Thursday, December 22, 2016

Top/Worst performers in my portfolio for 2016

It's coming to the end of the year. In one week's time, we will be ushering in 2017.

So how did my income portfolio fare for 2016? I will officially be recording and tabulating the results on 31 December 2016, but it doesn't hurt to review the performance of my counters thus far. I'm not the type who monitors the prices of my holdings daily, so some of the top/worst performers were somewhat surprising.

I define returns as follow:

((Current Market Price + Dividends/Distributions received) - Purchase Price)/Purchase Price

I have included transaction costs in the above calculation as well

Worst Performers

1). In first place, the worst performer for the year goes to Sabana REIT, with a -35.44% return. I have nothing to say about this. Move along now, move along. Damn paiseh.

I've learned some valuable lessons from this, and it's my first "tuition fee" that I paid to mister market. Since my capital is small, I have lost only $280 for this. It's painful, but not catastrophic. I have since divested this counter.

2). Second place goes to Kimberly Clark Corporation. This counter shouldn't be here actually. I managed to catch it at its lowest due to newbie luck. As my strategy is to nibble in multiple tranches, transaction fees dragged it to the second worst performer, with a -7.63% return.

3). Third place goes to iFAST Corporation, with a -6.96% return. I purchased it when it fell to its IPO price. It still fell further. My investment thesis still stands so I'm not too worried about it.

4). In fourth place, we have VICOM, with a -6.73% return. Similar to iFAST, my investment thesis still stands. However, I purchased it at the wrong price. I will be detailing this mistake in a subsequent post.

5). Rank 5 goes to Starhill Global REIT, with a -3.91% return. After purchasing most of the REITs at their lows at the end of last year/start of this year, Starhill Global was the only REIT that has not moved proportionately as compared to the others. Hence, I got in at a slightly higher price, which explains the negative returns here. No worries here either.

Top Performers

5). In fifth place, we have Japan Foods Holding, with a 14.57% return. Newbie luck here again. I managed to catch it at its lowest. Compared to other restaurant counters, JFH is one of the strongest ones out there. Lean business model, good cash hoard, decent ROE, profit margin, synergy between its franchises, etc.

4). Fourth place goes to Parkway Life REIT, with a 14.63% return. Nothing to comment on here.

3). Third place goes to Dairy Farm, with a 18.99% return. Interestingly, I recall buying Dairy Farm when B of Forever Financial Freedom sold his entire stake in it.

2). Okay, second place is somewhat surprising. It goes to ST Engineering, with a 20.62% return. I know it's a quality counter in my portfolio, but I didn't expect it to do that well. Again, newbie luck here. Managed to purchase it at its lowest.

1). First prize goes to......................*cues music*.............Lippo Malls, with a 27.40% return. After purchasing this counter and after improving my fundamental analysis skills, I came to realize that I may have made a wrong purchase. There is quite a lot of stuff that I don't really know about this counter. I've spent many a times scratching my head as I try to make sense of the corporate actions that were undertaken. The information detailed is quite convoluted and I am unable to make sense of its ramification for unitholders.

And then, you have to look up "north" as well. Veteran bloggers shy away from this counter while newbie bloggers flock towards this counter.....hmmm, I foresee myself divesting this counter some time in the future.

Actually, the best performer goes to Saizen REIT, with a 44.28% return. However, since this is a one-off issue, I did not want to classify it as the top performer.

Thursday, December 1, 2016

November updates

So what has Unintelligent Nerd been up to? I'm pretty much occupied with my new job and school. School work is tough. Considering my background, I think I got more than I bargained for by signing up for the 1-year programme in engineering school. For the first couple of weeks, the terms used by the lecturer flew past my head. My understanding has gotten a bit better since then, but there is still much work to be done. I'm done with 3 tests and am left with 2 more next week before the term closes for a much needed break.

The following are some updates in my life:

I'm settling in nicely at my new job. The colleagues are great and we gel well. The only grouse I have is that my commute time has increased to a whooping 3 hours 20 minutes journey each day (1 hour 40 mins to and fro).

Formal Education
One of the goals which I have set for myself in life is to try to achieve a perfect GPA. It is possible to achieve such a goal for these 1-year programmes; there are fewer modules so there is lesser chance to screw things up.

I failed to achieve my goal in the previous 1-year programme I took. This current 1-year programme starts with a blank slate. If I don't screw things up, I could reasonably achieve my goal. However, I'm getting cold feet because it's engineering we are talking about here.......

Informal Education
At the same time, I'm taking a Coursera course on Micro-economics. I find that reading up on the level 1 CFA syllabus without receiving any feedback on my progress/understanding is a sub-optimal strategy to take. With Coursera, at least I'll be able to gauge my understanding of the concepts (in this case, econs) through their built-in quizzes.

Book Reading
Personal development from book reading is put on hold. I think I'm quite distracted lately. I've been reading multiple books halfway. Either I lost interest or do not have sufficient cognitive resources available to digest the materials.

Personal Finance
I have opened a CIMB FastSaver account and have designated it to receive my monthly salary from my employer. Sure, I could get more than 1% interest, but considering all the hoops I have to jump through, the no-frills FastSaver account is more suitable for me.

I have been eyeing some counters on NYSE and Bursa Malaysia. In fact, I have opened a US trading/settlement account with Standard Chartered to trade in the former market. I have just placed an order on a particular US counter and hope the price would fall enough for my order to be filled. The counters I'm eyeing have dropped substantially, though I'm expecting them to drop more. As such, my entry position is but a nibble. If they fall more, I have multiple tranches of cash prepared to average down hard. If it goes up, just sit back and collect the dividends.

I'm still exploring what brokerages could be used to to trade in Bursa Malaysia securities. It does not make sense for me to nibble if custodian fees wipe out my dividends totally.

Recent Transactions
I initiated a new position in Mapletree Industrial Trust in two tranches in November when the price dipped. It is a counter which I have been eyeing for quite some time.

I added to my silver holdings as well.

Friday, November 4, 2016

瞒天过海 as my preferred self-preservation strategy

Being a Facebook user, I am observing more of my friends/peers/juniors taking an interest in personal finance. In my news feed, I see more of them liking the pages of personal finance websites as well as sharing articles on personal finance with one another.

I think that is a good thing. It is good to pursue self-education in the arena of personal finance which, in turn, would set them up with a better foundation in their lives.

However, I'm not going to talk about that group today. Instead, I will be talking about some other interesting folks who, through those online channels, stumble upon investing and made some profits off the stock market and have to broadcast their winnings on social media.

First up, we have our "income investor." Having stumbled onto income investing, he attended an income investing course and applied what he had learned from the course. Upon receiving his first distribution income from REITs, he had to photograph his bank transaction statement and upload it on Facebook, tagging and thanking his teachers in his post, as well as commenting that "I got free money from investing." Quickly, friends descended on him, asking for lunch/dinner treats, and commenting on their luck in having a rich friend. This is not a one-off incident by the way.

Next, we have the hotshot trading couple. After attending a trading course, hotshot couple was eager to apply what they have learned in the stock market. With a 2-year profitable track record, hotshot couple began posting some not-so-nice stuff on Facebook, even once openly denigrating an institutional investor which we all are familiar with. Every so often, he will post a stock chart with a smiley face, fishing for the comments of others. Lately, the couple commented that profits are harder to come by.....

Next up, we have our "value investor." "Buy Low, Sell High" and "Hunting for value" are some of the catch phrases she used. What intrigued me was her underlying thinking behind her recent buy call on Facebook: Samsung Galaxy Note 7 explode --> recall product --> revenue drops --> share price drop --> value stock.

Out of curiosity, I searched for Samsung's share price. The display is set to 5 years.

Well, the price did dive recently. But I wouldn't call Samsung a value stock. 

Also, Samsung phones happens to be in vogue now. You'll never know when they might go the way of Nokia or Blackberry. I have neither the competency in evaluating such companies nor am I keen to become dependent on the vagaries of consumer preferences.

What about the fundamentals? 

Cash flow from operations is decreasing/okaaayy. Intangibles are growing....Nah. Not my cup of tea. I'll pass.

Finally, we have the "investment" guy. I don't know him personally but a friend working in another company used him as an example of what not to say when introducing yourself on your first day of work. "Investment" guy is an intern whose interest/hobby is investing, as investing allows him to live the high life, fund his wanderlust, as well as to retire early. Following "investment" guy's sharing, my friend shared that the meeting room burst out into "oooo", "waaah", "rich kid", "investment siol!", etc.

Readers, I'm not sure what you think of these examples. As a private person (more so when it comes to investing), I think that these expressions are over-the-top. Furthermore, I think that there might be consequences for such expressions.

Look at how quickly people descended on "income investor," suggesting for catch-up sessions in order to get free meals. Now it becomes way harder to distinguish real friends from the false.

Would it be to your advantage if your bosses know that you could "quit anytime" because you are trying to achieve FF/FI (or whatever "retirement" term you use)? You could be perceived as "less dedicated" than your peers, even if that may not be the case.

Why should the company give you increment and bonuses when you are "so rich already?" Hmm.

When there are lay-offs in a recession, who is more likely to get retrenched? The diligent breadwinner who is supporting multiple kids or the young single who shares about the free money that he or she receives from the stock market? I'm sure the bosses' compassion would be directed towards the former.

Don't forget to take into account human envy. If your bosses are ones that did not manage their personal finances well in their youths, your success sticks up like a sore thumb, reminding them of "what could have been" if they had recognized the importance of proper financial management in their early years and have acted on them.

As for myself, nothing to see here. Move along now. I'm just 瞒天过海-ing. I'm just a regular unintelligent nerd who only knows how to work hard, study, and learn. Simi is investing? Can eat one?

Friday, October 21, 2016

Book Review: Singapore's Real Estate - 50 Years of Transformation

In my previous post, I alluded to my interest in developing competency in REITs analysis. However, there is quite a limited selection of reading materials that delve into the topic. For this reason, I broadened my scope and began sourcing for real estate materials in the local bookstores.

Today, I will be highlighting some of the points which I have gleaned from reading "Singapore's Real Estate - 50 Years of Transformation."

- The Real Estate Development Life cycle illustrates how an empty plot of land is converted into a building: (1) Land Assembly and Preparation, (2) Planning and Approval, (3) Construction and Project Management, (4) Marketing and Leasing, (5) Occupation and Use, (6) Upgrading, Renewal, Redevelopment. From there, the authors expanded what is done at each stage and by which players (e.g. government organizations, developers, etc.)

- Back then, when capital was scarce, developers recycled their capital by subdividing their properties into strata-titled units and selling these individual units to buyers.

- Some land parcels are designated as "white sites." Developers are given the freedom to choose what the land is used for. This allows the developers to be responsive to changing market conditions. In return, developers have to pay a premium for such flexibility.

- The government uses the Sales of Sites Programme (SOSP) to regulate housing prices by controlling the supply of land. URA and HDB is responsible for administering the SOSP.

- Real Estate Service Providers grew with the industry. In the early years, they provided mainly valuation services. Today, they serve as consultants providing a wide range of services ranging from fund management, capital advisory, project management, facilities management, etc. They might be undergoing digital disruption as data pertaining to the industry is freely available on government websites and websites.

- Interestingly, the authors cited a paper stating that real estate assets are usually priced at significant discounts to NAV while held in the developers' book. Guess we shouldn't really consider developers (and their respective real estate assets) trading below their book value as a plus point for investment? I have yet to read the actual paper though. *mental note to self to read it*

- It does not mean that REITs with healthy levels of occupancy rates are immune to bankruptcy. Even though New City Residence Investment, a residential J-REIT, had healthy occupancy rates, they were not able to refinance maturing loans and were forced to declare bankruptcy. Therefore, we should not conflate occupancy rates with debt servicing.

- UK Real Estate education focused on valuation, law, economics, construction, and planning. In contrast, US Real Estate education focused more on the business aspects: management, administration, finance, etc. Singapore adopts an eclectic approach by combining aspects from both models.

Prior to reading this book, my understanding of the Real Estate industry is just limited to the REITs I invest in. Reading this book provided me with a better understanding of where Singapore's Real Estate has come from to where it is today. As an investor, I think that the information provided in the book is good to know, but may not be directly used to improve my REITs investing acumen. Still, it makes me more appreciative of the Real Estate aspect of Singapore which I used to not have any knowledge of.

Meanwhile, I have to look elsewhere to further my REIT education. Maybe the references within the book is a good starting place?

Tuesday, October 4, 2016

Musings on life

One long-standing concern which I hope to eventually eliminate from my life is my lack of career stability. Since graduation, I have been holding on to contract jobs as a social science researcher. While there are the lucky few who managed to secure permanent research positions as a degree holder, the majority of organizations in my field are looking for Masters or PhD holders.

With plenty of me-time in-between jobs this time round, I reflected quite a bit:

I could never get used to this feeling of being a sojourner of sorts. Once I am finally comfortable with the people and the daily routine at work, my contract ends, leaving me with a bittersweet feeling. This time round, all is not lost. My next project is cross-organizational; I will be working with my ex-colleagues very closely. I am very grateful for this opportunity.

One recurring thought which I had while employed in my previous workplace was my willingness to accept a permanent position at said workplace if they ever offered me one. Though my bosses and my bosses' boss did brought up such a topic, they did note that I was unqualified because I lacked a Masters Degree, Without taking into account the admin staff, all employees had at least a Masters Degree and 40% of my colleagues/superiors had a PhD.

Competition for those permanent positions is rife though. PhD applicants have been applying for Masters-level positions. This is not a good sign.....

Side Interests/Personal Development
I enjoyed this short-term break from work. Besides reading up on books (see here and here), I have also completed the Health Insurance Module offered by the Singapore College of Insurance (see here).

Another of my medium-term goals is to complete the CFA. As I am a slow learner, I have not signed up for the level 1 examinations yet. Instead, I purchased the abbreviated Wiley Level 1 CFA books so that I can read to my heart's content before even attempting the examinations. The material on financial statement analysis has been an illuminating read. I am not sure whether is it because I got the abbreviated textbook, but there is not much material on REITs.

There goes yet another potential source of information regarding REITs investing. Other REIT-education alternatives which I am considering are as follows: (a) taking up the CMFAS Module 10, (b) read up on property books available from your major bookstores, (c) complete all the necessary exams to be a real estate agent, and (d) familiarize myself with JTC + other government websites. In times like this, I'm banging my head against the metaphorical wall out of frustration. I want to improve in my investing acumen but the information I need to improve with is either beyond my level or floating around piecemeal in cyberspace.

It is also during this period of time where I started this Unintelligent Nerd blog.

Personal Finance
Personal finance-wise, I am doing alright. As planned, my emergency fund kicked in when my contract ended. The only drawback was that my warchest is a bit on the low side. After purchasing a counter on my watch list recently, I'm almost out of ammunition.

Formal Education
This is a tricky bit. On one hand, I would love to delay taking my Masters so that I can invest more in this uncertain financial climate. On the other hand, I can't be delaying too long to get a permanent job!

A PhD is out of the question. While some have advised me to hide in a PhD programme to weather the recession, I do not find this a good idea. First, I am a slow learner. I would very much prefer to build at least the most shallow of foundations for my PhD topic first before even applying for a PhD programme; I have not done so. In investing, this is called margin of safety. :D Next, my dividend income from my portfolio is meager. This is exacerbated by the proportion of REITs in my portfolio. Cash calls during PhD with only a stipend income? GG (good game)! Third, I am still straddling between my social science research career and another field. So, which field do I go into? If I choose the latter, I could be committing academic suicide because of my poor foundations.

Masters then. Yet another problem. A Coursework Masters or a Research Masters? In my original field or jump to another field? I would love to do a Research Masters (more esteemed by research-centric employers) in that other field. But I have to play it cautious.

A Research Masters in Social Science? I've thought of a highly niche subfield where there are only 2 Singaporean researchers in it. Wait a minute, there are now 4 researchers in this area. Guess blue oceans do not remain blue for long.

In the interim, my strategy is to take up 1-year academic programmes sequentially. I have just completed and graduated from one such programme earlier this year. I will be starting on another of such programme in a few weeks' time.

Just one year back, I have been nagging encouraging my school mates and my colleagues who are on contract to continually upgrade themselves and to keep their skills sharp. I could hear the crickets chirp! Now, one of them is spamming Coursera courses to boost his CV; the other is seriously contemplating doing those 1-year academic programmes which I am currently doing. Has shit hit the fan in the job market? I'm not sure. Things could worsen further.

Friday, September 23, 2016

Reading up on Cryptocurrencies

I have been reading up on Cryptocurrencies lately. This post will serve as a summary of what I have learned from my readings. Specifically, Don and Alex Tapscott's Blockchain Revolution and Prypto's Bitcoin for Dummies.

Blockchain revolution exposed me to the concept of the blockchain - the underlying technology that supports cryptocurrencies such as Bitcoin. In fact, people should focus on the blockchain rather than on the individual cryptocurrencies such as bitcoin because of its potential applications beyond finance. I will be listing the points which stood out in my reading as well as my thoughts:

- Blockchain technology could be used to supplant remittance services. The poor migrant worker often had to pay high transaction fees to send their money back to their home countries. With blockchain, migrants could bypass such remittance services altogether. If the blockchain does take off, firms such as Western Union could see their moats eroding. (I used to wonder why Neratel would be agreeable to sell their payment solutions business, but after observing how FinTech and the Blockchain are encroaching on this space, I now have a new perspective on the situation).

- Companies' balance sheet could be accessed in real-time if it is deployed on the blockchain. Presently, balance sheets serve as a snapshot of companies' assets, liabilities, and equity at a particular point in time. If balance sheets are shifted onto the blockchain, investors are able to see any changes in assets, liabilities, and equity in real-time. (Personally, I don't think I'll be able to benefit from this. I'm already experiencing information overload in my financial journey thus far. Flood me with even more information? No thank you. However, I'm sure it will be very useful for the canny investors).

- Companies have started IPO-ing on the blockchain.

- The disrupters could get disrupted. Companies such as Airbnb and Uber may face disruption themselves. Consumers could directly liaise with providers through the blockchain instead of going through a platform.

- Estonia has adopted the blockchain into its infrastructure (*Note to self* Read up more on Estonia).

- Musicians, composers, artists, and creative professionals are adopting the blockchain. Though it is still in its nascent stage, investors are given the opportunity to invest in songs/arts/creative works and reap royalties from it.

While it is eye-opening to read about the potentials of the new technology, I still remained utterly clueless as to how to get started in it. To that end, I read Bitcoin for Dummies.

To get myself started, I have downloaded a mobile bitcoin wallet. However, I have not done anything with it yet. One thing's for sure, if I do get any cryptocurrencies, I'll spread the funds between a mobile wallet and a paper wallet. Placing funds in an online wallet kinda defeats the purpose of cryptocurrencies. Besides, there have been hacks on such online platforms before.

Cloud mining seems interesting, but I'll have to read more to weigh the pros and cons.

My purpose in dabbling with cryptocurrencies is just for fun. I am not looking at it from an investment/capital gain perspective.

Wednesday, September 14, 2016

MAMA and Investing

No, I'm not referring to your mother. I'm referring to the words underlying the acronym MAMA - Moratorium Achievement Moratorium Achievement.

Let me take a step back. How do individuals develop their sense of identity in life? When do they develop their own sense of personal identity? Is identity fixed or is it a fluid concept?

While there are many psychological theories that aim to explain identity development in humans, today I will only be discussing the work by psychologist James Marcia. His thesis is that identity is a result of the dialectical interplay between exploration and commitment. In life, we explore the various options the world offers us. Once we have made a decision, we commit to it. In so doing, our decision gets intertwined with our identity.

However, this is not the end of the story. Often, we have other personal aspirations, interests, side projects or even a complete change of heart. We recommit ourselves to these new endeavours/incorporate these new endeavours within our core identity, formulating a much more nuanced concept of identity.

According to Marcia, each one of us could be categorized into one of four Identity Status categories: Identity Foreclosure, Identity Diffusion, Identity Moratorium, and Identity Achievement.

Identity Foreclosure occurs when an individual made a commitment without exploring any alternatives. Example: "I must go into Banking/Law/Medicine because my parents said that only those careers will lead to a high pay and a bright future. Therefore, I follow lor!"

Identity Diffusion is characterized by neither exploring nor committing to a particular facet of life. Example: "What do I want in life? Don't know. Never thought about it before leh."

Identity Moratorium occurs when an individual experiences crisis in his or her life. Values, beliefs, and choices are called into question and the individual is forced to re-examine his or her value/belief system and past choices. Example: "Alamak. I chose this Major but I realized that I have made a wrong decision. What do I do now?"

Identity Achievement happens once an individual experiences and overcomes a crisis by evaluating beliefs, values, and choices and committing to a plan of action. Example: "I know what I want. I have done my research. I have consulted experienced people who have walked this path. I know the strengths and the weaknesses of my choice and I'll go all in!"

However, Identity Achievement is not a permanent state. Neither is the world nor our desires static. There will come a time when we either experience a crisis or a dissatisfaction with the way our current life is. That is when we re-enter the Moratorium stage, putting our values, beliefs, and life choices into the spotlight again (That's where you see all the midlife crisis/career change/and what not). Hence, the MAMA cycle.

Me being me, I appropriated his theory to investing. I believe I'm somewhere in Identity Moratorium with regards to the investing facet of my life. I know the importance of savings and investing. I personally took the decision to invest, without any external influence from anyone. I started by DCA-ing into the STI ETF through the POSB Invest Saver plan.

However, I realized that the above method did not suit my needs. I preferred cash flow through dividends/distributions over capital gains. Given a choice, I would rather prefer a higher proportion of total returns to be from dividends than from capital gains. Though I have some high-yielding REITs in my portfolio, they are but a small position. Low leverage, positive free cash flow, and cheap valuations are the way to go for me. :)

Yes, I am aware that "optimally" I should be pursuing value investing over income investing given my age. In some circles, it is said that capital gains (dividends included) from a value investing approach possess a higher probability of outperforming income investing. I'm still fine with that.

Do I have a lot more to learn about investing as well as my own investment temperament? I sure do. In fact, sometimes I get frustrated with my own progress in investment knowledge. I fail to understand the ramifications of various company announcements. If I progress on, I'll learn.

Are there flaws in my investment strategy at the moment? Yes. Do I know how to rectify or mitigate their impact? Somewhat.

What about you readers? Which stage are you in? One thing's for sure, none of you are in the Identity Diffusion stage. Why else would you bother reading my post?

Monday, September 5, 2016

Thoughts on the HI Module

Insurance is important and I know zilch about it. As part of my quest for personal development, I have spent the past 2 weeks studying for the Health Insurance (HI) Module offered by the Singapore College of Insurance (SCI). Why 2 weeks when I could have scheduled the examination at any time? Because I came across another blogger who shared that it could be done within 2 weeks. Well, I passed the module, but I now know I should allow myself additional buffer time when I do attempt the remaining SCI modules in the future.

Hopefully, as I take up more insurance modules, I would be able to reach a point where I am able to advise myself as to what insurance products I would need. Also, I could join the insurance industry in the event my main career and my backup careers fail me. However, I doubt that. Couple the notions of "insurance agent" and an "extreme introvert" and you'll have a person-job mismatch of epic proportions. Still, additional options doesn't hurt.

The following points are what I've learned from the HI module and which I've applied to my personal situation. Your mileage may vary; each person's financial situation is unique.

1). I do not think I need a Disability Income/Income Replacement insurance. As an income investor, I hope that the income stream from my portfolio will, one day, be sufficient to serve as a Disability Income insurance. Furthermore, you may not be able to receive the full benefits of an Disability Income insurance if you have income from other sources/high net worth. Under the coordination of benefits clause, the insurer could reduce the benefits pay-out if you have other sources of unearned income, let's say, dividends from an income portfolio.

In the intervening period (which is, I am at the most vulnerable as the income from my portfolio is pretty underwhelming.

2). I don't think I need a Hospital Cash insurance either. A Hospital Cash insurance pays you for each day you stay in the hospital. I think my income portfolio could also be used to carry this burden.

3). With Medishield Life, I am, to some extent, covered for Class C/B2 wards. If I do want better amenities (Class B1/A wards/private hospitals), I could get an Integrated Shield Plan. There are cases in which individual over-insure themselves with an Integrated Shield Plan and yet opt for a C/B2 ward out of ignorance of their insurance policies. This highlighted to me that I should thoroughly know what I want and insure myself accordingly.

4). While a medical expense insurance will take the full brunt of one's medical needs, an individual still has to fork out some cash to pay for the deductible and co-insurance. An emergency fund would be useful in paying down these out-of-pocket expenses.

Now, time to hit the books again. Onwards for personal development!

Monday, August 29, 2016


Fresh off the press is the SGX Asia Pacific ex Japan Dividend Leaders REIT Index (see here). A REIT ETF, based on that index, will be issued by Philip Capital (see here).

As an income investor, I'm glad for this development. If you compare the proposed REIT ETF with any one of our individual REITs, the yield is a bit on the low side (4.53% over the last 12 months).

Of the top 10 constituents, only 2 belongs to Singapore (Ascendas and CapitaMall). With the exception of the Link REIT from Hong Kong, the remaining 7 are Australian REITs. As the ETF will consist of 30 members, I was curious as to who the other constituents are. However, I was not able to find the information on SGX's site. The information is now available here.

The ETF will be reviewed semi-annually in March and September.

I will most probably deploy my cash into the ETF in tranches. While the PE ratio of 10.91 seems acceptable, the total returns for the Index have since ran up quite a fair bit. I have to remind myself that I should be looking at total return instead of yield on cost. If I purchase at too high a price, I would definitely lose out once the price corrects. A safer approach is to enter after a correction, benefiting from both a price appreciation and dividend yield (total return).

Book Review: The Rise of the Robots - Technology and the Threat of Mass Unemployment

Before I begin my book review, I would like to thank owq for some additions to my previous post. Initially, I planned to write a part 2 on the post. After some mulling through, I decided otherwise. Instead, I will be sharing what I have learned through reading Martin Ford's The Rise of the Robots: Technology and the Threat of Mass Unemployment. Book reviews will also be one of the common features of my blog.

The Rise of the Robots is a title that has always caught my attention whenever I visit Popular Bookstores. First, I have a personal interest in this area. Second, we live in a time of increasing digital disruption and automation. Job security seems to belong in the past. You never know when a new technology could arrive and displace you of your job! I do not wish to be blindsided to the potential impact that such emerging technologies could have on my job.

I will be enumerating salient points which I have gleaned from the book:

1). Historically, automation has vaporized jobs in agriculture. This has led to growths in the manufacturing sector. Similarly, automation has caused massive job losses in the manufacturing sector, pushing people into the service industry. In time to come, the service industry will be equally affected. All in all, jobs disappeared at a much faster pace than they were created.

2). Acquiring further education and skills may not necessarily mitigate the impact of automation.

3). Income inequality would further widen. Having save costs through automation, companies and shareholders would benefit the most. The author shared that the top 5 percent of households are currently responsible for nearly 40 percent of spending. This trend will continue into the future.

4). There is also a trend of "reshoring." Previously, companies go offshore for cheap labour. As offshore labour cost has risen, companies have adapted by bringing manufacturing back to their shores, using automation instead of human workers. One familiar name I saw was Kuka AG, the favourite stock of Tacomob. See here.

5). Competition in the job market will intensify. In 2011, there were 50,000 new positions in McDonalds. Over one million applicants applied for the jobs.

6). Artificial intelligence will be migrated into the cloud. Therefore, individual robots do not require that much onboard power and memory. What individual robots learn from their immediate environment are sent to the cloud, contributing to a global store of knowledge which could be used by other robots.

7). Knowledge workers are not immune. Software is beginning to be able to gather information and write coherent essays and reports in a variety of areas including sports, business, politics, finance, etc.

8). Freelancing platforms could grow smarter. Freelancers who use such platforms generate data for the platform. Gradually, the platform would learn how to meet the requirements of clients through the generated data and make freelancers obsolete.

9). In July 2012, the London Symphony Orchestra performed music completely composed by a machine.

10). Eventually, software will be able to mark student essays and provide feedback on their work.

11). Massive open online course (MOOC) platforms enable students from all over the world to learn any subject of interest at minimal cost. Personally, I love this development and this warrants a separate post on MOOCs. What the author shared in this area is intriguing. Instead of attracting the poor and under-educated, most of the people who signed up for the classes already had an undergraduate degree. Another interesting point which the author highlighted is that middle-tier educational institutes would struggle the most from the introduction of MOOCs. Elite institutions could rely on their academic prestige and the rigour of the education offered. On the other hand, lower tier institutions could offer education at more affordable levels. Therefore, mid-tier institutions are stuck in a quagmire, offering little incentives for prospective students to pick them.

12). There's actually plenty more points to highlight, but I shall cap it at 12. The author highlighted that one of the strategies to combat the impacts of automation is to provide a portfolio of equities to every single person, with the necessary safeguards in place. This allows everyone to share in the profits of the economy.

Here are my thoughts:

Following my graduation from university, I have never stopped learning and self-upgrading. I graduated from another academic programme this year and added yet another piece of paper qualification to my CV. I will be commencing on yet another academic programme soon. Still, I feel horribly inadequate.

Maybe it is because the ideal career I have in mind is multidisciplinary in nature and I desperately need expertise in the various domains. Another viable explanation is that the current job market is gloomy. If you include increasing automation, stagnant wages, graduate underemployment, and the various indicators of poor economical health highlighted in the book above, the situation becomes all the more bleaker.

Instead of being unaware of where the technological behemoth is stomping its foot, I intend to learn from it and incorporate what it could teach me into my work. Also, to prevent myself from stepping foot into certain (sunset?) industries that could be obliterated in, maybe let's say, another 30-50 years time.

If point 7 comes to fruition, my research job and, to some extent, my backup career will be taken from me. Why hire Unintelligent Nerd to do research when a computer could scour the worldwide journal databases for literature, form hypotheses and iteratively test those hypotheses, engage in various model fitting, and auto-write and publish a journal article, to boot?

My current strategy is to balance work, education, and investment. If I over-invest in my education, I could end up as a jobless PhD holder. If I take a more circuitous route (Masters than PhD), I will be better able to build my warchest but overall spend more money on my main career. I could also continue doing what I'm doing. Getting additional non-postgraduate certificates to beef up my CV. Oh! And there's financial education that I am aiming for as well (CFA).

I'll just 走一步算一步

Tuesday, August 23, 2016

History of Cash Calls for REITs

One of the grouses which investors have against REITs is that the asset class occasionally calls for cash. Therefore, it comes as no surprise that there is a saying that what a REIT distributes out is eventually taken back in with the use of cash calls. This sentiment has caused some investors to shy away from investing in REITs.

However, is the above notion really an accurate depiction of REITs? I decide to find out.

Before sharing my findings, I need to note down some obstacles which surfaced during my search:

1). Some of these cash calls are not reflected in the "Corporate Action" section on the SGX website. Instead, they are found in the "Company Announcements" section. Some of the cash calls surfaced in Google searches.

2). I have supplemented my search by referring to each of the REIT managers' website. Some cash calls are worded slightly differently (e.g. "fundraising", "equity", etc). I have tried not to miss out on cash calls that are worded differently to the best of my abilities. However, I am sure that I may have missed out on one or two of these cash calls.

3). Some cash calls are executed waaaay back in time. To exacerbate the problem, information pertaining to these cash calls cannot be found in both the SGX Corporate Action section and the REIT manager's website.

4). Sometimes, preferential offerings and private placements are both executed at around the same timing. Do you classify this sort of scenario as a single cash call or two cash calls? It's up to you, the reader, to decide.

To reiterate, what I present below is not exhaustive; there could be errors as well as missing information. Do drop me a comment if you spot any discrepancies. The information is presented in the following format: the name of the REIT, followed by the date/s of the cash call/s and the type of the cash call (e.g. "Rights Issue", "Preferential Offering", "Private Placement", etc) on subsequent lines, in order of recency.

CapitaLand Mall Trust
November 2012 (Private Placement)
November 2011 (Private Placement)
March 2009 (Rights Issue)
October 2005 (Preferential Offering + Private Placement)
July 2004 (Preferential Offering + Private Placement)
June 2003 (Preferential Offering + Private Placement)

Fraser Centrepoint Trust
July 2014 (Private Placement)
September 2011 (Private Placement)

Mapletree Commercial Trust
August 2016 (Preferential Offering + Private Placement)


Starhill Global REIT 
July 2009 (Rights Issue)

Lippo Mall
December 2014 (Private Placement)
November 2011 (Rights Issue)

Fortune REIT
August 2013 (Private Placement)
September 2009 (Rights Issue)
June 2005 (Preferential Offering + Private Placement)

CapitaRetail China Trust
October 2013 (Preferential Offering)
October 2012 (Private Placement)


Keppel REIT
September 2014 (Private Placement)
November 2011 (Rights Issue)
October 2009 (Rights Issue)
April 2008 (Rights Issue)

Frasers Commercial Trust
July 2015 (Private Placement)
July 2009 (Rights Issue)
June 2007 (Rights Issue)

CapitaLand Commercial Trust
June 2009 (Rights Issue)
July 2006 (Preferential Offering + Private Placement)
April 2005 (Public Offering + Private Placement)

Suntec REIT
March 2014 (Private Placement)
November 2010 (Private Placement)
October 2006 (Private Placement)

Mapletree Greater China Commercial Trust

OUE Commercial REIT
July 2015 (Rights Issue)

Manulife REIT

IREIT Global
July 2015 (Rights Issue)

Ascendas REIT
December 2015 (Private Placement)
January 2009 (Preferential Offering)
September 2005 (Preferential Offering + Private Placement)
November 2004 (Preferential Offering + Private Placement)
February 2004 (Preferential Offering to existing unitholders + new units)

AIMS AMP Capital Industrial REIT
February 2014 (Private Placement)
September 2010 (Rights Issue)
November 2009 (Rights Issue)

Cache Logistics Trust
November 2015 (Private Placement)
March 2013 (Private Placement)
March 2012 (Private Placement)

Cambridge Industrial Trust
March 2011 (Rights Issue)
October 2010 (Preferential Offerings + Private Placement)

Mapletree Industrial Trust
August 2011 (Preferential Offering)

Mapletree Logistics Trust
September 2010 (Private Placement + Preferential Offering)
July 2008 (Rights Issue)

Soilbuild REIT
August 2016 (Preferential Offering)

Sabana REIT

Viva Industrial Trust
November 2015 (Preferential Offering + Private Placement)

Fraser Logistics & Industrial Trust

CDL Hospitality Trust
June 2010 (Private Placement)

Far East Hospitality Trust
July 2013 (Issue of stapled securities to institutions? Private Placement?)

Fraser Hospitality Trust
July 2015 (Private Placement)

Ascendas Hospitality Trust
June 2013 (Preferential Offering + Private Placement)

OUE Hospitality Trust
March 2016 (Rights Issue)

Ascott REIT
November 2013 (Rights Issue)
September 2010 (Preferential Offering + Private Placement)
March 2007 (Preferential Offering)

First REIT
December 2010 (Rights Issue)

Parkway Life REIT

Keppel DC REIT

As this post is long enough, I shall note down my thoughts/comments on a subsequent post.