Sunday, May 29, 2016

Yaruzi Bought His First Ever Prada!

I'll probably never know why people, especially ladies, are willing to spend thousand of dollars for a "bag". But I figured out that the company selling them would make a nice profit. It's not a surprised that Prada's gross margin is at 72.37%! Yes you read it right. For every $10,000 you spend on Prada's bag, the actual cost to produce the bag is $2,730.

So instead of buying the bag, I decided to buy 1000 shares of Prada at HKD 25.35 per share today.

Sunday, May 8, 2016

April 2016 - Unit Trust Portfolio Update

Finally my unit trust portfolio turned positive, after staying under water since January. YTD return was 1.51% by end April 2016. I received cash dividends of $952.20. Moving forward, I've decided to re-invest the cash dividends into my low cost portfolio, instead of the unit trust portfolio.

United Gold and General fund, which invested in gold miners around the globe, surged unexpectedly. It was the significant contributor to the portfolio out-performance, as it rised from -18.64% in January to 34.86%, a total of 53.5% jump over 4 months. If we looked at the fund top holdings such as Newmont Mining Corp, Barrick Gold Corp, Goldcorp Inc, etc, we'd find out that their share price are trading at 52 week high. I might consider buying them direct for my low cost portfolio.

Do watch up gold and gold miners very closely, because I believe their bottoming process is real this time round. I sold some to lock-in some profit, but I was still holding most of it. I think this was just the beginning of their turnaround from multi-years down trend.

I also sold some of my United Emerging Markets Bond Fund(SGD) holdings to reduce my exposure in the riskier segment of fix income. This was the continuation after I liquidated 2 high yield bond funds in March.

Transactions in April 2016
1. Sold
United Gold and General fund $1,041.99
United Emerging Markets Bond Fund(SGD) $1,441.61

Link to Yaruzi's unit trust portfolio allocation as of April 2016

Sunday, May 1, 2016

April 2016 - Low Cost Portfolio Update

The low cost portfolio remained in the positive territory in April 2016. YTD return was 1.12% as of 30 April 2016. I injected fresh fund amounting to SGD 43,000.00 in April, which mainly came from my annual bonus and monthly contribution. I received dividend of HKD 69.49 from Vanguard FTSE Asia Pacific ex Japan High Dividend.

I bought 5800 shares of Chow Tai Fook at HKD 4.88 per share. I added Chow Tai Fook in my watchlist, after another company Luk Fook Holdings was shortlisted when I performed stock screening based on quantitative aspect (ROE, NAV, Dividend Yield, Debt, etc).

In term of their business model, I became convinced that there would always demand for jewelry, as long as there were women in this world. That revelation came after I failed to convince my wife that diamonds and jewelry were overrated and overpriced :-). If I couldn't fight them, I might as well join them. What could be better than investing in a company where the business model made people, ladies especially, to throw their (husband's) good hard earned money happily on overpriced piece of "precious art". And hey, these companies paid dividend too! 

I decided on Chow Tai Fook instead of Luk Fook because of it's market leading position against the later. Their share price had been hammered badly because of the major crack down by Chinese government against corruption, resulting in slumping sales for casino and sellers of luxury items. The flow of hot money that usually came into casino and luxury items suddenly evaporated as they hid from the Chinese government intense scrutiny. Would the hot money hide forever? I doubted.

I also bought 400 shares of HSBC at HKD 48.85 per share. Banks & financials globally looked interesting after they get hammered during the sell-off. I wanted to increase exposure in the banking and financial sector, but at the same time diversify from just owning local banks. HSBC, as one of the largest global bank, fit into my criteria.

With the purchase of Chow Tai Fook and HSBC, equity allocation of the portfolio was 50.24% vs bonds 49.76%. For measurement and tracking, I decided to use XIRR, which was a standard and widely used formula to calculate portfolio rate of return.

Link to Yaruzi's low cost portfolio as of April 2016