Three quarters of this tumultuous year has passed. Unlike the previous crisis, the markets (except Singapore) have rebounded much faster. Government’s stimulus packages, robinhood traders, low interest rate, acceleration of digital conversion etc etc. All these probably play a part in one way or another but who is to know which plays a bigger role? If the markets have not rebounded, we can probably list out reasons why they have not done so.
As retail investors, these are beyond our control. So while it’s good to know the macro, let it not affect our investment decision too much. Continue to think long term and make use of short term opportunities to enhance the long term return. I am not immune to emotions but being aware of how minute I am and having a plan help me to mitigate them.
The recovery started in April with the first positive in July, and continued in August. Despite the correction in US market, it edged higher and portfolio ended September with an overall return of 7.2%. I am delighted with the performance as I did not expect to be anywhere near my goal of getting at least 8% return in a pandemic year.
What heartens me further is that the return does not just come from the US portfolio, but also from my SG portfolio which is up by 3%. And as seen from above table, both have a good lead over SPY and ES3.
Top and Bottom Six
Looking at the individual counters that contributed to the above performance, these are my top and bottom 20% performers at half time.
5 out of 6 top performers remain from the mid-year report with Shopify replacing Adobe. What is amazing and scary is the jump in gain over the past quarter, where the return of the current 6th performer is on par with the best performer during mid-year. For the bottom 6, HRnetGroup, CRCT, and OCBC are sinking deeper but with the exception of SATS, the percentage loss stays at around 20%.
The list changes if I ranked by absolute value. Due to a higher position size, Parkwaylife and Micro-mechanics replace Keppel DC and Shopify in the winner circle; while FCT and MCT took the places of HRnetGroup and Vail Resorts for the bottom 6.
Regardless of percentage or amount, it is satisfying to see the magnitude of the smallest gain and greatest loss are of similar values. While it is not a direct link, I am reminded that the maximum loss in a counter is 100% but maximum gain is limitless. So if one has a portfolio with 20% of good counters and 20% of not so good counters, the overall return is likely to be positive.
Growth vs Income
The growth counters definitely do better than the income counters this year. Overall, the ROI for growth is at 29%, much higher than 4% for income. Reits have done better than expected with a ROI of 5.9% thus far.
So far collected about 11.6k in dividend. Due to the various holdbacks in dividend for Reits and Banks, dividend collected for the year will be about 20% lower than the projected value of 18k.
ES3 and Unit Trusts
Beside the reviewed portfolio, I also invested my CPF-OA in ES3 and unit trusts. These are tracked separately and do not form part of the overall portfolio. While I bought a tranche of ES3 during March, I am still down 11% even with the dividend in. I have better luck with the unit trusts bought in April which has returned 20% over the past 5 months.
Combining my stocks, ES3 and unit trusts together, they are now 0.1% down. Would have been better leaving the money in CPF! But with 9 years to go before I can withdraw my CPF, I reckon I have a good chance to beat 2.5%. Psychologically, it also helps that 85% of the invested amount came from previous profit.
Stay vested with good companies
This is just the first year of my new portfolio, so no matter how the performance turns out at the end of this year, it will not be a good indication of how good or bad this portfolio is.
While Covid-19 will eventually pass, another crisis will also definitely come in the future. So I will continue to remind myself to invest in good companies led by strong management. These companies will be the ones that will be able to withstand the storm, emerge stronger and provide the necessary return in the long run.