I am having a headache recently with regard to my upcoming regular month end of additional capital injection into the investment portfolios. On one hand, SREITs have tanked again to near their 52 weeks low and now seems the best time to invest. Saying that, in particularly for the past few months, whenever I thought that the SREITs prices have bottomed and accumulated more units, their price just dropped further. On the other hand, my investment forage into bond unit trusts over the past 1 year has been stable thus far especially with global inflation under control- interest income which I had received is around 6% return per annum and capital price of the bond fund held their ground well. Moreover, there is also potential further capital appreciation once interest rate cuts by the US Federal Reserve is announced.
1. Invest SREITs at all-time low or better to go into Bond Investment Instead?
I think that I will probably add on to the bond unit trusts for June 2024 month end as I have previously in May 2024 already invested approximately S$10K into both United Hampshire US REIT and Frasers Logistics & Commercial Trust (unfortunately, both SREIT's unit price declined further after my respective purchases).
2. A close friend asked me whether Equities or Money Market Funds is the best investment in view of current market?
I thought that my friend asked me a very interesting question. My personal thoughts are that for risk averse folks who find equities and bonds extremely risky, then maybe buying into the Money Market Funds is well worth it. Singapore Saving Bonds or T-bills are also good options.
The thing is that over the years, I have decided to just keep my real thoughts to myself whenever risk averse close friends asked me such question. I will at most just share my thoughts on the above financial instruments since their risk profile is extreme prudence and they generally ask for the sake of affirming their own beliefs (if you say something else, then it gets into a heated debate). However, the fact remains that returns from such investments will barely keep up with inflation. I think that some risks need to be undertaken in order to exit the rat race earlier.
Ok, that's all for today's post, have a great week ahead folks!
Thanks for the insight! Good to think about it! For me personally, I will treat my CPF as the bond allocation of my portfolio, so probably if it's me, I will plow cash into equities, lol... of course...REITs and Trusts are a total heart-breaker now, lol
ReplyDeleteHi BFire, yup...agree with you....CPF actually similar to bond with the guarantee behind by the Singapore Govt. So putting in extra cash into equities makes perfect sense definitely. Thks for sharing your thoughts :)
DeleteHi Blade!
ReplyDeleteTo be very honest, I believe it has been quite hard to see my REIT holdings drop by such a significant amount. I will continue to inject capital as I believe one should take out their emotions from investing and stick to their thesis if it still holds true, but definitely less aggressive allocation is due.
Hi PL, welcome back! How have you been? Thanks for dropping by. Yup, for those REITs that are sound fundamentally, agree with you... it may be a good opportunity to scoop up more units during this SREIT downturn.
DeleteFor me personally, I will be adding more into my bond unit trusts to build up this asset class for a more stable and predictable income flow. For SREIT, I will probably buy a bit here and there....but will only inject more capital once news of US Fed interest rate cut is being officially announced.
Which bond unit trust u invested ?
ReplyDeleteHi Benjamin, some of the bond funds I invested in are PIMCO GIS Income Fund, Allanz Global High Yield Fund, JPM Income Fund, Neuberger Berman Short Duration Emerging Market Debt Fund, AB American Income Portfolio, UBS US Total Yield Fund, Fidelity Asian Bond Fund.
DeleteDo you also have any current bond fixed income securities or bond funds in your portfolio?
Hi Blade, fixed income wise I only have Nikko AM SGD IGBond ETF, T bills.. i am new to bond funds and new to your blog. Be interested to know you reasons for the choice of bonds funds u mentioned above :)
ReplyDeleteHi Benjamin, PIMCO Fixed income fund is one of the top fund manager out there and very well-known. As for the rest, they are also part of Endowus curated funds selection under its 3 Income Portfolio combinations. I used the Endowus Income Portfolio solution as well as also handpicked my own choice of fixed income funds in my own self created portfolio.
Delete(i) You can read more below:
https://endowus.com/income
(ii) For the fees structure, refer to my Endowus Cheatsheet Section A2:
https://dividendpassiveincome.blogspot.com/p/endowus-quick-reference-page.html
Hey BK, how does the bond part work? 6% guaranteed?
ReplyDeleteHi Damn mate, good to see you dropping by. The distribution return is on a monthly basis. The 6% is not guaranteed. As with bond funds, they do appreciate and depreciate depending on the interest rate environment and also issuer default risk. Best thing about bond funds is that they are well diversified relative to what we retail investors can direct accumulate on our own.
DeleteAnyway I was using NLT as my bond portion. I loaded alot since peak rates are here, probably good idea to hedge into fixed income. Then after your deep dive I decided to dump it all. Still looking for alternative. How is Endowus stable income vs say you buy your own bond?
ReplyDeleteHi Mate, NLT is an enigma to me and I was still holding on to a small portion of it in my portfolio as its cashflow theoretically is extremely resilient but I have since sold off everything too.
DeleteThe pricing of NLT services surprisingly got reduced by IMDA after the review which I am extremely disappointed after the announcement- where got commercial organisation start cutting price of its products and services in view of a high inflationary environment over the past 2 years? Virtually unheard of.
Also, the growth in its service revenue from the latest 5G network and more connections over its network did not cover the gap in its funding of distribution. Their investor relation did reply to me before that its leverage ratio is extremely low hence this is just to "optimise" its capital structure.
As for your Endowus question, bulk of my investment on this platform is buying through its recommended Higher Income Portfolio (80% Bond and 20% Equity) as I let the experts monitor the performance of the fund managers of their recommend income portfolio. If there are fund manager underperformance or another unit trust with cheaper cost, Endowus will send a request for one to consider switching out of such fund inside the main portfolio. I did receive such advice by Endowus before. So this is the advantage of choosing a recommended portfolio by Endowus relative to one constructing one's own portfolio and selecting one's own prefered unit trusts into it.
The reduction in rates makes no sense. But the kicker is they use borrowings to give distribution. Dont make sense either. And the market pricing seems to reflect that as it continues to trend lower.
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