Monday, June 15, 2015

The past does not tell the future

A friend was asking me why I buy into ETFs since I know that they are expensive in Singapore and I have written about it (See here http://sgx-stocks-sti.blogspot.sg/2015/05/twice-fees-and-around-14-44-times.html)

The short answer is because they are the only option for investment for my funds in SRS as I cannot use SRS to trade through Stanchart.

Assuming you can only trade in SGX and you have a choice of ETFs, one has to make the best of a bad bunch.

In short, I have a table below which shows the various ETFS which I use and how i try and structure the spends to match the GFAP. (For more on GFAP, please see herehttp://www.pragcap.com/is-the-global-financial-asset-portfolio-the-perfect-indexing-strategy)

I am breaking this table into two portions so that it can be read.

Country / Region Type ETF SGX Code Lot Size Currency
Singapore Equity STI ETF (ES3) ES3 100 SGD
Singapore Equity Nikko AM STI ETF  G3B 100 SGD
Singapore Bond ABF SG Bond ETF A35 100 SGD
Asean Equity CIMB Asean 40 ETF (M62) M62 100 USD
Asia Equity db x-trackers MSCI AC Asia Ex Japan High Dividend Yield Index UCITS ETF 1D (N2F) N2F 10 USD
Asia Equity Lyxor ETF MSCI AC Asia Ex Japan Real Estate (MT7) MT7 10 USD
Asia Equity CIMB S&P Ethical Asia Pacific Dividend ETF (P5P) P5P 100 USD
Japan Equity Lyxor Japan 10US$ (CW4) CW4 10 USD
Hong Kong Equity Lyxor H.S.I ETF (A9B) A9B 10 USD
China Equity DBXT CSI300 ETF (KT4) KT4 10 USD
Europe Equity Lyxor Europe 10US$ (JC5) JC5 10 USD
USA Equity SPDR S&P500 US$ ETF (S27) S27 100 USD
USA Equity SPDR DJIA10 US$ ETF (D07) D07 100 USD
USA Equity Lyxor NASDAQ (H1Q) H1Q 10 USD
Asia Bond iShares Barclays USD Asia High Yield Bond Index ETF (O9P) O9P 100 USD


SGX Code Lot Size Currency Bid Price Offer Price Spread (% of Offer) Annualized Return of ETF Since 1 Year (%) Total Expense Ratio (%) Annual Dividend Yield (%)
ES3 100 SGD 3.36 3.37 0.30% 9.78% 0.30% 2.75%
G3B 100 SGD 3.4 3.41 0.29% 9.96% 0.42% 2.82%
A35 100 SGD 1.143 1.149 0.52% 2.99% 0.25% 2.65%
M62 100 USD 9.32 9.43 1.17% 7.22% 0.65% 3.41%
N2F 10 USD 1.822 1.829 0.38% 18.33% 0.65% 2.17%
MT7 10 USD 10.2 10.3 0.97% 10.52% 0.65% 1.55%
P5P 100 USD 0.983 0.998 1.50% 6.23% 0.65% 5.16%
CW4 10 USD 1.308 1.31 0.15% 9.26% 0.50% 0.76%
A9B 10 USD 3.36 3.38 0.59% 16.14% 0.65% 2.07%
KT4 10 USD 14.07 14.11 0.28% 71.79% 0.50% 1.02%
JC5 10 USD 14.76 14.86 0.67% -7.55% 0.35% 2.29%
S27 100 USD 208.66 209.02 0.17% 11.71% 0.11% 2.04%
D07 100 USD 177.78 178.06 0.16% 10.14% 0.17% 2.42%
H1Q 10 USD 17.68 17.7 0.11% 17.89% 0.30% 0.79%
O9P 100 USD 10.59 10.68 0.84% 4.02% 0.50% 6.90%

The full table is below
Country / Region Type ETF SGX Code Lot Size Currency Bid Price Offer Price Spread (% of Offer) Annualized Return of ETF Since 1 Year (%) Total Expense Ratio (%) Annual Dividend Yield (%)
Singapore Equity STI ETF (ES3) ES3 100 SGD 3.36 3.37 0.30% 9.78% 0.30% 2.75%
Singapore Equity Nikko AM STI ETF  G3B 100 SGD 3.4 3.41 0.29% 9.96% 0.42% 2.82%
Singapore Bond ABF SG Bond ETF A35 100 SGD 1.143 1.149 0.52% 2.99% 0.25% 2.65%
Asean Equity CIMB Asean 40 ETF (M62) M62 100 USD 9.32 9.43 1.17% 7.22% 0.65% 3.41%
Asia Equity db x-trackers MSCI AC Asia Ex Japan High Dividend Yield Index UCITS ETF 1D (N2F) N2F 10 USD 1.822 1.829 0.38% 18.33% 0.65% 2.17%
Asia Equity Lyxor ETF MSCI AC Asia Ex Japan Real Estate (MT7) MT7 10 USD 10.2 10.3 0.97% 10.52% 0.65% 1.55%
Asia Equity CIMB S&P Ethical Asia Pacific Dividend ETF (P5P) P5P 100 USD 0.983 0.998 1.50% 6.23% 0.65% 5.16%
Japan Equity Lyxor Japan 10US$ (CW4) CW4 10 USD 1.308 1.31 0.15% 9.26% 0.50% 0.76%
Hong Kong Equity Lyxor H.S.I ETF (A9B) A9B 10 USD 3.36 3.38 0.59% 16.14% 0.65% 2.07%
China Equity DBXT CSI300 ETF (KT4) KT4 10 USD 14.07 14.11 0.28% 71.79% 0.50% 1.02%
Europe Equity Lyxor Europe 10US$ (JC5) JC5 10 USD 14.76 14.86 0.67% -7.55% 0.35% 2.29%
USA Equity SPDR S&P500 US$ ETF (S27) S27 100 USD 208.66 209.02 0.17% 11.71% 0.11% 2.04%
USA Equity SPDR DJIA10 US$ ETF (D07) D07 100 USD 177.78 178.06 0.16% 10.14% 0.17% 2.42%
USA Equity Lyxor NASDAQ (H1Q) H1Q 10 USD 17.68 17.7 0.11% 17.89% 0.30% 0.79%
Asia Bond iShares Barclays USD Asia High Yield Bond Index ETF (O9P) O9P 100 USD 10.59 10.68 0.84% 4.02% 0.50% 6.90%

The theory is that

1) Markets tend to mean revert.

2) Over a period of time, one can average down on markets but not on stocks.

3) If we hold a GFAP Index, one is likely to do on average, average, less costs

4) Rebalancing will provide a bonus when performance drags the weight away from Index

So, in short, do not chase positive performance (of China), rebalance to negative performance of market and buy Europe now

Full Disclosure : I am long all ETF listed above.


Disclaimer :- 

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures



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