Portfolio review for 2010

As usual, my portfolio review for year 2010 is divided into three sections: Expenses, Emotion and Return.

Expenses

2010 2009
Number of Buy 4 9
Number of Sell 0 1
Turnover Ratio 0.0% 0.72%
Average Holding Period (year) Infinity 139
Total Expense Ratio 0.36% 0.58%

Quite a passive year, partly because of delay on planned portfolio activity in October 2010.

Emotion

Nothing much to say here, except the frustration of finding London Stock Exchange(LSE)-listed global bond ETFs that are available in Saxo (the stock broker I use), and the delay caused by the waiting. Anyway, the two LSE-listed global bond ETFs are available now (since May 2011) for trading in Saxo.

Return

2010 2009
Portfolio IRR Portfolio TWR Benchmark Portfolio IRR Portfolio TWR Benchmark
SGD
5.21% 5.20% 4.47% 25.60% 25.48% 20.39%
USD
14.50% 13.70% 28.92% 23.58%

Note:

  1. IRR = Internal Rate of Return, also known as Dollar-Weighted Returns.
  2. TWR = Time-Weighted Returns
  3. Both TWR and IRR returns include dividend and un-invested cash holding.

Comments on the return

  • The IRR and TWR are almost the same. This is because new cash contribution is evenly spread out over the year, as I save monthly to contribute to the portfolio.
  • Portfolio return is quite close to the benchmark, which tells me that my portfolio behaves as expected as a 75/25 portfolio.
  • The gap between SGD return and USD return is due to depreciating US dollars.

Portfolio Allocation

Current Target
Equity 71% 75%
US 25% 25%
EU 13% 20%
JP 5% 5%
APEJ 7% 10%
SG 3% 5%
REIT 17% 10%
Fixed Income 29% 25%
Global 5% 10%
Asia 4% 5%
SG 16% 10%
Cash 3% 0%

There is a slight over allocation in REIT due to a number of right issues by several REIT managers. The Cash holding is caused by the delay on planned portfolio activity mentioned above.

Looking into 2011

There are more and more ETFs listed in SGX and I have not looked into them; could be interesting. For global bond ETF, I will start to use the LSE-listed iShares Citigroup Global Government Bond (IGLO) and iShares Global Inflation-Linked Bond (IGIL) that are now available for trading in Saxo stock broker.

As always, stay the course and tune out financial news.

11 responses to “Portfolio review for 2010

  1. Thank you very much for your kind sharing.
    Is there any tax withholding issue for dividends for IGLO or IGIL?
    Do we have the estate duty issue buying ETFs from LSE ?

    Past data of IGIL shows that it is very volatile. I think it is not a very good idea to include IGIL due to its high volatility. Don’t you have any concern of its volatility?

  2. Thanks Choozm. What I meant by volatility is that based on the price performance chart (in USD) in website http://uk.ishares.com/en/rc/products/IGIL, it dropped by -20% in year 2008 for IGIL. Seems very hugh drop for bond.

  3. Hi choomz,

    Decided to post here in your latest post so as to easier track any replies.

    Would you like to consider HSBC MSCI JAPAN ETF traded on London Stock Exchange (or Germany/France/Switzerland)?
    http://www.etf.hsbc.com/etf/attachments/uk/etf_retail_funds.pdf
    TER 0.40%, and now Full Replication (it started off as Optimised Replication).
    http://www.fool.co.uk/news/investing/2010/09/09/hsbc-trounces-ishares.aspx

    This leads to a related question. Suppose one day very low cost, tax-efficient Vanguard ETFs are available on LSE or other European exchanges, should one’s action be to sell away all their current holdings and replace them with Vanguard?
    http://www.bloomberg.com/news/2011-04-04/vanguard-to-challenge-blackrock-s-ishares-in-european-etf-market.html

    Thanks!

    • Hi momo,

      Thanks for the info. I am hesitant to put all ETF in LSE as there is estate tax in UK and I try to avoid exceeding the estate tax limit (though it is higher than US).

      As for switching all ETF to vanguard, may be, may be not. There is transaction cost to be considered. I may prefer to stay inaction and keep the old ETFs. I may switch Legg Mason Global Bond Trust, the only actively managed fund in my portfolio.

      • I just realized I have been spelling your name wrong (choomz instead of choozm)!

        Your reply usually leads me to ask further questions 😀

        Just one question now. Yes I am aware of the inheritance tax above the nil-rate band for LSE. However, I am 99% certain my LSE holdings will not exceed the nil-rate band in my lifetime. The same cannot be said for my kid(s), assuming he/she/they take over my portfolio and continue to add on to it. Therefore, the question is, should I just bother about my lifetime, or should I plan one generation (or even a few generations) down?

        If my wish is for my future generation to grow wealthier by building on to the portfolio I built, and that I have to take care of all the tax issues, should I just invest in Singapore ETFs/stocks/unit trusts instead?

        Thanks!

  4. Hi momo,

    Probably at the time you children take over the portfolio, the tax rules are different already. Or may be putting your asset in a family trust will help? You have asked a question that I think a qualified financial adviser will be in better position to answer you 😉

  5. Hi choozm,

    I have a new question.

    “Anyway, the two LSE-listed global bond ETFs are available now (since May 2011) for trading in Saxo.”
    How was this issue resolved? Has it got to do with the fund’s trading currency (USD instead of GBP)?

    I requested to add 02821:xhkg (ABF Pan Asia Bond Index Fund) on the Hong Kong Stock Exchange and the reply was “Cannot be enabled for Online trading”. No reason was given.

    How do you correspond with Saxo usually? You think 02821:xhkg can be added?

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