I decided to make some adjustments to my CPF investment. The thought has been in my mind for many months but I had pushed back the decision. So why now? Erm, no particular reason, it just happened.
On average I am getting a better return from investing in individual stocks than unit trusts but the performance isn’t the only reason. As mentioned in my earlier post Why I do not practise DCA or (simply) Buy the Dip, I simply prefer to invest in individual companies. Also, with T-bills that give me near to 4% return now, I can take less risk with this asset class.
I do not track the XIRR of these investments. The figures shown in next two paragraph assumed I have invested the principal at the beginning of 2020, which is not the case. So the numbers shown are not accurate but they provide sufficient indication of the performance.
So for the unit trusts investment, I made a loss of 2% over the past 4 years. Not a lot but do not forget that I forgone the guaranteed 2.5% guaranteed annual return. So in total, that’s a loss of 12% over the 4 years. Ok ok, probably less but you get the point.
As for stock investment, I am getting about 23% return. The number includes my divested position of AEM this morning. That’s about 12% more than leaving the money in CPF-OA over the past 4 years. Ok ok, probably more but your get the idea.
Combining the two together, I am still getting a higher return that CPF-OA annual return of 2.5% as I have more investment in the individual stocks than funds.
Why did I sell AEM?
It’s not so much of the weak performance announced yesterday. That was expected, given the previous guidance. However, it does look like recovery will take a bit longer than expected.
Given the above statement, it looks like there will be at least another 2 quarters of weak results and probably a weak guidance for FY2024. That might lead to a significant lower price in the next half a year. Obviously, I might be wrong. There is always a chance that the ramp up comes earlier than guided or the market thinks differently for me. Hence, a significant lower price in the next half a year is just my wishful thinking.
In any case, that’s decision at this current moment. If I have bought AEM with my cash, or I am not thinking of making adjustment to my CPF investment, I might not have sold.
What to do with the sales proceed?
So with the above divestment, I am left with OCBC, Micro-Mechanics and Sheng Siong in my CPF investment. I am likely to beef up my positions in Micro-Mechanics and Sheng Siong, and also buy more T-bills. I am also considering NikkoAM-StraitsTrading Asia ex Japan REIT ETF.
If my wishful thinking really comes true, I might be a shareholders of AEM again.