a sizeable drop in portfolio value. (for IBKR only, as my local stocks there's no function in FSMOne/SCB/CDP for reporting annual MTM p/l)

To give an example of MTM losses, one of my biggest holdings is the ETF VDPX. Coming into 2018, I had a sizeable position bought at an average price of US$19.87 (plus the 4% dividends collected).

Start Jan 2018 price: US$27.715
End Dec 2018 price: US$22.93

Based on these prices, MTM accounting says that I suffered a 5-digit US$ loss in my VDPX even though one could say that I have not 'lost' since the current price never dropped below my average buying price. However, I think its better to adopt a consistent method of calculating portfolio return rather than to pick whatever measure is most flattering. 

So similarly, for 2019, I will take the US$22.93 price and look at what the price is (about US$25.50 now) to see what is the return for VDPX this year on an MTM basis.

Dividends Collected: April 2019

Singapore companies don't usually pay dividends in April, the tax month. So the only S$ contribution is the Temasek 2.7% bond coupon.

However, Vanguard HK and UK, and iShares Australia pay their quarterly dividend in April. 

April 2019 strategy

Hardly bought anything this month April 2019. At the start of the month I bought Vanguard Asia High Yield ETF 3085.HK and continued to accumulate more WQDV. But everytime I buy, the price keeps going up. 

But bulk of my cash went towards building up my warchest. Moved $15k of my warchest into SSB. Rates will be worse next month.

Dividends Collected: Mar 2019

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

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.

Comfort delgro March 2019- back to 'large holding'

http://buyaftercrash.blogspot.com/2018/01/2017-performance-of-largest-holdings.html

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.  

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.

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:

https://www.belegger.nl/Forum/Upload/2014/7530608.pdf


The thread on WHT discussion in HWZ is here: https://forums.hardwarezone.com.sg/money-mind-210/how-buy-bonds-singapore-5278285-8.html


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. 

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...

Dividends: January 2019

Quiet start to Singapore dividends. January is the quarterly payment for Vanguard UK and Vanguard HK dividends.

Edit: late payments for LQDE/SDIG/SLXX/WBK added

3-4% yield - Easily achievable or No way!

These are the current dividend yields of various ETFs that I hold based on the data on the ETF's website as of Jan 2019:

Vanguard FTSE100 4.65%

STI ETF 3.47%

Vanguard Pacific  3.69%

Vanguard Asia ex Jpn High Yield 3.76%

ASX200 ETF 4.31%

HKSE Tracker fund 3.48%

Proxy for Euro Stoxx 50 which does not declare dividends: Vanguard Europe ex UK 3.21%

Someone in HWZ mentioned that a $1m portfolio yielding 3-4%  for retirement would be a good option for annuities but there are still keyboard warriors/worriers claiming that such a yield is not guaranteed. 

My view is that 3-4% yield is a conservative target and easily achievable using an asset allocation strategy for any 'normal' risk profile. Chasing higher yields like 5%+ might lead to a mismatch between risk profile and portfolio risk. 

Portfolio Top Holdings Review: Start of 2019

My top holdings are in the Portfolio page in this blog. I did a brief review to see if there were any movements in 2018.

Singtel: Small to Medium (Z74.SI)

I have been using SRS and some cash in SCB to accumulate more of Singtel. With my last purchase for SRS at $2.96, it has moved from the 'small' to 'medium' category. I will probably use my SRS funds to continue accumulating Singtel.

Euro Stoxx 50 ETF: Small to Medium (XESC:LN, or CS51:LN)

I have been making small purchases throughout 2018 and it has now crossed into the medium category. I pick this ETF as it is listed in GBP but reinvests the dividend so I do not have to deal with the hassle of Euros. All LSE listed Euro ETFs declare dividends in Euros even if they are listed in GBP (something like the buy China ETF using HKD but get RMB problem. The index dividend yield (which is reinvested) is 3%+ plus which is very nice for a mega-cap ETF. 

I will continue to accumulate this on a quarterly basis

HKSE has a Vanguard European ETF which declares dividends in HKD, but it has a higher expense ratio and I am not sure if the tax position would be as favourable as an ETF domiciled in Ireland.

Lyxor China Enterpises: Unwinding Position

Lyxor announced mergers/delistings of its ETFs. Its a matter of time before they exit fully I guess. With China market staging a brief recovery, its time to unwind the position. I think I already have enough China exposure without this ETF, so I am still thinking what to do with the funds. Maybe HK Tracker fund 2800.HK and Vanguard World VWRD?

Standard Chartered US$ Forex Spread

One very frequently sees posts in HWZ saying that SCB forex spread is bad. For those planning to buy IWDA and hold 20+ years to retirement, I can only say 'so what'?

User Chopra on HWZ found a 2016 post on SCB where it was pointed out that the spread  for US$ was 2.2% two ways (i.e. buy-sell) or 1.1% one-way. A 1.1%/ 2.2% one-off forex premium shouldn't discourage anyone from investing for 20 years, but many keyboard warriors seem 'paralyzed'. They say SCB has bad forex, then they worry whether IB is 'safe' and about 'tax' and the US$10 activity fee.

More users have done the calculation and the 2018-2019 SCB forex spread over IB is now only 0.65% one way (or 1.3% both ways). Yet I guarantee you that keyboard warriors will continue to complain about SCB's 'bad' forex rate.

2020 Edit: The forex spread for IB is now 0.4%


SCB USD High Account holders can also deposit physical US$ cash without charges, but I already calculated that saves your $4 for every $1,000 deposited. Frankly, if I can just change my S$ to US$ electronically, why would I bother with the hassle of finding the moneychanger with the best rate and queuing up at bank to deposit cash?


2016 Post for reference: http://buyaftercrash.blogspot.com/2016/06/interactive-brokers-or-standard.html?m=1

Strategy Report: Jan 2019

I started off the year by buying 3085.HK under HK$20, CapitaLand at $3.06 and Sembcorp at $2.50, hoping to average down, but prices went up instead.

In mid-Jan, continued to add IOZ ASX200 ETF as I haven't bought for some time and needed to rebalance to bring up my Australia holdings, add Euro Stoxx 50 ETF CS51 and some more Aviva. Also did some small share top-ups of local shares here and there.

In the fixed income space, SG Savings Bond is no longer attractive so I am still looking around. Singlife has a 5-year 2.5% plan and 3-year 2.25% plan which might be an ok place to leave some cash.

2018

Interactive Brokers Time Weighted Rate of Return for Year 2018: -12.55%