Let’s do a stock take on our STI ETF Dollar Cost Averaging (DCA) and Singapore Permanent Portfolio at the end of Jul 13. (Click Here For A Comprehensive Guide To the STI ETF)
STI ETF DCA
Our STI ETF DCA simulated portfolio started in Jan 2008 which invests S$500 on a monthly basis. As at Jul 13, the simulated portfolio had invested S$33,000 and made S$10,819.03 profits (including dividends). This means an annualised returns of 7.7%. Follow the performance of this simulated portfolio as we continue to do this “forward testing”. You can read more about the performance tracking here.
Singapore Permanent Portfolio
The simulated Singapore Permanent Portfolio was started in Jan 2012. Although gold price had went down significantly, we did not have the opportunity to re-balance the portfolio because the weightage of gold had never gone down to 15% of the portfolio. Most investors are afraid to see the components dropping in price but in contrary, it is good to have more volatility of the individual components because there are more opportunities to re-balance, and more re-balancings translate to higher returns. We will stick by the rules to re-balance. If the current trend continues, we should be able to re-balance if stocks constitutes 35% of the portfolio or gold constitutes 15% of the portfolio, whichever happens first. As at 31 Jul 13, the weightage of the Permanent Portfolio is as follow:
- Stocks (STI ETF) – 29.37%
- Bonds (SGS 30-year Bonds) – 22.97%
- Gold (SPDR Gold Trust) – 19.59%
- Cash – 28.07%
In terms of performance, the simulated portfolio has returned 0.51%. The returns are low because Permanent Portfolio is not a high-yielding portfolio. This means that the portfolio does not rely on high rates of dividends or coupons payments. The main source of returns is capital gains through portfolio re-balancings. This simulated portfolio has not gone through any re-balancing to date, and hence, the cause for low returns. If we take alignment to the U.S. Permanent Portfolio, the long term average annual returns to expect is about 8%. The other main advantage of the portfolio is its low volatility. After going through a rough period whereby stocks, bonds, and gold suffered declines in price, the portfolio worst drawdown was only 9.32%. This is pretty impressive when compared to many other portfolios. You can follow the portfolio tracking here.
CEO of Dr Wealth. Built a business to empower DIY investors to make better investments. A believer of the Factor-based Investing approach and runs a Multi-Factor Portfolio that taps on the Value, Size, and Profitability Factors. Conducts the flagship Intelligent Investor Immersive program under Dr Wealth. An author of Secrets of Singapore Trading Gurus and Singapore Permanent Portfolio. Featured on various media such as MoneyFM 89.3, Kiss92, Straits Times and Lianhe Zaobao. Given talks at events organised by SGX, DBS, CPF and many others.