I spent the morning analysing and reflecting on the changes in my active portfolio in the last quarter. Some of my findings surprised me even.
So thought of sharing it with you …
Surprise #1: STI has a rather subdued Q2
STI climbed from 3171.11 on 30Mar to 3226.48 on 30June, rising only 1.75%. This was the first surprise to me because I thought Q2 was a rather good quarter for local stocks.
So, its the Reits not STI …
On closer inspection, I realised that it was mainly the Reits that had rallied quite a fair bit in the last quarter and clearly outperformed the STI. That gave me the false impression that the broader Singapore market was on a rally in Q2.
Using the “FTSE ST Real Estate Investment Trusts Index” as a proxy, we can see that the index rose from 755.91 on 31Mar to 798.62 on 30Jun, an increase of 5.65%.
This trajectory continued the strong run in Q1. So if you have been owning Reits, then you should be smiling throughout the whole of Q2 🙂
Surprise #2: The $$ VALUE of my portfolio increased
After doing the Maths, I realised that the $$ value of my active portfolio actually increased in Q2. It gained a good 4.5%.
Surprise, surprise because I thought I had been selling and taking profit on many counters throughout the whole of Q2.
I guess it was a combination of (1) the increase in share prices of the remaining shares that I have and (3) the selective buying of a few new local equities.
One of the main investment themes for me in Q2 has been SELL & TAKE PROFITS.
I had been selling the shares of several counters (mainly Reits) that I felt were overvalued at the current share prices. I had also sold some of my overseas investments in US and Hong Kong for the same reason.
The $$ value of Reits & Business Trusts in my portfolio has dropped by 12% while overseas investments has dropped by 5% at end of Q2, when compared to end of Q1
Part of my reasons to reduce exposure to Reits was my continued concern around rising interest rate in the near future. Reits are particularly sensitive to interest rate as they borrow heavily. So, I think it will impact them significantly.
Surprise #3: Loading up with more STI equities
I was surprised to learn that the $$ value of the STI equities (excluding Reits & Business Trusts) in my active portfolio has increased by 25%. That’s BIG!!!
I felt like I had literally swopped Reits for Equities.
Looking at my top 20 counters, I discovered a few new names that were not there one quarter ago.
Let me list them down below in case you want to consider investing in them too. I have done some homework on these companies and hence, felt confident enough to open new positions with them. But please do your own homework.
- Thai Beverage
Surprise #4: I started investing in Small Caps
It has been a while since I invested in Small Caps companies. The burnt marks from speculating in red chips and some “lousy” small caps companies in the past are still very vivid in my mind.
Maybe it was because I felt devoid of any good investment opportunities in the local blue chip companies currently. I probably felt a bit itchy hand to want to buy something … so I dipped my hands into more risk investments like the Small Caps.
Fingers crossed and I hope it will turn up well this time.
(Bad … Bad … losing patience … which is a critical virtue a good investor must have)
Surprise #5: Reits and Equities are balanced now
When I reflected on the changes, I was surprised by the changes in the weightage of the various classes of listed investments in my overall active portfolio.
It looks like this now … Reits & Business Trust and STI Equities are almost balanced now. The former used to have a much heavier weight.
- Reits & Business Trust (45%)
- STI Equities (43% of which 5% is contributed by Small Caps)
- SG Corporate Bonds (5%)
- US & Hong Kong Equities (8%)
Looking forward to Q3
No one will know what Q3 will hold but one thing I have learned over the years is to always stay invested no matter what’s the situation. There are always pockets of opportunities around – we just need to work hard to discover them.
So, always hold a sizeable warchest that you can deploy at short notice when the market corrects unexpectedly and in a drastic manner.
Remember share price is affected by human emotion as much as the “true” value of the company.
Do you have any Gems to share? Happy to receive your feedback. Thanks.
Wishing all of us good luck!