The market continues to stay volatile in the past quarter with uncertainties from US-China trade war and other events. While I do not base my investment due to macro events, they nonetheless have an impact on my portfolio performances.
Two key changes were made in the quarter.
The first being the utilisation of 30% of my opportunity fund in July after my portfolio has slipped below 5% for the year at the end of the June. With the exception of Hong Kong Land, Raffles Medical, UMS and VICOM have provided positive return since the purchase in early July. I have sold this stake of UMS in August and used the cash to buy more Valuetronics this month as I am more positive of Valuetronics in the near term. Will continue to monitor cash-stock allocation and adjust accordingly.
The second change is tweaking the ratio of income/growth stocks ratio from 60:40 to 50:50. You can read the posts on “A football team of stocks – team news”and “Buy and Sell Actions August 2018” for the thinking behind the tweak.
Now for the details.
Performance
The goal is to achieve at least 8% return with a stretched goal of 12% with STI ETF (ES3) as benchmark.
iFAST continues to be the star player this quarter and together with the dividend received, the quarter saw an improvement by 1.8%. This has resulted in a lower loss of 3.4% for 9 months as compared to the 5.1% loss for 1H. The portfolio continues to underperform ES3 which has registered only a drop of 0.6% for the 9 months.
Allocation
One of my key strategies to achieve my target is maintaining the following allocations.
Asset allocation of 30% cash and 70% stock
After utilizing the opportunity fund, current asset allocation stands at 26.5% cash and 73.5% stock. As the opportunity fund was just utilized in July, I would not rebalance the allocation yet. Will review by end of the year.
Income to growth/value stocks at 50%-50%
After deciding on the new ratio, actions were taken in August and September to align the portfolio to it. As seen from the image below, I have pretty much kept to the allocation.
R: REITS, D: Dividend, G: Growth, P: Punt, T: Turnaround, V:Value
Maximum exposure of 15% to overseas counters
In the mid-year report, the overseas counters took up 12% of the portfolio. Since then, it has grown to about 16.6%. This is slightly beyond initial proposed maximum but I am comfortable with the slight discrepancy.
Core Holdings
With the tweak in strategies, 10 counters (out of 23) now make up 69% of my outlay cost as compared to 9 out of 27 counters that made up of 63% in the mid-year report. Two new stocks that made into the list are Arista Networks and Tencents, while I dropped Straco again from the core holdings.
Year to date, I have 5 counters in the black and 5 in the red. However, 4 counters in the red have dropped by more than 10% and even a strong 35% by iFAST can only partially mitigate the pain. Definitely feel better when looking at the longer term picture.
What’s coming up?
With a quarter left, am I able to turn the tables against my benchmark STI EFT? Am I able to end the year in black? Am I able to achieve my 8% return goal?
The likeliness of the above happening decreases in the order of the questions. The remaining dividend for the year probably will just prop up the performance by around 1%. If 3 of the 5 following developments are reported in the coming quarters, I do stand a chance to beat my benchmark and end the year in black.
- Continued strong performance by iFAST with a higher dividend payout for Q3,
- Food Empire continues to report strong growth in revenue for Q3 but this time round, reported growth in net profit.
- A strong Q2 performance by Valuetronics with stabilizing number for CE segment and continued growth in ICE segment and it decides to continue to declare an interim dividend of HD$0.07.
- UMS continued to surprise with net profit growth even thought revenue continues to soften.
- Arsita Networks report higher number than its forecast.
What about 8% return for the year? Well, let’s leave that for next year.
Towards Financial Independence 