Some Fund Recs (Because I Survived the Wilderness)

Hola! It’s been awhile, hasn’t it? I’m back after an epic 2-week hiatus where I was literally sleeping in the wilderness, scaling great heights, and constructing a makeshift boat with my bare hands. Okay fine, it’s less awesome than it sounds – I was away at my company’s Outward Bound course for a grand total of 5 days. And the remaining 9 days was spent… recovering. Yeah, you know I’m sexy and rugged like that.

So I haven’t been doing a very good job at keeping this blog updated on a regular basis. Up till my last post, I’ve been managing about one post a week, partly because my posts are so damn long. I can’t help it – I usually have so much to say when I want to talk about something that I go on and on and on and on and before I know it, I’ve spent like 2 hours on a post. Not to mention the time taken to find that perfect, non-copyrighted title picture. Damn you, intellectual property!!

So I’m gonna try something different from now: I’ll try writing shorter, more regular posts, splitting a huge topic out into different bits. Hopefully this way, blogging’s not going to be as daunting of task to me, you won’t get so damn bored with my 1,000 word essays, I get momentum to write more, and you get more fodder to help you hatch a rich life. All in all a good deal for the both of us. I won’t always be able to come up with superdamnentertaining analogies – some of my posts will be factual and serious, but at least I’ll be able to use those to get some blogging momentum.

Are you ready? Good. Here we go.

So I got a comment from Jing asking if I could recommend some Exchange Traded Funds (or ETFs for short). Okay, I’m not a financial advisor. There’s no way that I can decide if a particular ETF would suit your needs. But I can tell you what’s in my portfolio and then you can decide for yourself, kay? These ETFs suit my own personal investing style of a buy-and-hold, dollar-cost-averaged, and index-based strategy (which you can read about here, here and here). And so the five ETFs I currently have in my portfolio are (drum roll please):

1. SPDR Straits Times Index ETF (Ticker: ES3): Benchmark index of the Singapore stock market, traded on the SGX. Comprises 30 blue chip Singaporean companies, some of which are effective monopolies. I invest in this mainly for the home bias, and to mitigate exchange rate risk from the US Dollar.

2. Vanguard Dividend Appreciation ETF (Ticker: VIG): Comprises US companies that have consistently grown their dividends over 10 years or more. Blue chips like Coke, IBM, McDonald’s. I’m a big fan of dividend investing, especially in companies that consistently grow their dividends. Traded on the NYSE.

3. Vanguard FTSE All-World ex-US ETF (Ticker: VEU): Global stock index fund, to give me some exposure into the developed world outside of the US for diversification. Traded on the NYSE.

4. SPDR Dow Jones Intnl Real Estate ETF (Ticker: RWX): I also believe in diversifying across asset classes, and real estate is one of them. RWX is a global, ex-US, real estate fund, traded on the NYSE.

5. Vanguard REIT ETF (Ticker: VNQ): US real estate fund. Okay I admit – I’m biased towards the US because I went to college there. So a large part of my portfolio consists of US holdings, and I invest a small portion of my portfolio in VNQ because real estate plays a particularly pivotal role in the US economy. Traded on the NYSE.

I’m also looking to invest in the ABF Singapore Bond Index Fund (Ticker: A35), another global bond index fund, and some Singapore REITs to diversify, once I build up a large enough equity base.

Okay but before you get all excited and run out and throw your money in these funds faster than army boys at a strip club, let me just say two things:

1. I have a certain investment style (long-term, buy-and-hold, index-based) which may or may not suit your style of investing. There are literally thousands of ETFs out there that can suit just about any investment style. You should decide on your own style and invest in the assets that suit your objectives.

2. I am not your financial advisor and these are in no way outright recommendations that will guarantee you riches and ca$$$hhh moneyyy baby. DO YOUR OWN RESEARCH before you invest in anything. Investing means taking on risk – please don’t be a baby and blame me (or someone else) if you lose money.

Till next time, assuming I don’t die from my sandfly bites, adios!

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4 thoughts on “Some Fund Recs (Because I Survived the Wilderness)

  1. Quick question from a noob:
    What’s your exit strategy?
    Any idea if those ETFs are liquid?
    When your old and want to cash out, will anyone buy the ETFs from you?
    As you said, its a zero sum game…

    Thanks!
    I enjoy reading your blog.

    • Hi Quentin, thanks for the compliments! To your questions:

      1. I’m currently at the accumulation stage now, meaning I’m collecting as many ETF units as I can. So in short, I don’t have an exit strategy for this point in my life. But that’s essentially the definition of a “buy-and-hold” strategy – you buy, and you don’t sell. Of course, you can’t hold them forever, and I would consider selling once I’ve accumulated enough assets (where “enough” depends on you). After which, I would consider a moving average exit strategy (say, to sell once they cross below a long-term moving average, eg the 200-day MA). But I don’t see myself selling for the next 10-15 years because I’d want to accumulate as many assets as I can, and even better if I can do so at lower prices.

      Note: If you’re planning to retire within the next 10 years, I would think carefully before adopting a buy-and-hold strategy. Stocks do ultimately go up, but they may sometimes take as long as 20 – 30 years to do so.

      2. Yes the ETFs I’ve chosen are liquid – you can check their traded volumes on Yahoo! Finance. In general, the main ETFs issued by the large companies: Vanguard, SPDR, iShares, etc are very liquid. The only exception is the A35 ETF, which is the ABF Singapore bond index fund and is traded on the SGX. Coincidentally, I was just about to buy it yesterday when I noticed that it had a really poor traded volume (hence low liquidity), and its bid/ask spread was huge. That prevented me from buying it and prompted me to do more research on fixed income options in Singapore.

      3. As the ETFs are liquid, it is very likely that I’ll be able to find buyers for them when I want to cash out in my old age. Stocks do ultimately rise over the very long run – and the buyers of my ETFs will be the next generation of investors, who will want to hold them for their version of the long term.

      Hope this helps!

    • Yoz Quentin,

      I can’t help but type this. The stock market is a zero sum game when people are trading aka speculating – someone win, someone lose.

      When we buy into stocks/ ETF for the long haul, the underlying businesses behind them actually uses our capital to grow and create more value to the society, and since their profits, cashflow and assets build up. In that sense, we can say that the money is “growing” through value-added businesses.

      Also, great stocks and ETFs pay dividends over time which are literally money grown and redistributed back – In this case, for me to win, nobody had to lose.

      Cheers

  2. Yoz!

    I recently read Value Investing in REITs, Attlee Hue, and find it very informative. Given your finance nackground, I’m sure you’ll learn much more than me. It covers SREITs specifically, and segmented all 23 SREITs into Retail/ Office/ Industrial/ Healthcare/ Hospitality (im not sure if i missed any). Do read it! 🙂

    A very haphazard summary i wrote:
    http://thevalueinvestingjourney.wordpress.com/2012/05/26/value-investing-in-reits-3-2/

    If you like, maybe we can meet up and do a book/ pointer exchange? ;p

    or you might buy it from bookstore? 🙂

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