Tuesday, January 1, 2019

Year 2018 Portfolio Performance and Dividend Income (Part 2)

Alrighty! The markets have closed for 2018 and it is time to tabulate my performance and continue the second part of my Year 2018 Review post. For those who missed out on part 1, you can find it here.

Net worth breakdown
There has been some changes to my net worth breakdown compared to the previous quarter. Equity allocation has increased from 35% to 39% (in light of all the nibbling I did recently). Cash allocation fell from 40% to 37%. The cash portion would have looked far worse had it not been for my bonus. Precious metals dropped from 25% to 24%.


Net Worth Breakdown

As per before, "the pie chart depicts the breakdown in my net worth across the various asset classes in percentage (pie chart neither includes my CPF nor my emergency fund). To be conservative, I computed my precious metals allocation at spot price even though I am holding everything in physicals."

Equity Performance

For my SGD-denominated portfolio:
Returns for Year 2018: -7.78%
Annualized returns since portfolio inception (March 2015): 6.48%

For my USD-denominated portfolio:
Returns for Year 2018: -3.59%
Annualized returns since portfolio inception (March 2016): 5.62%

The above computations include equities only. It does not include cash drag and precious metals drag.

Thoughts on Performance
Strangely, I am very satisfied with my returns despite having negative returns for both my SGD and USD-denominated portfolio in year 2018. The market has been red and my portfolios were not spared. Hence, what I am experiencing is pretty normal.

When I look back at my multi-year performance, I think I am doing alright in my investment journey. 2017 had been a good year and I took some profits off the table. In 2018, I continued to divest positions that I have superficially entered in as well as fundamentally weaker counters. Hence, most of my portfolio losses were realized in the early part of 2018. Had I not done so, my returns for year 2018 would be much more redder.

In life, you win some and you lose some. So far, I managed to win slightly more than I lose. This is a good sign and I hope this would persist.

As I type this post, I am reminded of what I have told myself before. The talking heads have been droning on and on about a stock market collapse. I have personally done what I can by eliminating the counters which I am unsure of or are fundamentally weak. What's left are the counters which I am comfortable holding (of course comfort comes in various degrees depending on the particular stock in question). As I don't foresee myself going completely cash, I would need to have the mental fortitude to ride it out with my current holdings and any potential stocks that I would be buying before the crash happens. I am okay with this.

Insurance
My insurance policies lacked a Critical Illness plan. I went around looking for a plan that has an option to add a Critical Illness rider and I came across the MINDEF and MHA Group Term Life plan (with a CI rider option) by Aviva. The term life portion has a fixed premium while the CI rider premium escalates with age. I have requested for a quote from Aviva and this is still pending.

Studies
Imagine my horror when the sample examination paper for one of my modules tested something that is seemingly out of the syllabus. I will be deferring said module to the following year to brush up on this out-of-syllabus topic before taking the exam.

In terms of scheduling my study time, more work needs to be done in this area. Generally, weekends are predesignated for studying and I have completed the first run-through of the entire textbook for one of my modules within 2 months from course commencement. And that is just for readings, it does not include assignments. Multiply this by two (since I am taking two modules) and time is sorely lacking. Guess I will be allocating some weekday nights to studying from now on.

Emergency Fund
With higher interest rates for the Singapore Savings Bonds (Jan 2019 issue), it finally motivated me to close a low-interest savings account that I had. Part of the proceeds went into our shared emergency fund while the rest went into......

Mother's Retirement Fund
....the Singapore Savings Bonds (Jan 2019 issue) for my mum's retirement fund. It's small, but a step forward nonetheless. On-and-off, I have been thinking of what ETFs or stocks should go here. At the moment, I think I will settle for STI ETF and Hongkong Land.

Regular readers will know that I am partial to Hongkong Land for its recurring cash flow from its investment properties. Coupled with its conservative management, slow (but steady!) dividend growth, and not being a "hot stock", it is a decent choice. My concerns at the moment is the USD/SGD exchange rate (which affects the dividends) and if the day comes when business-as-usual (BAU) is no longer BAU.

Hypothetically, my mother's retirement fund will consist of SSBs, with stocks to be purchased by me in a market crash and then transferred to her personal CDP account. That's all for now, I guess.

Current Holdings
After converting all my USD holdings to SGD, the following table shows the percentage of each stock from only the equities allocation of my net worth (arranged in descending order).

Stock Holdings

Moving forward, I intend to add on other counters such that the role of AIMSAMP REIT and Singtel becomes more diminished in my portfolio. Ironically, Abbott Laboratories, who occupies the bottom position, is almost a double-bagger stock. LOL!

Investment Strategy
I intend to continue what I am doing, which is to predominantly invest for dividends and dividend growth. In light of the market turmoil, I will focus more on large-cap stocks which have the staying power to survive an economic downturn.

My preference is to have a large number of stocks in my portfolio to reduce reliance on any particular stock or group of stocks for dividend income. I think I will elaborate more on a future post about my investing style.

As we are on the topic of my investment style, I have signed up for the investment newsletter by US blogger Dividend Growth Investor. This is not a sponsored post. The rationale is to learn of new US dividend growth stocks that I have not heard of before, try to second-guess his stock picks for the following month (to see whether my picks converge with his choices), and market time into dividend growth stocks. I don't think that is the "right" way to use his newsletter, but that's how it is for me.

As always, I am partial towards REITs, consumer staples, healthcare, and (some) utilities. It might look to be a good time to add to consumer staples if the decline in the sector continues.

That's all. Thanks for reading!

8 comments:

  1. Nice bro, wish you a successful 2019

    ReplyDelete
    Replies
    1. Hey Bro,

      Thanks! Wishing you a successful 2019 to you and your family.

      Cheers!

      Delete
  2. Happy new year to you!

    It's so true that we will win and lose some in life. Most importantly is that we are satisfied with what we have.

    Looking forward to reading more about your investing style!

    ReplyDelete
    Replies
    1. Happy New Year to you too!

      Sure, will write about it. :)

      Delete
  3. Hi UN,

    Nice holdings there.
    Which brokerage are you using to hold the US companies?
    Any monthly holding fee for foreign companies?
    :D

    ReplyDelete
    Replies
    1. I use Stan Chart for my US holdings. Nope, they don't charge any custodian fees nor corporate action fees.

      Delete
  4. Hi UN,

    I concur with you regarding the investment strategy - diversification and focus on the large-caps. Though I feel it's still a little early to be moving into the defensive consumer staples sector.

    I am using VXX to hedge my positions. Let's observe how volatile the market would be till next trade talk.

    ReplyDelete
    Replies
    1. Hi Rainbowcoin,

      I have been in consumer staples all along. Yup, there is still room for them to drop.

      I see. I'm not familiar with VXX nor hedging.

      Delete