Lendlease REIT’s Jem Acquisition

Lendlease Global Commercial REIT (Lendlease REIT) had announced to its unitholders of their intention to acquire the remaining 68.2% interest in Jem, a large sub-urban mall cum office complex located in Jurong East. An extra-ordinary general meeting would be held on 7 Mar 2022 with regards to this acquisition.

 

Post-acquisition wise there will be dramatic shifts in the entire Lendlease REIT’s portfolio. Here are some selected highlights:

 

• The acquisition would increase Lendlease REIT itself by 157% by valuation (from SGD 1.4bn to SGD 3.6bn).

• The Jem property (both retail and office) would form a substantial part of the portfolio by valuation (59.7%).

• Local exposure would be increased from 76.5% to 88% by valuation.

• Top ten tenants’ contribution by gross rental income (GRI) would be reduced from 57% to 41%.

 

The advantages of the acquisition include:

 

• A potential distribution-per-unit accretion of up to 10.5% (for 1H FY2022 pro forma effects).

• A 0.5-year increase of weighted average lease expiry (from 8.4 to 8.9, based on net lettable area as at 31 Dec 2021).

• Improved diversification of trade sector mix by GRI.

 

The Bedokian’s Take #1: Jem

 

Jem is located next to Jurong East MRT station, deemed as one of the busiest MRT stations in Singapore. Its competing malls nearby are Westgate, JCube and IMM, which all are, ironically, owned by CapitaLand Integrated Commercial Trust. As such, having good quality tenants and tenant mix is important to maintain the mall’s competitive advantage. In this aspect, Jem has some unique brand names not in the other three malls like Ikea, Books Kinokuniya, Courts and Din Tai Fung.

 

Jem’s office space is fully leased to the Ministry of National Development under a 30-year master lease, with a rent review of every five years. This will bring a stable rental cashflow as the ministry is one of the top ten contributing tenants by GRI.

 

The Bedokian’s Take #2: The Jurong Area

 

Usually seen as “just a huge industrial estate”, the Jurong area has transformed/is transforming into a huge residential (Jurong East, Jurong West and the upcoming Tengah), commercial (Jurong Gateway, Jurong Lake District) and industrial (Jurong Innovation District and Tuas extension) locations. These developments give Jem (and the other malls around Jurong in general) a slight advantage over other suburban malls in terms of potential footfall. In summary, the malls in Jurong are having pluses of suburban and prime retail ones.

 

The Bedokian’s Take #3: Lendlease REIT’s Potential Growth

 

While the taking over of Jem will pose a huge change in Lendlease REIT’s make-up in terms of geographical and the retail/office proportion, it is still a “young” REIT with room to grow, with potential new properties being added in the future. The sponsor, Lendlease Corporation Limited, is a part of Lendlease Group, which is a global property developer and manager, and this ensures a stable pipeline.

 

Though there are other known Lendlease properties here in Singapore, the REIT’s principal investment strategy is global in nature, hence we may see the REIT’s geographical and retail/office make-up change again with a new acquisition.

 

As our Bedokian Portfolio contains Lendlease REIT, and given the above three “takes”, we would be inclined in adding our positions, should the preferential offer/rights option be given.

 

Disclosure

 

Bought Lendlease REIT at:

 

SGD 0.88, Sep 2019 (IPO)

SGD 0.91, Jan 2020

SGD 0.55, Mar 2020

 

Disclaimer

 

Reference

Circular to Unitholders in relation to the Proposed Acquisition of the remaining interests in Jem. 14 Feb 2022. https://www.lendleaseglobalcommercialreit.com/-/media/asia/lendlease-global-commercial-reit/investor-relations/publications/2022/circular_final_presentations_publications.pdf 

Introduction To Alternatives (Part 2)

This is a continuation from Part 1. In this post, I shall share with you on how to incorporate alternatives into your portfolios. 

Before thinking about how to include alternatives, let us ask ourselves one question: Should I include them in the first place? 

 

Should I Include Alternatives In My Portfolio?

 

As mentioned in Part 1, alternatives provide more diversification to have better returns and lesser risks. Among the alternatives, real estate investment trusts (REITs) and commodities are easy to understand, and could be included into your main investment portfolio. Following the Bedokian Portfolio’s make-up, REITs can make up 20% to 40% of your portfolio, while commodities would be about 5% to 10%¹. There are many types of securities and investment vehicles to invest into these two, ranging from individual shares/units of REITs, to exchange traded funds and unit trusts, to owning the actual physical thing (for gold and silver in the form of bullion).

 

For properties I had written up an earlier piece here. You may want to check it out.

 

Private equity (PE) and hedge funds, as said earlier in the previous post, are only available to sophisticated investors, so is not available directly to us retail investors, whether we want them (or like them) or not.

 

For derivatives, unless you have a sound understanding on how they work and the strategies to implement them, it is not advisable to go into them. Furthermore, derivatives are leveraged products, so your returns and risks can be amplified, too.

 

The verdict on whether cryptocurrencies (cryptos) are a financial good or an item in the greater fool theory is still out there, so if you are not comfortable going into them, then just stay out. If you are comfy with cryptos, be sure to read up on them (blockchains, DeFi, exchanges, etc.), for now they are in the realm of the Wild West.

 

If you have any collection sets or items (stamps, coins, comic books, etc.) accumulated from your hobby days, know their appraised value and in the company of like-minded people who appreciates them, you may consider monetizing your collectibles. However, do note that collectibles, unlike securities and investment vehicles, there is no common market for them, and the value would depend on the appraiser/buyer and the “flavour of the moment” (think tulips). If any returns are derived from them, it would be more of a one-off or a “few-offs”.

 

Easier Way To Go Into Some Alternatives

 

If you are not a sophisticated investor and yet want to go into PE and hedge funds, there is a way about it, and that comes in the form of exchange traded funds, or ETFs. There are at least a couple of ETFs containing listed PE firms (or you could invest in them direct by buying their shares). Most hedge fund ETFs do not really invest in the hedge fund companies themselves, but rather on the strategies employed (equity long/short, arbitrage, etc.). 

 

There are ETFs for derivatives, which I had shared on how to invest in oil using futures², plus other commodities futures. Leveraged and inversed ETFs are other examples of using derivatives. Options trading is gaining acceptance among investors and traders nowadays, and there are some options strategies available via ETFs, especially covered calls.

 

Lastly, there are also ETFs on cryptos, but most of them are centred on Bitcoin.

 

Most of the ETFs mentioned above are listed overseas, especially in the United States. You can look them up by visiting ETF-centric websites, such as www.etf.com or www.etfdb.com.

 

How To Fit Them Into My Portfolio?

 

From my point of view, PE and hedge fund ETFs should be placed as a sub-category under the equities asset class of an investment portfolio, and no more than 10% of the entire portfolio. The reasons of grouping them as equities are that PE ETFs are still made up of company shares, while a majority of hedge fund strategies involve equities one way or another.

 

Derivatives which do not belong to commodities (i.e., leveraged, inversed, options) and cryptos should be placed separately in a trading portfolio and away from the investing one, due to the holding timeframe and nature of the financial goods.

 

In conclusion, the advice of “know what you are doing” is paramount in any investment/trading decision. Going into alternatives for the sake of “jumping onto the bandwagon” is a strict no-no.

 

Stay safe, stay invested.

 

1 – The Bedokian Portfolio (2^nd Edition). P70-71.

2 – ibid. p42-43.

 

Introduction To Alternatives (Part 1)

After swimming around comfortably in the pool of investing, you might have come across this term “alternatives” while doing your laps. Alternatives, or alternative investments in full, are assets that do not belong to the common mainstream asset classes/financial instruments, namely equities (shares/stocks), bonds and cash.

There are several alternatives; some are asset classes, investment vehicles, methodologies, or a combination of the former two/three. Examples include real properties, hedge funds, private equities, cryptocurrencies, derivatives, etc. The Bedokian Portfolio already contains two alternatives, namely real estate investment trusts (REITs), an equities-property hybrid, and commodities (gold, silver and oil).

 

Alternatives are usually included due to their different correlations with equities and bonds, thus providing more diversification and hence, better returns with lesser risks in an investment portfolio.

 

Writing about alternatives would warrant an entire book, or a series of books, depending on how much details are written. I would give a very short summary of the various alternatives available out there. I had covered commodities and REITs in the eBook¹, so I would not state them here.

 

Property

Property is referred to as immovable property, for example land, houses, apartments, buildings, factories, warehouses, etc. They are generally used to earn rental income, and there is a huge potential in capital gain when its value increases, especially when the property is in a prime location, and/or in an increasing economic growth environment. Properties are leveraged items; unless one is rich enough to pay it off in one shot, a loan is needed to be taken out to fund the purchase. Therefore, for a property investor, a typical strategy would be using the rental income to cover the mortgage payments, with either divesting in the future to realise capital gains, or for keeps for legacy reasons.

 

Private Equity

Private equity, or PE for short, is an investment in a company that is not publicly traded in the financial markets. There are two main approaches of PE: venture capital (VC) and leveraged buyouts (LBOs). Some of you may have heard of VC, where a VC firm would put a stake in start-ups or small companies with huge potentials, and either sell them to larger companies or list them publicly a few years down the road. A lot of well-known companies that are listed in the markets currently were funded initially through VC, such as Alibaba, Google, etc. 

 

For LBO, a PE firm would buyout a private company using debt or leverage (thus the term), and just like VC, the acquired company would eventually be sold or listed a few years later. Whether VC or LBO, the common thing between the two is that the PE firm would have some say in the management of the funded/acquired companies, ranging from advisory to direct control. 

 

PE is in the domain of sophisticated (accredited and institutional in investment talk) investors, who are usually high net worth individuals, funds, investment firms, etc.

 

Hedge Funds

Hedge funds are funds that use different strategies to earn returns for the investors who have a stake in it. Though hedge funds buy and sell shares most of the time, which may seem on the surface that they are no different from equities, it is the strategy(ies) employed that make them stand out. 

 

Some of the selected hedge fund strategies include:

 

Equity Long/Short: Purchasing of a company’s (or some companies’) shares while at the same time short-selling others’, usually across sectors or industries.

 

Market-Neutral: Similar to equity long/short, but the approach involves both longing and shorting within the same sector/industry. It is “neutral” in a sense as this strategy is not concerned on where the markets are heading, but rather exploiting the relative performances of the companies within the sector/industry.

 

Dedicated Short Bias: As it goes, shorting is the name of the game, although a few hedge funds adopt a net short method (i.e., short positions more than long positions).

 

Global Macro: A strategy which makes use of the geo-political and socio-economical situations around the world. Investments are not just limited to equities, but also other asset classes.

 

Arbitrage: Arbitraging is an art or skill of identifying mispricing of the same security across two or more markets, and make a profit from it. Here is a layman example: at a given time, if an item is selling at S$1 and S$1.50 at locations A and B respectively, I would buy it at location A and sell it at location B.

 

Event Driven: This approach utilises happenings in the corporate world and takes advantage of the expected mispricings, such as mergers, acquisitions, spin-offs, etc. 

 

Multi-Strategy: As described, it means a hedge fund could employ two or more of the strategies mentioned above.

 

Just like PE, hedge funds are in the domain of sophisticated investors.

 

Cryptocurrencies

A relatively new asset that emerged from the shadows of the Global Financial Crisis of 2008/2009, cryptocurrencies (or cryptos for short) are gaining widespread popularity and traction in recent years. The great ancestor of cryptos is none other than Bitcoin, which is also famous for the accompanying blockchain technology. Though they are touted as a form of digital currency for the future, as of now they are mostly used for speculative trading.

 

Collectibles

Collectibles are items that are likely to worth more the longer they are kept, and some examples include artwork, antiques, rare coins, stamps, wine, etc. On the crypto front, there are also non-fungible tokens (NFTs). The difficulty of having collectibles as an investment is the appraisal and valuation of their current and potential worth, unless you hire an expert to look into them or you are an expert yourself.

 

Derivatives

Derivatives are a category of investment vehicles that derive (the root word) their value from an underlying asset. In other words, you do not really own the asset using derivatives, but rather they sort of mimic the asset class itself by following the value. 

 

Derivatives are used more for trading than investing, and most derivatives lose their value over a certain time, such as within the next few days, weeks or months. Examples of derivatives include futures, options, warrants, swaps, contracts-for-differences (CFDs), etc. There are also stacked derivatives, like options on futures and options on swaps.

 

In Part 2, I shall share further on how to incorporate alternatives into your portfolios.

1 – The Bedokian Portfolio (2^nd Ed). Chapter 5 Commodities; Chapter 6 REITs p45-50.

Does Rebalancing Frequency Affect Returns?

Rebalancing is the act of bringing one’s investment portfolio to its “original” state of predetermined asset class allocation levels, and it is one of the core tenets of diversification. Typically for passive investors, rebalancing is done once or twice a year; this frequency is seen as balancing between maintaining the portfolio and the transaction costs that come along with rebalancing.

With the advent of brokerages offering less expensive commission charges and fees, the costs of rebalancing monthly or quarterly may be equal or below to that of semi-annual or annual rebalancing using brokerages that still charge commissions at prices a decade ago. This is highly plausible if a passive investor only has 5 or less securities (especially exchange traded funds, or ETFs) in his/her portfolio.

 

On this thought, I decided to carry out a little test to see if the rebalancing frequency affects returns. Using the data from Portfolio Visualizer¹ (www.portfoliovisualizer.com), I used three portfolios: the traditional 60/40 equities/bond, the Bogleheads Three-Fund (50% United States (US) equities, 30% global ex-US equities and 20% bonds) and the balanced Bedokian Portfolio (35% equities, 35% REITs, 20% bonds, 5% commodities using gold and 5% cash).

 

Three rebalancing scenarios are used: monthly, quarterly and annually. The initial amount would be US dollars (US$) 12,000, and subsequent injection would be US$ 1,000 per month for monthly, US$ 3,000 per quarter for quarterly and US$ 12,000 per year for annually. The period tested would be from January 1994 to December 2021 (this period is used as the earliest REIT data obtained is from January 1994).

 

Period Jan 94 - Dec 21	Portfolio Returns (US$)
Rebalancing Frequency	60/40 Equities/Bond	Bogleheads Three Funds	The Bedokian Portfolio
Monthly	1,420,865	1,686,410	1,999,423
Quarterly	1,444,998	1,707,376	2,014,024
Annually	1,402,952	1,661,966	1,934,630

Fig. 1: Portfolio returns with monthly, quarterly and annual rebalancing, Jan 1994 to Dec 2021. Figures are before inflation.

 

Interestingly, returns using quarterly rebalancing came out tops, with monthly rebalancing coming in second and annual rebalancing third.

 

Let us look at another set of results, the average 10-year and 15-year rolling returns. These two timeframes are used on the assumption that an investment portfolio is maintained for at least 10 years.

 

Period Jan 94 - Dec 21	Portfolio
Average Rolling Returns (Rebelancing Frequency)	60/40 Equities/Bond	Bogleheads Three Funds	The Bedokian Portfolio
10 Years (Monthly)	6.47%	6.78%	8.48%
15 Years (Monthly)	6.26%	6.44%	8.08%
10 Years (Quarterly)	6.59%	6.88%	8.55%
15 Years (Quarterly)	6.38%	6.54%	8.16%
10 Years (Annually)	6.63%	6.96%	8.51%
15 Years (Annually)	6.44%	6.63%	8.10%

Fig. 2: Average 10-year and 15-year rolling returns with monthly, quarterly and annual rebalancing, Jan 1994 to Dec 2021.

 

Surprisingly, the results were mixed. Annual rebalancing brings about a higher average rolling returns for the 60/40 equities/bond and Bogleheads Three-Fund for 10-year and 15-year, while the Bedokian Portfolio’s quarterly average rolling returns were better than the other two variations.

 

Do note that the data used is based on the perspective of the US markets, and transaction costs and taxes are not factored in.

 

Explanation And Conclusion

 

From a prima facie observation, the dataset used for the asset classes were the same throughout the three portfolios, hence there is a probability that the individual asset class(es) themselves are displaying better returns by quarterly capital injection. There is also the possibility that for quarterly rebalancing, the securities were bought in at lower price points as compared to monthly or annually, where the latter two could be bought in at higher price points. 

 

As for the average rolling returns, since it is an average reading, the actual numbers that form the average may see more deviations around the mean, which may explain why the annual average 10-year and 15-year rolling returns were higher even with quarterly rebalancing bringing in more returns (for the 60/40’s and Bogleheads’).

 

While looking through the figures of different timeframes (at least 10 years) of different portfolios using Portfolio Visualizer (which I had not published here), it seems that returns from quarterly rebalancing were relatively better than those from monthly and annual ones. Perhaps going quarterly is better? 

 

Then again, we cannot have this conclusion due to two simple reasons: first, I had only utilized one data source. The dataset used is based on the presumptions that Portfolio Visualizer had stated, such as the sources and method of calculations. It is recommended that other sources (and their underlying basis of data) are to be used so that we could have a fair comparison across. 

 

Second, and more importantly, all these are inferences and results from past data, and we all know that past performances are not indicative of future results.

 

Stay safe and stay vested.

 

1 – https://www.portfoliovisualizer.com/backtest-asset-class-allocation

All About Price: Reversion To The Mean

This is part of my intermittent series on price, one of the most important and commonly encountered considerations in investing and trading. For this post, I will talk about one of the theories used in deciding a buy or sell call: the reversion to the mean.

According to Investopedia, reversion to the mean (or mean reversion) “is a theory used in finance that suggests that asset price volatility and historical returns eventually will revert to the long-run mean or average level of the entire dataset”¹. From the definition, we can see two things: firstly, mean reversion implied that the price of an asset (or security in our context) would go back to its long term mean or average value. Secondly, we could expand the mean reversion theory to apply on other measures and ratios such as returns, dividend yield, price-to-book, etc.

 

The gist of mean reversion is that, no matter how much a value fluctuates across a period, it would fall back, or rise up, to its average at certain points in time. In the context of price, investors (and traders) would use it as a tool to determine when to enter or exit a particular security. When the price goes up beyond the average, it is deemed that the security is overpriced and hence it is time to sell, ceteris paribus. Conversely, if the price goes below the average, it is time to (re)enter the counter, ceteris paribus.

 

Online stock charts, such as those from Yahoo Finance, let you find out what are the average values for almost all securities globally. Called moving averages, there are a few types, and the common ones used are simple moving average (SMA) and exponential moving average (EMA). The difference between these two is that SMA takes in all the values over a prescribed period, while EMA applies more weightage to recent or current values. Some investors/traders use two moving averages, whether SMA and EMA or SMA/EMA over two different timeframes.

 

Going beyond moving averages, we would be stepping into the realm of technical analysis (TA), in which SMAs and EMAs are just one portion of the entire scheme of things. For this post, I shall not proceed further.

 

Employing mean reversion via moving averages is one of many indicators an investor has in his/her arsenal, and it must not be the sole determinant in making a buy/sell call. Fundamental analysis (FA) in my opinion is important, especially if you are investing for the long term. A number of investors whom I know utilizes both FA and TA (commonly known as FATA) in making the buy/sell call, which to me is acceptable if the indicators, tools and rationale behind them are sound and valid.

 

Mean reversion using moving average, just like any other indicators, is backward looking, and we must not forget the common phrase uttered in the investment/trading circle: past performances are not indicative of future results. However, with proper and systematic FA or FATA, whether using The Bedokian Portfolio or other methodologies, you can be considered in the “guesstimate” group of investors who roughly know how things may pan out in the future, as compared to those who rely on little or no analysis at all.

Check out the other posts in my All About Price series.

All About Price: Introduction & Valuation of Value

All About Price: Buyer/Seller Remorse and Premorse

All About Price: The 52-Week High/Low

1 – Chen, James. Mean Reversion. Investopedia. 18 Aug 2021. https://www.investopedia.com/terms/m/meanreversion.asp (accessed 23 Jan 2022)

 

The Mapletree Merger: The Bedokian’s Take

Well, as usual, I am a bit slow in providing inputs on certain events happening in the investment scene. For this blogpost, I shall talk a bit about the proposed merger between Mapletree Commerical Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT), forming the Mapletree Pan Asia Commercial Trust (MPACT).

If you had remembered, we used to have MNACT in our portfolio (see here), but we had divested fully our position (see reasoning here). I had also talked about MCT being the “King of the South” (see here), and the trend of REIT mergers (see here), hence I feel I should write a piece about these two coming together.

 

If one looks at the intentions, it makes sense for this merger to go through: MPACT will be in the top 10 largest REITs in Asia in terms of market capitalization, and with it comes economies of scale in managing debt and acquisition of new assets. Depending on which side you are at, the merger could either be welcoming or unwelcoming for either side’s unitholders, or both if one has invested in the two.

 

Based on some of the responses I gathered online and offline, from MCT unitholders’ perspective, granted that MPACT would be accretive in terms of yield and net asset value (NAV), the price consideration for absorbing MNACT, which is at SGD 1.1949 (close to MNACT’s NAV), may be a bit difficult to swallow for some MCT unitholders as they feel it is too high a premium to pay. Furthermore, there is the impression of the dilution of geographical concentration, whereby MCT investors may not want to have exposure to other property assets overseas.

 

On the other hand, MNACT unitholders, from what I read, may benefit from this deal in terms of seeing their investment going up a few notches to book value; after all, since the second half of 2019 (the unrest in Hong Kong and the subsequent COVID-19 pandemic), MNACT’s price is on a downtrend, and this offer could be seen as a deliverance. However, I do not see this price enthusiasm going on judging from the closing price of SGD 1.08 as at 10 Jan 2022 (or probably due to the likely coming interest rate hikes, which is a REIT’s common bogeyman).

 

The Bedokian’s Take

 

It might not be fair for me to comment as I do not hold these two counters directly (apart from using exchange traded funds), but there are several answers and reactions to this merger, depending on where one is coming from. The points provided in the presentation from the trusts (see under Reference below) are reasonable, and the views in the previous two paragraphs are legitimate, too. 

 

Barring any other macroeconomic factors (yes, that includes interest rates), in my opinion, one should ask the following two questions on whether to participate in the merger: the first would be what the long-term view of MPACT is; if one thinks that there is potential in the retail and commercial property sectors in Singapore AND (emphasis mine) Asia-Pacific region, and their economies in general, then MPACT is a good proxy to go for. 

 

The second question is somewhat related to the first; what the growth potentiality of MPACT is; a cursory check of Mapletree Investments’ mixed-use, office and retail properties located in Asia which are not in any publicly-listed trust showed a number of assets in Singapore (e.g., Harbourfront Centre, etc.), Vietnam (e.g., Saigon South Place), China (e.g., Nanhai Business City), India (e.g., Global Technology Park) and Japan (TF Nishidai Building). These are possible injections to MPACT by the sponsors, not counting those that could be acquired by the trust itself.

 

If the answers to the above two questions are positive, then one might consider going for the offer. Still, further fundamental analysis is required to have a more solidified view of the whole picture.

 

Disclaimer

 

Reference

Proposed Merger of Mapletree Commercial Trust and Mapletree North Asia Commercial Trust (the “Merger”), 31 Dec 2021. https://www.mapletreecommercialtrust.com/~/media/MCT/Newsroom/Announcements/2021/5%2020211231%20%20Joint%20Presentation%20%20Proposed%20Merger%20of%20MCT%20and%20MNACT.pdf (accessed 10 Jan 2022).

2021 Review, 2022 Preview And Bob

Very soon we will see the end of 2021 and the beginning of 2022 in a few hours’ time. In this post, I will share my views for the past year, my opinions of the coming year, and give an update on Bob’s portfolio.

2021 Review

 

As mentioned in the last preview, 2021 was still dominated by the COVID-19 narrative, with a couple more viral variants taking the spotlight; first we had the delta, and now we are going through the omicron spike. There was no global consensus on tackling the pandemic, with some places adopting a zero tolerance, some embracing an endemic approach, and others somewhere in between, but almost all agreed that vaccination is the way to go.

 

Despite these, the global markets and economies were experiencing a growth surge as if the pandemic had taken a back seat. Illustrating this point, the S&P 500 index had risen 27.23% year-to-date (YTD) as at 30 Dec 2021, with our local Straits Time Index grown at 9.84% YTD as at 31 Dec 2021. The quick recovery, however, had brought about a supply chain issue on a worldwide scale, with the faster-than-expected rebound of demand and the hard-to-catch-up supply side. This was seen as one of the major reasons in pushing the inflation rate up. All around, the price of items ranging from food and holiday gifts to energy (electricity, oil, etc.) are rising.

 

One more thing, here are the three counters which are representative of my “next big thing” (i.e., cybersecurity, electronic payments and alternative energy respectively), and see how they performed in 2021:

 

HACK: +7.96%¹

IPAY: -12.34%¹

ICLN: -24.09%¹

 

Well, every day is not a Sunday, but do think long term.

 

2022 Preview

 

As usual (again), I would like to give a disclaimer that I really do not know what the future holds. Judging from the current trend, the inflation issue, and the (highly probable) accompanying raising of interest rates by the U.S. Federal Reserve, may dampen the growth of markets and most asset classes (see here and here for more info). There is a silver lining, though, as not all sectors/industries are adversely affected by rising interest rates, such as banks, where their profitability typically stems from the difference between lending and savings rates, and companies in the consumer staple/essentials sectors, where their products and/or services are still used, high rates or not.

 

The next big thing (even so it has been big for the past two or three decades), for at least the next decade, would be China. In the face of a lot of news (not all are good) and the geopolitical situation, China’s markets and economy are worth exploring due to their contrasting features; they may be autarkic in certain areas (e.g., their own technology sector), yet they are considered a major manufacturer for the world. This simultaneous independence, interdependence and dependence of markets, economy and trade, especially with U.S. and European ones, made it a good investment area to consider. 

 

Another talking point for 2022 would be the potential hype of the metaverse. The technologies behind this concept is not new, like virtual reality, gaming, networking, etc. Yet it is the seamless mashing of these, plus the normalisation of being connected from anywhere anytime, meant that mainstream adoption of the metaverse could be possible.

 

Bob

 

As at 31 Dec 2021, Bob’s Bedokian Portfolio had grown to slightly above SGD 80,800 in value (excluding the cash component which is not shown) and gained a dividend amount of SGD 1,817.21. All asset classes (except cash) had shown healthy growth for 2020. Bob will rebalance on 3 Jan 2022 with another SGD 5,000 injection, so stay tuned to his portfolio.

 

Happy 2022!

 

Disclosure

 

The Bedokian is vested in HACK, IPAY and ICLN.

 

Disclaimer

 

 

1 – ETFDB.com, YTD as at 30 Dec 2021 (accessed 31 Dec 2021).