My Index Portfolio Update – Q3

Early this March, I started a trial to see if an Index Portfolio made of Bonds, Equities, Gold and Reits would outperform STI (pure equities) in the long run. I set up this trial because I was intrigued by the concept of the permanent portfolio, which claims to outperform most pure asset class.

At end of Sep, my Index Portfolio has almost reached my target breakdown between Bond, Equities, Gold and Reits as follows:

  1. Bonds – 39% (vs 40% target)
  2. Equities – 39% (vs 40%)
  3. Gold – 5% (vs 5%)
  4. Reits – 17% (vs 15%)

In terms of Singapore versus International exposure, it was 46%/54% versus my target of 50%/50%.

More importantly, how did it perform against my benchmark?

For the same period, using SPDR STI ETF as a proxy, it gained 4.5% and it distributed about 1.5% yield in dividend. Thus, giving a total gain of about 6%.

My index portfolio made 6.8% yield comprising of 5.4% capital gain and 1.4% in dividend.

It has somehow managed to make gains that matched and even exceeded the STI. I was half expecting that it would underperform due to the weakening Singapore dollars and a lower bond value. Fortunately, the rise in STI and HK markets and the dividend distributions made up for it.

I am generally happy with this outcome as it demonstrates the power of diversification. However, I will need to hold longer over the business cycles to learn if it is more advantageous than just pure STI equity.

I will progressive add more bonds and equities investment to meet my targets at the end of this year. Stay tune at end of Q4 if you are interested.

By the way, if you are interested in my index portfolio, please find them below:

  ETF / Unit Dividend % Of Index Portfolio
Bonds (Target – 40%)
ABF S’pore Bond Index Fund, A35 SGX ETF 1.84% 13%
Vanguard Intermediate-Term Bond, BIV US ETF 2.56% 6%
iShares U.S. Preferred Stock, PFF US ETF 5.48% 6%
IShares USD Asia Hy Bond, O9P SGX ETF 7.77% 6%
SPDR Bloomberg Barclays High Yield Bond, JNK US ETF 5.65% 8%
      39%
Equities (Target – 40%)
SPDR Straits Times Index, ES3 SGX ETF 3.03% 11%
NIKKO AM Singapore STI, G3B SGX ETF 2.43% 6%
ChinaAMC CSI 300 ETF (3188) HK ETF 0.86% 4%
HangSeng H Share ETF (2828, Jun/Nov) HK ETF 3.11% 13%
Deutsche Asia Premier Trust Fund Unit Trust NA 5%
Lion Capital Malaysia Fund Unit Trust NA 1%
      39%
Gold (Target – 3%)
Gold 10US$ SGX ETF NA 3%
Reits (Target – 15%)
SG Phil Div Reit SGX ETF 4.18% 7%
Phil SG RE Income Fund Unit Trust 5.00% 9%
      17%
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s