4Q 2023 Investment Strategy Update

Finally, we can start breathing a sign of relief. US Fed finally has indicated they are not looking at increasing the interest rate further and instead projects 3 rate cuts in 2024 as the economy cools down and start losing steam. Who will be the winners in a decreasing interest rate environment? For Singapore, it will be non other than the Reits (Especially Reits with US market exposure). Less $ spent on interest payment = more distribution to unitholders and higher property value. The losers in a decreasing interest rate environment? It will be the banks of course as their Net Interest Margin shrinks = lesser profits. So for 2024, it will be bearish on banks equity and bullish for the Business Trust and Reits. Market has already start pricing in this information as it can be seen in the rally in Reits with USA exposure at the start of December. For me, I can finally start reaping the rewards for accumulating Prime US Reit and Keppel Pacific Oak US Reit for the past1 year.

DJI ended at 37689, an increase of 4182 points (+12.48%) compared to 3Q 2023. For Singapore, STI ended at 3240, an increase of 23 points (+0.71%) compared to last quarter. While investors has poured into the USA market with the Fed signaling they are done with the interest rate increase in the last 2 months; however, there is not much movement in the Singapore market partly due to investors holding their ground against buying into the banks counter (consisting of 46.65% STI weightage) as banks are typically bearish due to their shrinking NIM in a decreasing interest rate environment.

Manchester United has finally announced on Christmas Eve 2023 that Sir Jim Ratcliffe had acquired a 25% stake in Manchester United and would be taking control of the club's football operations. The acquisition will consist of 25% from the Glazer family and 25% from public unitholders in the form of tender offer at $33/share. Once he pass the director test, which is said to take anywhere up to four weeks to complete, although usually takes closer to a fortnight; he can then officially start the tender offer. I cannot wait to cash in when that time comes.

With 2023 drawing to a close, it is time for the annual review against my 3 year plan (Next 3 years (2023 - 2025) Investment Plan) set back in Nov 2022. Below are my result:

Original 2023-2025 plan: 

1. 50% Equity, 50% Reits/Trusts 
2. Portfolio Dividend Yield to be 3.80% in 2023, 4.30% in 2024, 4.80% in 2025.

End 2023 result: 

1. 50.16% Equity, 49.84% Reits/Trusts 
2. 80.74% SG Equity, 19.26% USA Equity 
3. Portfolio Yield at 3.58% in 2023 (+0.00% from 2022, but miss 2023 3.80% target)

Verdict: Miss Target

Below is my end 2023 portfolio snapshot:

Total dividend received in 2023: $6,478.37 (~$539.86/month)

For this quarter, not much activity from me, except accumulating Prime US Reit, Keppel Pacific Oak US Reit and Mapletree Industrial Trust as I feel the SG market has over reacted to the Manulife US Reit and interest rate increase saga.

Transaction 1: Bought 1 batch Prime US Reit shares in October. 

40+% yield is just too tempting to be missed. Load up more as I don't think it will fold like the Manulife US Reit. Manager is quite prudent in controlling debt, carefully avoiding borrowing more to maintain dividend.

Transaction 2: Bought 1 batch Keppel Pacific Oak US Reit shares in December.

Maiden investment in this counter at 20+% yield. I find this counter the strongest out of the 3 Singapore US Reits. Property price of the portfolio has not decrease much and management has worked hard to maintain the building high occupancy rate.

Transaction 3: Bought 1 batch Mapletree Industrial Trust shares in December.

Investing more due to the exposure to USA data center portfolio, which will benefit the trust in a decreasing interest rate environment and long customer tenancy time. 

.

That is all for now. See you all in Q1 2024 update and thank you for reading thus far.