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June Portfolio Review

The market rebounded last month with the Straits Times Index (STI) gaining 3.2%. Despite the fear of 2nd wave of Covid-19 pandemic, the markets are in general optimistic of a quick global economic recovery. Singapore has since moved into Phase two of reopening earlier than expected, with more retail businesses and social activities to resume. Besides, Singapore is also having the 14th General Election on 10 July.

The Covid-19 global pandemic has introduced much market volatilities that we have not been experienced for more than a decade. In the past few months, the crisis has put a "hard stop" on various sectors including travel, retail, airlines and hospitality,  triggering an unexpected global recession. However, despite the uncertainties and warning from the authorities that the pandemic may continue for the next 6 to 12 months, the STI is up 17% from its low of 2,238 points.

Year-till-date (YTD), the STI index still suffered a drop (including dividends) of -18%. Almost all of its 30 component stocks ended in the red. 

Our REIT portfolio was impacted by the global pandemic Covid-19 as well. However, with the time-tested portfolio rebalancing strategy, we recovered strong in May despite the drop in the markets. However in June, the portfolio was impacted by First REIT due to the announcement from its major tenant and shareholder to review the rental support. This has triggered a sell down on the REIT in the first two weeks of June. YTD June, the portfolio was down by 19%. Fortunately, our REIT picks still managed to outperform the STI by 7%.

The annualised portfolio yield is at 8%.

While the portfolio is still in the red, we think the market is potentially recovering in the coming months with gradual easing of movement restriction. Under phase two, the retail businesses are reopening with safe distancing measures in place.

We still believe that the current REIT valuation provides a good opportunity for long term investors to pick deep value REITs with good dividends.

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