Portfolio - October 2020

We were so close to reaching another milestone/goal last month but the market went against us in the last few days, losing 20k+ in 5 days. Hopefully, we will be able to achieve it before the end of this year!

Our portfolio has reached another new high! It increased by 0.12% to $567,374 - $24,741.70 of capital injection (including the use of leverage - $9,483.25) and $24,072.61 of capital loss. This includes $53,036 of leverage/debt (gearing ~10.3%).

If you prefer to look at numbers, this is the raw data used to generate the above bar graph. These numbers are as of the last day of the month.

"Cash Flow" is the amount of money being injected/withdrawn from the portfolio (buying stocks = +ve cash flow while selling stocks and collecting dividends = -ve cash flow)

SOLD
- Accordia Golf Trust (15,000 units) @ $0.707

Technically, I have yet to sell this stock. Accordia Golf Trust has been privatized and should be delisted soon (it is currently suspended). It did a capital distribution and would have skewed the dividends received so the best action is to treat it as being sold. After holding it for 4/5 years, the absolute return is about 62.71% and the annualized return is 13.01%.

BOUGHT
- Thaibev (9,000 units) @ $0.585

- Suntec REIT (6,000 units) @  $1.47

- Capitaland Mall Trust (5,200 units) @ $1.82 (Using leverage)

- IREIT Global (400 units) @ $0.49

- OCBC (19 units) @ $7.81 (Scrip Dividend)

- iShares Hang Seng Tech ETF (400 units) @ HK$15.80

- IWDA (11 units) @ US$65.30

Thaibev, Suntec REIT, and Capitaland Mall Trust are all existing holding and we just decided to continue to invest and average down them. After oversubscribing by 9,900 units, I was only allocated 400 units. Meh. I was expecting to get 2,000/3,000 units.

Another interesting new addition to our portfolio is the iShares Hang Seng Tech ETF (3067). There are a couple of ETFs that is tracking the Hang Seng Tech Index and we chose iShares simply because it has the lowest fee/expense ratio. You can take a look at this article for more information - Hang Seng Tech Index ETF - Which one to buy?

I have "force" myself to buy $1,000 SGD worth of IWDA. We have decided to set some rules for the monthly IWDA investment:
- Current average price: $59.547
- If the market price is above our average price, buy $1,000
- If the market price is below our average price, buy $2,000
- Must buy by last trading day of the month

As an introduction, IWDA (iShares Core MSCI World UCITS ETF) is an accumulating (does not distribute dividends) world ETF managed passively by iShares. This has multiple purposes:
1. Capital Growth - Determine if simply buying a diversified world ETF will outperform StashAway/Endowus
2. Leverage Collateral - It has 70% LTV which will increase eventually increase our ability to borrow more or prevent a margin call

Anyway, IWDA is highly recommended by ShinyThings from HWZ. You can refer to this summarized version here.

On a side note, we can invest in such a small amount because there's no minimum commission for SCB priority customers which makes our investment very cost-effective.

I have also decided to increase my SRS contribution to $1,480 per month with the intention of maxing it by year-end.

Our Monthly DCA for October - $4,230
$1,000 Cash - StashAway Risk Index 22%

$740  KPO's SRS - StashAway Risk Index 36%

$250 CZM's SRS - StashAway Risk Index 14%

$740 KPO's SRS - Endowus Loss Tolerance -60%
$1,000 Cash - Syfe REIT+ (100% REIT)
$500 Cash - Syfe Equity100 (100% Equities)

Dividends
The total dividends collected this month is $727.10. The breakdown is as follows:

Company                                                                 PayDate      Shares     Total

DBS Group Holdings Ltd                                        5-Oct-20    900          $162.00

Raffles Medical Group Ltd                                  7-Oct-20     20,000    $100.00

OCBC Limited                                                         7-Oct-20    900         $143.10

Pacific Century Regional Developments Limited   22-Oct-20  14,000    $322.00

Total dividends collected for 2020: $17,326.23
Average dividends per month for 2020: $1,732.62

StashAway

KPO

CZM

Capital: $43,170‬.00
Current: $‭‭‭‭50,592.80

If you are interested in StashAway, do use our referral link. You get $10,000 free management fees for 6 months and we will get $16!

If you want to extract those transactions information from StashAway, do take a look at this article - StashAway Transactions Parser.

Endowus

Capital: $9,670.00
Current: $9,914.02

If you are interested in Endowus, do use our referral link for our readers! You will get S$10,000 managed free for 6 months ($20 equivalent) and we will get $20 too!

Syfe

Capital: $8,200.00
Current: $‭‭‭9,030.90

New Syfe customers will have their first $30,000 managed free for 6 months when they use our new referral code (KPOCZM). We will be receiving a $10 cash incentive for our portfolio if you invest $500 or more.

If you want to extract those transactions information from Syfe, do take a look at this article - Syfe Transactions Parser.

You might be interested in these blog posts too:
- Portfolio Performance in 2019
- 2019 Net Worth
- Portfolio - December 2019 - $463,297
- Portfolio - January 2020 - $455,071
- Portfolio - February 2020 - $442,216
- Portfolio - March 2020 - $415,071
- Portfolio - April 2020 - $459,037
- Portfolio - May 2020 - $470,665
- Portfolio - June 2020 - $502,313

- Portfolio - July 2020 - $487,135
- Portfolio - August 2020 - $525,857
- Portfolio - September 2020 - $566,705

- Portfolio - October 2020 - $567,374 

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How ETFs Work - Using Lion-Phillip S-REIT ETF as an Example

I have written an article on SGX 3rd REIT ETF - Lion-Phillip S-REIT ETF last week. CZM and I were initially quite interested until some of the readers mentioned that there will be a 17% corporate tax which will reduce the dividends significantly! Do check it out if you have yet to read it :)

We all know that Exchange Traded Funds (ETFs) are low cost passive funds but have you ever wonder/know how ETF works? Vanguard has an article explaining this - How ETFs work.

Using Lion-Phillip S-REIT ETF as an example, the ETF sponsor is Lion Global Investors Limited and Phillip Capital Management (S) Ltd. The participating dealers would be the banks and brokerage firms (Phillip Securities Pte Ltd, DBS Vickers Securities (Singapore) Pte Ltd, Commerzbank AG and UOB Kay Hian Pte Ltd).

The Creation Process (Happening Now!)
The participating dealers applies for a creation unit (at least 50,000 units or more) from the ETF sponsor by either giving basket of securities, cash that equals the value of the creation unit or a combination of the two. In this case, I believe the payment is in cash and each unit is valued at a NAV of $1 per unit. The participating dealers can then "sell" them to retail investors or trade them in the exchange/secondary market.

The Redemption Process

The participating dealers can redeem creation units (similarly at least 50,000 units or more) from the ETF sponsor and receives a basket of securities, cash equivalent or a combination of the two. This will probably takes place only after the ETF is listed on the exchange.

Why is there a need to have these 2 processes? The reason is ETF arbitrage can take place where the participating dealers can make more money. This is slightly more complicated and you can research more on it yourself. In short, it provides liquidity to the ETF and it ensures that the market price of the ETF is close to its NAV.

With this new knowledge, let's take a look at the 2 REIT ETFs in the market now and their respective AUM (Asset Under Management):
1. NikkoAM-StraitsTrading Asia ex Japan REIT ETF - S$79.82 million
2. Phillip SGX APAC Dividend Leaders REIT ETF - S$24.23 million

Since Lion-Phillip S-REIT ETF consists of only REITs from SGX, it might not attract investors from the region. Hence, assuming each of the participating dealers were to create S$3 million of ETF shares each, Lion-Phillip S-REIT ETF would have an AUM of S$12 million.

Based on the above weightings, I created a spreadsheet to estimate the number of underlying shares required for each creation (50,000 of ETF units).

If we were to look at the top 3 stocks, each creation would require 26,634 units of Capitaland Mall Trust, 31,250 units of Capitaland Commercial Trust and 26,233 units of Suntec REIT. An AUM of 12 million would require 639,208 units of Capitaland Mall Trust, 750,000 units of Capitaland Commercial Trust and 629,602 units of Suntec REIT.

Would that actually drive the underlying REITs price up? I have no idea. lol. However, putting things into context, the percentage of underlying shares required from the outstanding shares is only around 0.02%. On the other hand, it was stated in CMT 2016 Annual Report that 59.38% of the shares are held with the public. This would mean about 3% of the public float would be purchased/held by the ETF sponsor for a S$12 million AUM portfolio. So what do you think?

You can find the spreadsheet here - LION-PHILLIP S-REIT ETF Creation - Underlying Stocks Required. Feel free to play with it :)

Health - KPO Needs to Lose Weight
Date: 2017-10-09
Weight: 78.5 kg
BMI: 26.2