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

No comments:

Post a Comment