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May Portfolio Review

While the global markets ended strong in April, we had another sell down in May. The Singapore market or the Straits Times Index (STI) dropped 4.2% last month. Majority of the corporate earnings were negatively impacted by the Covid-19 pandemic.

On top of the Covid-19 pandemic, there is an increasing tension between US and China over the coronavirus blame game. Besides, the protest in US and China's national security bill in Hong Kong have filled the headlines in the past two weeks. The recovery is likely to be slowed down.

Year-till-date (YTD), the STI index suffered a drop (including dividends) of -20.8%. Almost all of its 30 component stocks ended in the red except two REITs, namely Mapletree Logistics Trust (+19.8%) and Ascendas REIT (+6.6%). Fortunately, Ascendas REIT is one of the component stocks in my REIT portfolio.

My REIT portfolio was impacted by the global pandemic Covid-19 as well. However, with the time-tested portfolio rebalancing strategy, we continued to recover in May despite the drop in the markets. YTD May, the portfolio was down by 7.65%. We have a huge recovery as compared to March (-35%) and April (-20%), as we have increased our positions based on the portfolio rebalancing strategy in the past two month. 

Another good news is the annualised portfolio yield has been increased to 9.6%.

As the portfolio recovered and dividends received, the portfolio leverage went down to 1.83.

We would expect the DPU to drop in 2020. Based on the recent quarterly report, few REITs have decided to retain their distributable income during this uncertain period. However, we still maintain our long-term bullish view on Singapore REITs.

Nonetheless, we still believe that this provides a good opportunity for long term investors to pick deep value stocks with good dividends.

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