My portfolio delivered another impressive performance this year, with an XIRR of 15.5%. This is more than five times the average yield of T-bills and Singapore Savings Bonds (SSB) for the year.
While such stellar returns are not guaranteed annually, and periods of lower returns or even losses are inevitable, long-term equity investing has historically demonstrated its superiority for wealth accumulation. My portfolio’s 5-year annualised return of over 10% is a testament to this.
As John A. Shedd aptly stated, “A ship in harbour is safe, but that is not what ships are built for.” This resonates with my investment philosophy.
I appreciate the peace of mind that comes with investing in safe havens like T-bills and SSB, but I believe that for substantial wealth growth, venturing into the equity market is a necessary step.
Not sure where and how to start? I have recently curated some resources which I believe provide a good starting point to your investment journey.
The most striking figure in the above image is the nearly 50% return from my US portfolio, which is the highest annual return achieved since inception five years ago. While this performance is impressive, I believe the market has become overvalued. As a result, I trimmed my positions from my portfolio last week.
Fortuitously, the market dipped immediately after I took profits. This seems to have positively impacted my short-term returns, with XIRR exceeding 52% – about 4% higher than my Time-Weighted Rate of Return (TWRR). However, I recognise that this short-term impact may diminish over the longer term.
There’s still potential for a Santa rally this week, or the market might experience further downward pressure. Regardless of short-term fluctuations, it’s crucial to remember that these price movements often do not reflect the underlying business fundamentals of the companies involved.
For now, I’m stepping back from the market to enjoy the festive season.
Returning from the Stratosphere to Earth, my SG portfolio only produced a paltry XIRR of about 4%. As a down-to-earth being, I am comfortable with the earthly return for this year.
The drag continues to come from the negative sentiment on Singapore REITs (S-REITs) and the weaker than expected recovery from the manufacturing sector. Luckily, Singapore’s three major banks DBS Group (SGX: D05), OCBC Ltd (SGX: O39), and United Overseas Bank Ltd (SGX: U11) are punching above their weight and produced a stellar performance for the year.
Let’s now take a look at the winners and losers for the year.
Unsurprisingly, four of the top five performers in the Percentage category hail from my US portfolio, with DBS being the lone Singaporean representative. In the Absolute Amount category, the other two Singapore banks join DBS, primarily due to their larger position sizes.
On the other end of the spectrum are the Mapletree family of REITs, iFAST Corporation (SGX: AIY) and AEM Holdings (SGX: AWX).
Let me briefly touch upon some of these counters.
Arista Networks (NASDAQ: ANET), much like Liverpool’s underrated yet prolific striker Mohamed Salah, consistently delivers outstanding results quarter after quarter.
While not as widely celebrated as the “Magnificent Seven” tech giants, Arista, as a leading provider of cloud networking solutions, plays a crucial role in supporting the AI boom by collaborating with many of these industry leaders.
Novocure (NASDAQ: NVCR) is a speculative play in the oncology space. The recent success of its Tumour Treating Fields (TTFields) therapy in pancreatic cancer trials has driven a significant surge in its stock price.
This surge has reduced my unrealised losses on this position to about 40%. Maybe, just maybe, my small punt in this counter may finally turn profitable with further positive news next year.
I re-entered The Trade Desk (NASDAQ: TTD), a leading programmatic advertising company, in March after being impressed by its strong revenue growth.
I am particularly excited by recent developments such as new partnerships with Spotify (NYSE: SPOT) and Netflix (NASDAQ: NFLX), and the launch of Ventura, a new streaming TV operating system. These developments augur well for the company’s long-term growth.
AEM operates in the cyclical semiconductor industry. While I anticipated a recovery in their fortunes by the second half of next year, my early entry proved premature.
However, I remain optimistic about AEM’s future prospects. The new partnership with a major fabless provider of AI and high-performance computing (HPC) semiconductor chips, bodes well for AEM’s growth in the next few years.
Lastly, let’s turn our attention to the biggest loser in absolute terms.
Despite exceeding its own guidance, iFAST is still not being valued for its future growth. Market remains skeptical that iFAST Global Bank (iGB) will be its next growth driver. You might wonder why incumbents aren’t already aggressively pursuing the mass affluent segment that iGB is eyeing.
This situation perfectly illustrates Peter F. Drucker’s observation in his article “The Disciple of Innovation“: “Indeed, the greatest praise an innovation can receive is for people to say, ‘This is obvious! Why didn’t I think of it? It’s so simple!’”
iFAST has a proven track record of disrupting the financial services industry, having pioneered online unit trust trading and played a key role in lowering brokerage costs. This history suggests they possess the ability to identify and capitalise on opportunities that others overlook.
Similar to how Jeff Green, CEO of The Trade Desk, has publicly stated that Alphabet (NASDAQ: GOOG) may have prioritised cloud, AI, and Gemini over its ad business, incumbent banks likely have other strategic priorities, creating a window of opportunity for iGB to thrive.
I hope this brief overview of my portfolio performance has been informative. Wishing you and your loved ones a joyous holiday season.
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