How I Would Invest $200,000 Today As A Singaporean Youth

 Recently, I've had a lot of friends ask me for some good stock picks, with no idea on how to invest their funds. Of course, like I said earlier, I'm not an investment guru or certified financial planner. Hell, I don't think I'm even generating alpha or creating better risk-adjusted returns. Nevertheless, I figured that it would be fun for me to try to create a $200K SGD portfolio and briefly justify my picks. Do take note that this is from a 3-5+ year investing time frame view, although there are still some picks which would be good long-term holds. It's more of a mixed bag really with a focus on value investing. 

Enough chit chat then, let's get straight to the point with some brief description / rationale for each stock!

Here's how I would Invest $200,000 Today as a Singaporean Youth... (If I was Responsible)

*Information accurate as of 17/3/2022 derived from (Source: SGX Stock Screener)

In descending order from highest weightage to lowest weightage:

VWRA (35%) - Vanguard FTSE All-World UCITS ETF USD Acc

This is an Ireland-domiciled ETF that encompasses stocks from the entire global market. It is rather cost-efficient in terms of fees since dividends are automatically reinvested, the expense ratio is reasonable at 0.22%, coupled with the fact that it only suffers from a lower 15% dividend withholding tax as compared to the 30% if I were to invest directly into US equities. This growth-focused ETF is my highest weightage since I am a young person with a long investing time horizon, and I am able to weather volatility. Now, you may be thinking: Why not the S&P500? 

Well, there are two many reasons: Firstly, the S&P500 pays out a dividend which would suffer from the aforementioned drawbacks, diminishing my compounded potential returns in the future. Secondly, as outlined in my S&P500 post, I believe we may experience less growth in the US equities market in the future. Obviously, I cannot predict the future, but I believe it will occur sometime during my investing lifespan (40 years or so). 

VWRA has also performed admirably in the past, only slightly underperforming the S&P500 index. Hence, even if my thesis doesn't pan out exactly the way I want it to, I shouldn't miss out on much. 

Keppel Corporation (12.5%)

A Singapore Conglomerate that operates in 4 Key Segments: Energy & Environment, Urban Development, Logistics, and Asset Management. I have done a post in a past regarding my firm conviction in Keppel Corp. With the 2030 Vision, there has been significant effort committed by the management to transform Keppel's cashflows into recurring ones. With the recent Offshore&Marine spinoff, I believe the counter has been significantly mispriced by the market. Not to mention, a large-cap blue chip company trading at 6% trailing dividend yield facing significant tailwinds from China reopening simply does not make sense. Growing, recurring cash flows coupled with management dedication to maintaining a 50-60% payout ratio means stable, enlarging dividends. Significant price appreciation should come along in the mid-term.

Sheng Siong Corporation (10%)

Sheng Siong Corporation operates a vast chain of supermarket locations and is known for its "value for money" items. With the harsh, uncertain macroeconomic condition we are facing today (and potentially for years to come), I think it is wise to allocate some capital to a defensive consumer staples industry. Not to mention the amount of pressure put on Singapore to increase public housing supply, Sheng Siong is poised to grow the number of locations they have, increasing profits and potentially dividends. You can find my analysis of the company here.

DBS Group (10%)

The largest Singapore bank, it is no wonder why it has experienced significant price appreciation and dividend growth over the years, given the fact that the bank has experienced the highest Return on Equity (ROE). With efficient capital management alongside aggressive expansion plans, it does indeed seem that DBS Bank is under good management. I am of the opinion that shareholders will continue to see further price appreciation and dividend growth in the long term. With the recent SVB collapse, banks are also now priced slightly more reasonably. 

United Hampshire US REIT (7.5%)

A rather small-cap supermarket REIT based in the United States. At a high dividend yield of 12.25% and few fundamental issues, it seems like it is certainly a bargain in the realm of Singapore REITs. Anchor tenants are all cycle agnostic with long leases locked in, which should prove useful in an economic recession. Furthermore, the management has already fixed 81.4% of debt in anticipation of rising interest rates, which should limit any further downside arising from interest rate hikes. You can read my initial investment thesis on the company, coupled with their latest earnings report here.

Mapletree Industrial Trust (5%)

Backed by a behemoth of a sponsor, Mapletree Industrial Trust's portfolio mainly consists of Data Centers. Due to the REIT's defensive industry, coupled with a reasonable yield of 5.1%, it should be a good long-term hold. After all, the REIT hasn't exactly disappointed anyone so far, with a historic uptrend of dividends and price appreciation. In terms of fundamentals, I would consider it in the upper echelon of S-REITs. You can view my use of Mapletree Industrial Trust as an example of my REIT evaluation criteria here.

Haw Par Corporation (5%)

Haw Par Corporation is currently trading at a heavy discount to book value, with most of its assets consisting of investments in UOB, another Singapore bank. I view Haw Par as a way to get discounted UOB shares, coupled with the bonus of owning a stake in the property game and high-margin pharmaceutical business which will benefit from the world recovering from COVID-19. In the long term, Haw Par should be able to increase its dividends in tandem with the banks, as well as benefitting from more sports events. I have also done a fundamental analysis of the conglomerate recently. 

Fu Yu Corporation (5%)

A cash-rich, high dividend-yielding small-cap industrials manufacturing company. Relatively high margins compared to its competitors which shows production processes are rather optimised. Management has shown extreme willingness to distribute capital back to shareholders in the form of high dividends, I simply believe that this company is a value buy. Interest rate hikes should not affect this company at all, barring an economic crisis that may affect sales. Fun fact: This counter was my first ever fundamental analysis on my blog!

Astrea 7 Class B Bonds (5%)

I know people are going to lambast me for this, but I think bonds have a good place in a young person’s portfolio, as long as exposure is limited, of course. With a whopping 6% yield which is a fair bit higher than the current risk-free rate due to many investors fleeing into government bonds in fear of SVB contagion, the risk-to-reward ratio is fairly reasonable. The 5-year call option to increase yield by 1% is extremely useful as well. It should also be noted that risk is spread out due to the fact that the bonds involve a large basket of corporations, achieving an investment-grade credit rating of BBB. This should provide some stable income for the portfolio.

PSC Corporation (2.5%)

A small-cap company that specialises in the distribution of common household items to supermarket chains operating in the consumer staple industry. Yet again, it is rather cash rich and is so far expanding its line of products via company acquisitions. It seems relatively undervalued for such a defensive stock, albeit with a low dividend yield. However, the growing prevalence of in-house brands may threaten market share. You can view my analysis of it here.

RE&S Holdings (2.5%)

A company that owns and operates a vast network of F&B restaurants with a focus on Japanese Cuisine and Quick Service Restaurants. I view this company as consumer discretionary since a thriving economy would naturally result in more people willing to splurge on luxury food items. The high dividend yield is icing on the cake as well. With more and more branches opening, we could see a period of high growth for the company. Like always, you can read my detailed thoughts here.

Overall Portfolio:

I must admit that this portfolio could probably be classified as rather defensive. However, I believe this portfolio consists of many value stocks, with a good mix of decent dividend yield at 3.8% and capital appreciation. With the way each company operates, the overall portfolio should do great in both good and bad times. You may also be asking why there are no commodities. It is simply because I believe I have not gotten a firm grasp on how commodities work, which is why I did not include them. As far as I know, gold has not significantly appreciated in value as well, despite supposedly acting as an inflation hedge. 

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The author is currently vested in Keppel Corp. 

Disclaimer: Please take everything published within this blog with a pinch of salt. Nothing I say here should be misconstrued as any form of financial advice whatsoever. In fact, I am probably the absolute last person you should approach for any sort of advice. All self-computed figures are calculated to the best of my ability, but I cannot guarantee they are 100% accurate, and I am not liable for any investment decisions made based on my content. 

Thank you for reading my blog, and I hope you have learnt something, no matter how seemingly minuscule, ciao!