March saw my net worth grow by 12.8%, mainly due to a larger than expected lump sum payment from my employment.
My investment portfolio was broadly flat, having grown earlier in the month and then fallen back. The ETFs had mixed performance in the face of uncertainty around Cyprus, with falls in emerging markets & Europe offsetting gains in Asia The month contained 3 small purchases, with Apple increasing around 2.5% in the last 2 weeks. A couple of small dividends were also received in the month.
My pension funds also continued their positive run, increasing by around 3% above the monthly contributions.
My property was occupied, with a new lease now signed for the next year. 2 small maintenance costs that have been expected for a while will now be included in April.
Cash balances increased significantly with a lump sum payment from work and no major expenses. I've opened a new time deposit for some of this, but will keep most of it in easy access for now until i have a clearer investment plan.
On a year to date basis, my net worth has increased by 16.6%
Sunday, 31 March 2013
Thursday, 28 March 2013
3049.HK Purchased
Today i purchased 3049.HK at around HKD6.13 per share.
This is a HK listed ETF tracking the shanghai composite index of mainland chinese companies. It is made up of 300 companies, with a heavy weighting in financials. Whilst i'm aware of a number of issues with chinese banks (including credit quality, rapidly changing regulations etc), i believe these are largely priced in to the market already, and sentiment is quite low despite strong performance to date.
I decided to buy today following a significant drop in bank shares, following news of tightening wealth management regulations. The holding is relatively small in comparison to my previous ETF purchases, but i plan to hold, regularly assess the risks and valuations, and potentially add to this position.
Although i had some indirect China exposure through my HK index purchase, this provides more direct coverage and fills one of the gaps in my portfolio.
The last couple of days have seen a pull back in equity valuations. I'll be keeping a close eye on the markets and may take the opportunity to make some further purchases.
Tuesday, 19 March 2013
Managing an investment portfolio
Following a comment in another post i'll try to summarise how i manage my investment portfolio. Whilst this certainly won't cover all the options available, i'll try to cover how i personally went about it and what i considered.
I'll break this down into 3 sections:
1) What markets / risk do i want exposure to
2) What products offer that type of exposure
3) Which service providers offer access to these products
Markets
Firstly, with respect to the markets & risk categories to target, this is very much a question of an individual's risk appetite. In my case, i have been targeting broad geographical & industry diversification, with a focus on high yield. However, the options i've looked at were almost limitless, for example:
Developed, Emerging; Large cap, Small cap; Yield, Value, Growth;
Country, Regional, Global; Individual names, Broad sectors;
Companies, Commodities, Currencies and so on.
Products
Once i had a clear idea of the markets i wanted to target i moved on to choosing suitable investment products. In my case, the priority here was to minimise fees, hence increasing the proportion of income/growth returned to me. I personally try to avoid products such as managed funds, unit trusts, insurance linked investment products etc which have all traditionally come with high fees, either at opening, closing or on an annual basis. I recall looking at a bond fund prospectus that charged something like a 4% upfront fee and a 2% annual fee. It would need to perform very well before the customer started to benefit.
My preference for achieving low cost diversification is currently Exchange Traded Funds, which come with annual fees typically in the 0.2-0.6% range. ETF ranges have been steadily growing for a few years now and there is almost always something suitable for my needs.
In addition to the appeal of lower costs, ETFs also offer the lazy option to diversification, allowing easy access to track an index without needing to hand-pick individual companies. This is ideal for me as I don't have a lot of time to manage the portfolio.
If pre-packaged diversification isn't required, the obvious options include but are not limited to direct equities, bonds, buying physical assets, or more complex structured/derivative based products.
Service providers
In some respects I found that this flowed from the choice of market & product. I found the simplest option to be a broker through a high street bank, many of which now offer dedicated online services. This is good for those trying to keep personal finances clean & easy to manage, but for those looking to build more complex or active portfolios, a dedicated brokerage may be preferable.
Again, a key consideration for me is fees, i try to avoid quarterly/annual holding fees, inactivity fees or preferential terms for a higher frequency of orders, simply because i don't think they will suit my infrequent buy & hold investing style. I would always recommend shopping around for the best deals though, as there are many options out there.
Again, another appealing factor of ETFs to me is that these can cover equities, bonds or commodities all via the stock market, which can make market access simpler if a basic online brokerage/bank provider is chosen.
(Disclaimer: every post on this blog is a personal opinion and in no way should be interpreted as professional or financial advice. Please consult a professional adviser if advice is needed.)
I'll break this down into 3 sections:
1) What markets / risk do i want exposure to
2) What products offer that type of exposure
3) Which service providers offer access to these products
Markets
Firstly, with respect to the markets & risk categories to target, this is very much a question of an individual's risk appetite. In my case, i have been targeting broad geographical & industry diversification, with a focus on high yield. However, the options i've looked at were almost limitless, for example:
Developed, Emerging; Large cap, Small cap; Yield, Value, Growth;
Country, Regional, Global; Individual names, Broad sectors;
Companies, Commodities, Currencies and so on.
Products
Once i had a clear idea of the markets i wanted to target i moved on to choosing suitable investment products. In my case, the priority here was to minimise fees, hence increasing the proportion of income/growth returned to me. I personally try to avoid products such as managed funds, unit trusts, insurance linked investment products etc which have all traditionally come with high fees, either at opening, closing or on an annual basis. I recall looking at a bond fund prospectus that charged something like a 4% upfront fee and a 2% annual fee. It would need to perform very well before the customer started to benefit.
My preference for achieving low cost diversification is currently Exchange Traded Funds, which come with annual fees typically in the 0.2-0.6% range. ETF ranges have been steadily growing for a few years now and there is almost always something suitable for my needs.
In addition to the appeal of lower costs, ETFs also offer the lazy option to diversification, allowing easy access to track an index without needing to hand-pick individual companies. This is ideal for me as I don't have a lot of time to manage the portfolio.
If pre-packaged diversification isn't required, the obvious options include but are not limited to direct equities, bonds, buying physical assets, or more complex structured/derivative based products.
Service providers
In some respects I found that this flowed from the choice of market & product. I found the simplest option to be a broker through a high street bank, many of which now offer dedicated online services. This is good for those trying to keep personal finances clean & easy to manage, but for those looking to build more complex or active portfolios, a dedicated brokerage may be preferable.
Again, a key consideration for me is fees, i try to avoid quarterly/annual holding fees, inactivity fees or preferential terms for a higher frequency of orders, simply because i don't think they will suit my infrequent buy & hold investing style. I would always recommend shopping around for the best deals though, as there are many options out there.
Again, another appealing factor of ETFs to me is that these can cover equities, bonds or commodities all via the stock market, which can make market access simpler if a basic online brokerage/bank provider is chosen.
(Disclaimer: every post on this blog is a personal opinion and in no way should be interpreted as professional or financial advice. Please consult a professional adviser if advice is needed.)
Monday, 18 March 2013
Another bailout
Although i'd been expecting a Cyprus bailout for some time, i had been expecting it to pass by quietly, given the numbers are relatively small in comparison with the other bailouts in the region.
As it happens, I was quite surprised (as it appears were most financial markets) to see the proposed details, for the first time proposing a 'tax' on ordinary savings accounts.
I think the EU have grossly underestimated the reaction this would cause, not just in Cyprus but around the world. It brings in to question the validity of deposit guarantee schemes, and after a few quiet months it raises fears again about eurozone contagion and what this now means for other struggling countries and banking systems.
Whilst ordinary people would end up paying anyway (through higher taxes, lower state spending etc), the way this has been structured and presented makes it look particularly arbitrary and unjust. Given the size of the EU budget, i think they should invest a bit more in better PR and communications!
I'm sure this will run for a few days and expect some degree of back-tracking, but it does make me think more about the importance of risk management, tax planning and diversification in managing personal finances.
As it happens, I was quite surprised (as it appears were most financial markets) to see the proposed details, for the first time proposing a 'tax' on ordinary savings accounts.
I think the EU have grossly underestimated the reaction this would cause, not just in Cyprus but around the world. It brings in to question the validity of deposit guarantee schemes, and after a few quiet months it raises fears again about eurozone contagion and what this now means for other struggling countries and banking systems.
Whilst ordinary people would end up paying anyway (through higher taxes, lower state spending etc), the way this has been structured and presented makes it look particularly arbitrary and unjust. Given the size of the EU budget, i think they should invest a bit more in better PR and communications!
I'm sure this will run for a few days and expect some degree of back-tracking, but it does make me think more about the importance of risk management, tax planning and diversification in managing personal finances.
Thursday, 7 March 2013
Investment Portfolio update
Back in December i gave a brief review of my investment portfolio. As a few months have passed and there are a few new additions i thought i'd give an update.
All UK listed ETFs have performed very well, with double digit growth since being purchased between October and December. In particular, IASP (Asia Pacific property) has shown strong capital growth along with paying two dividends.
Gold has slipped back as equities rallied & confidence returned to the markets. I'm not overly concerned about this as it acts partly as a hedge to the equity heavy portfolio. I'm slightly surprised the high yield bond ETF (SHYU) has grown so much even without having received dividends yet, but i guess this serves as evidence of the continued search for yield in the markets.
The more recent purchases are the HK Index tracker fund (i have a small standing monthly purchase in place) and Apple. The HK tracker has leveled off in the last couple of months, but i'm happy to keep adding a small amount to this each month for the time being, certainly until it becomes a more material part of the portfolio. The Apple purchase is only a couple of days old so we'll see how it goes - i have no plans to add to this for the time being.
Overall i'm happy with the performance of the portfolio, and i'd actually quite welcome a pull back in the market so i can add a few new additions to improve diversification. I've also managed to stick to my buy and hold strategy, with no disposals to date. Obviously my nerves haven't been tested yet with any significant falls!
| Name | Return | CAGR | % Portfolio | |
| SEDY | 12% | 33% | 16% | |
| IASP | 19% | 57% | 17% | |
| SHYU | 10% | 29% | 17% | |
| IUKD | 14% | 51% | 17% | |
| IDVY | 11% | 52% | 10% | |
| Gold | (7)% | (19)% | 14% | |
| 2800.HK | (3)% | (8)% | 4% | |
| AAPL | (1)% | (82)% | 4% |
All UK listed ETFs have performed very well, with double digit growth since being purchased between October and December. In particular, IASP (Asia Pacific property) has shown strong capital growth along with paying two dividends.
Gold has slipped back as equities rallied & confidence returned to the markets. I'm not overly concerned about this as it acts partly as a hedge to the equity heavy portfolio. I'm slightly surprised the high yield bond ETF (SHYU) has grown so much even without having received dividends yet, but i guess this serves as evidence of the continued search for yield in the markets.
The more recent purchases are the HK Index tracker fund (i have a small standing monthly purchase in place) and Apple. The HK tracker has leveled off in the last couple of months, but i'm happy to keep adding a small amount to this each month for the time being, certainly until it becomes a more material part of the portfolio. The Apple purchase is only a couple of days old so we'll see how it goes - i have no plans to add to this for the time being.
Overall i'm happy with the performance of the portfolio, and i'd actually quite welcome a pull back in the market so i can add a few new additions to improve diversification. I've also managed to stick to my buy and hold strategy, with no disposals to date. Obviously my nerves haven't been tested yet with any significant falls!
Tuesday, 5 March 2013
AAPL Purchased
Today i purchased a very small number of shares in Apple.
Its share price has fallen sharply in the last few weeks, on what appears to be a combination of (a) a lack of clarity around plans for its cash surplus and (b) concerns around a lack of future innovations / new products in the pipeline. I understand there may also be some form of vicious circle occurring with portfolio managers re-balancing their 'tech' holdings as a result of the recent fall in Apple in comparison to gains in the likes of Google, which is perpetuating their respective falls & gains.
Whilst i to some extent agree with these concerns, the fundamentals (a PE under 10, dividend yield of 2.5% and a large cash reserve) now look attractive to me.
I'm personally a fan of Apple products and i'm always amazed at how busy the flagship HK store is, and how long the queues are when new products are launched. I think there is still a lot of appetite for innovation & evolution with the existing range, let alone potential pipeline products such as the often rumoured apple tv, watches etc.
Although i've been looking to add US exposure to my portfolio for some time, this investment doesn't fully fit my core strategy of holding well diversified, income based index tracking ETFs. As a consequence the size of the investment is very small in comparison with my core holdings of ETFs.
I'm viewing this investment primarily as a small test of my 'value radar' rather than a core holding. The purchase price was USD426.
Its share price has fallen sharply in the last few weeks, on what appears to be a combination of (a) a lack of clarity around plans for its cash surplus and (b) concerns around a lack of future innovations / new products in the pipeline. I understand there may also be some form of vicious circle occurring with portfolio managers re-balancing their 'tech' holdings as a result of the recent fall in Apple in comparison to gains in the likes of Google, which is perpetuating their respective falls & gains.
Whilst i to some extent agree with these concerns, the fundamentals (a PE under 10, dividend yield of 2.5% and a large cash reserve) now look attractive to me.
I'm personally a fan of Apple products and i'm always amazed at how busy the flagship HK store is, and how long the queues are when new products are launched. I think there is still a lot of appetite for innovation & evolution with the existing range, let alone potential pipeline products such as the often rumoured apple tv, watches etc.
Although i've been looking to add US exposure to my portfolio for some time, this investment doesn't fully fit my core strategy of holding well diversified, income based index tracking ETFs. As a consequence the size of the investment is very small in comparison with my core holdings of ETFs.
I'm viewing this investment primarily as a small test of my 'value radar' rather than a core holding. The purchase price was USD426.
Friday, 1 March 2013
Expecting a few one-offs
March is likely to be a fairly unique month for my finances, with a couple of one-off cash inflows expected.
Firstly i expect some time around the middle of the month to receive a share of some family inheritance. Whilst only representing a few months expenses, it will add to my cash reserves and would be readily available for investment.
Towards the end of the month i should also receive a lump sum related to my employment. Again, this will be in the form of cash and therefore readily available for investment.
I expect the combination of these to push me well in excess of 30% of my assets held in cash, much higher than my 20% medium term target.
My initial thoughts are to hold a reasonable proportion in easily accessible accounts both for emergencies and to be ready for investment opportunities. However, given the size of my buffer and positive monthly savings rate, i'll probably tie some of it up in time deposits to get a better return. I may also add to my holidays/luxuries budget for the year.
Whilst its a nice dilemma to have, i really do need to give some more thought to how best to manage my cash reserves, and in particular finding a balance between ease of access and maximising return.
Firstly i expect some time around the middle of the month to receive a share of some family inheritance. Whilst only representing a few months expenses, it will add to my cash reserves and would be readily available for investment.
Towards the end of the month i should also receive a lump sum related to my employment. Again, this will be in the form of cash and therefore readily available for investment.
I expect the combination of these to push me well in excess of 30% of my assets held in cash, much higher than my 20% medium term target.
My initial thoughts are to hold a reasonable proportion in easily accessible accounts both for emergencies and to be ready for investment opportunities. However, given the size of my buffer and positive monthly savings rate, i'll probably tie some of it up in time deposits to get a better return. I may also add to my holidays/luxuries budget for the year.
Whilst its a nice dilemma to have, i really do need to give some more thought to how best to manage my cash reserves, and in particular finding a balance between ease of access and maximising return.
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