Questions: "Wilfred, under what circumstances would bonds and equities drop together?" Answer: High yield bonds or also known as junk bonds are positively correlated with equities. Here is the 5 years correlation matrix of the various asset classes based on monthly returns on SGD: The Bloomberg Barclays Global High Yield and Citi Global Emerging Markets US Dollar Government Bond are … [Read more...]
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Is it worth selling your 101 ILPs instead of surrendering it?
I keep on getting queries from clients and potential clients that they want to terminate their 101 ILPs. This after they realized that they found it to be not suitable. What are 101 ILPs? 101 ILPs are investment wrapped under an insurance contract which provides very little insurance coverage. Typically, the death benefit is 101% of the investment market value. Thus, financial practitioners … [Read more...]
When is investing in Exchange Traded Funds (ETFs) not suitable?
Much has been said in the media about the benefit of Exchange Traded Funds (ETFs). But like all financial products, there are situation which its purchase is not suitable. So here are a few scenarios in which investing in Exchange Traded Funds may not be suitable. When the focus is not large cap There are countless number of Exchange Traded Funds all over the world. But very few really make … [Read more...]
Spectacular collapse of the LM Investment Management Limited
I was first introduced to LM Investment Management Limited by an institution on May 2008. It was to be offered to high networth or Accredited Investors. It was an Australian fund manager. The fund that was introduced to me was the LM Currency Protected Australia Income Fund. The returns were generally 100bps more than the standard fixed deposit rates as shown below: Despite its attractive … [Read more...]
6 ways to increase your investment returns
1: Asset allocation is critical The most important part of investment is to get the asset allocation right. This is because large proportion of the percent of return variation of a portfolio is explained by the asset allocation. The above was a research done on the percentage of the actual return variation of balance funds explained by the asset allocation policy. In all countries surveyed, it … [Read more...]
Vanguard funds in Singapore at just US$ 20,000!
Vanguard is the world’s most famous index fund provider. Vanguard came to our office a few years ago but nothing happened after that. My problem with them is that their funds required a whopping minimum of USD 100,000 or EUR 100,000. It is impossible to construct a diversified portfolio with such a large entry level. Moreover, their funds were not on any of the platform. So, it was impossible … [Read more...]
The broken Umbrella: Platinum All Weather Fund
The Platinum All Weather Fund invested in complicated derivative transactions. The fund shorted out-of-the-money 'calls' on the S&P 100 index stocks and the long out-of-the-money 'puts' on the index. The underlying fund manager was impressive. It was reported that since 1990, the fund manager delivered decent returns with low volatility. With such long track record, it must be a good … [Read more...]
Disappearing Castlestone Collection of Modern Art
The Castlestone Collection of Modern Art fund was launched in March 2009. It invested in a diversified collection of museum-quality Post-War Art. The art pieces were non-producing/deceased artists with established secondary markets (Christie’s/Sotheby’s). This fund was only offered to Accredited Investors. The Castlestone Collection of Modern Art was an open-ended mutual fund, 8-year … [Read more...]
CPF Lifetime Retirement Investment Scheme unlikely to achieve economies of scale
I wrote the following letter to the Straits Times on 5 August 2016 which expresses my opinion on the CPF Lifetime Retirement Investment Scheme: I am glad that the Government will be introducing the Central Provident Fund (CPF) Lifetime Retirement Investment Scheme (LRIS) ("Simpler investment scheme to grow retirement nest egg"; yesterday). However, more needs to be done to ensure the … [Read more...]
Swiber Holdings defaulted bonds, a commentary on how the system works
The Swiber Holdings is another lemon product sold to Accredited Investors. Here is another article on lemons. As everybody already know by now that Swiber Holdings bonds have defaulted. It seems a lot of people bought its bonds. Who are these individuals? These individuals are rich people known as ‘accredited investors’. According to the Straits Times report, “Swiber saga DBS says bond sales … [Read more...]
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