Time to Review, Reflect, and Reshuffle - Dividend Portfolio Performance 2017

A Bigger Picture to Investing

It's been 5 and a half years since I made my first investment into equities and I still somewhat remember the experience.Feeling clueless as I stumbled around figuring how to set up my CDP and brokerage accounts; anxious as I stared at the prices rolling up and down; and a thrilling blend of fear and hope as I locked in my first order.

Investing for myself has been fruitful in more than just financial terms, yes. But there was a point where I felt that there needed to be a bigger picture to this whole investment journey. One where I could one day impact others' lives and help the wider community grow and manage their wealth while also improving my own. I don't believe I'm there yet, but a little while back I broke out of my comfort zone to take one step forward toward this goal.

I challenged myself to create a tangible portfolio that others could see. It involved many things, but included making calls on individual stocks and more importantly, being comfortable with taking accountability for those calls. You can take a look at the portfolio I created in the post linked here and the interim performance linked here and here, or you can check out the portfolio constituents below.

Before I go into the performance of the portfolio, it's worth mentioning a few characteristics about it:

• The stocks are all listed on the SGX and had been regularly paying dividends for the past 5 years when I first created the portfolio.
• The portfolio's geographical concentration is largely centered on Singapore, but these companies also do business in foreign markets, including the USA, China, Hong Kong, Taiwan, Thailand, Indonesia, and India.
• Except for Thai Beverage which deals with the Thai Baht (THB), these companies denominate their earnings in the Singapore Dollar (SGD), limiting the foreign exchange risk (assuming the companies somewhat hedge their FX exposure). 

The Portfolio

Now that it's been about a year since my last review, here comes the exciting part again; time to break out the charts and discover how the portfolio did.

Overall, the portfolio performed well and kept within a moderate-low risk range with a good showing in risk-adjusted returns when compared to other funds; included are two for comparison in roughly the same time period. (Could have done more to match the funds' sector and geographical exposures but it's much more troublesome so I simply googled "top returning funds".)

Realistically speaking, however, understanding the underlying performance of each portfolio constituent keeps me grounded and gives clarity to the good and the bad picks.

• There were weaknesses in a few stocks as market disruptions rocked core business segments and catalysts failed to kick in. The softest returns came from SPH (T39.SI) as it bottomed out at -17%, while Thai Beverage (Y92.SI), SIA Engineering (S59.SI), and Singtel (Z74.SI) all struggled to keep pace, ending in the negative single digit range. Thankfully, dividends from these stocks provided some resilience against the drag on the overall portfolio.
• The REITs in the portfolio, Ascendas REIT (A17U.SI) and CapitaLand Mall Trust (C38U.SI), provided a steady mix of dividends and capital gains of between 14-16% to form a stable foundation of healthy returns. Going forward however, I don't see the retail space holding ground for long against the e-commerce headwinds unless their model changes - a shift of focus towards entertainment and experience over purely retail purchases perhaps?
• The stars of the show turned out to be DBS (D05.SI) which surged forward under strong market sentiments relating to its holistic digital strategy and overall growth, and multi-bagger UMS (558.SI) (aka 'the Semiconductor Manufacturer that could') with returns that climbed as high as 182% but settled back to 122% at time of recording after lapping up record-breaking earnings on the back of the next-gen electronics wave but paled as global smartphone sales expectations were revised downwards and the threat of a trade war loomed nearer in 2018.

Conclusion and Next Steps

There's more reflection to be done around what went well and what didn't, but this exercise has helped me to find more confidence in making investment calls while also showing the potential of what a Dividend Portfolio can do for us. 2017 was a strong year for equities nonetheless, and it's not realistic to expect every stock pick / investment decision I make to always be profitable going forward; though I do expect to keep improving.

With this in mind, I believe that now's a good time to reshuffle the portfolio to factor in the state of the global economy and it's current trajectory. We see global leaders comment about the absurdity of a trade war but a collective inability to stymie its threat. We see cooling measures coming into effect as the focus on inflation gradually surpasses growth stimulation. We also see a global shift towards a much heavier reliance on electronics and renewable energy - distributed energy resources in power grids, electric vehicles becoming personally- and commercially-viable, and next-gen technology like augmented reality and artificial intelligence already landing in consumers' hands, albeit in forms like Animoji and camera scene identification.

There seem to be some pretty defined areas that the global society is headed towards and it's just about us picking the right investments to ride those waves. I have some opinions in mind that I hope to write about once I can, and if you're interested we can always bounce ideas off each other.

Until next time, happy investing!