Wednesday, September 8, 2021

Edited, Extended, Expanded…And It Is Still Free!

Announcing the second edition of The Bedokian Portfolio eBook!

It has been more than five years since the first edition of the eBook was published online and available for free. During this time, a lot of changes and happenings took place in the economy and financial markets. To start off, we are in the middle of a global pandemic due to COVID-19, which saw several sectors and industries being deeply impacted, in both negative and positive lights. Airline, tourism and hospitality were hard hit, but technology and pharmaceuticals benefited. From here, we can see there are diverse responses and results to a given situation, even though as we know the whole economy and market is like one big machine with many different interrelated parts moving together.


Two localised developments worth mentioning since 2016 are the emergence of real estate investment trust (REIT) exchange traded funds, which we currently have three listed in the local Singapore Exchange, and robo-advisories taking root and gaining adoption by investors. There is, of course, cryptocurrencies, which is also gaining traction in recent years, though the future direction of it being a real currency or a speculative instrument is very much uncertain.


Though my overall strategies, methodologies and approaches of The Bedokian Portfolio remain similar between the two editions, there are some subtle differences. Between then and now, and after observing the markets for several years, I had developed nuanced views and opinions on certain points and issues, resulting in the differences. Adjustments and adaptations are part and parcel of evolvement, and that is applicable to portfolio management. Nevertheless, the general gist of The Bedokian Portfolio remains the same.


I hope you will enjoy this new edition. And remember, keep calm and carry on investing.


The new eBook is available for download here! You can also scan the QR Code located on the top right of the blog (if viewed on web version) to download.

Tuesday, September 7, 2021

Battlefield Lessons On Investing

As an individual, I believe in reading up and gaining additional knowledge for the betterment of oneself, for learning is a lifetime activity. A big advantage of having lots of general knowledge is the contextualization of one knowledge domain onto another, from which we could derive useful real-life applications. We can apply this onto investing as well. 

As a war history buff, I shall share an interesting bite on World War 2: 


In the second half of 1944 on the western European front, the Allied commanders were debating on whether to approach Germany on a broad front (i.e., keeping and moving the front line as even as possible), or to adopt a narrow front (i.e., one part of the front move further in than other part(s)). Eventually the broad front strategy, favoured by the Supreme Allied Commander, General Dwight D. Eisenhower (who went on to become the President of the United States in the 1950s), prevailed.


The rationale behind both sides of the argument were not without merit. The proponents of the narrow front would want to end the war quickly with a single decisive stroke at a particular location that would cause the Germans to capitulate, while supporters of the broad front pointed out the precarious logistical supply situation they were in. Though the German forces were routed earlier in France (thus giving the assumption of a potential quick victory had the Allies went for a narrow front), they were still a formidable foe, as demonstrated later in end 1944/early 1945 during the Ardennes Counterattack (known as the Battle of the Bulge). Furthermore, a narrow push runs the risk of the attack being cut off at the rear by the defenders.


So, what can we apply the above to the field of investing?


#1: Never Underestimate The Markets


Just as the Allies began to underestimate the Germans who eventually dealt them a surprising blow during the Battle of the Bulge, as an investor we should not be underestimating the markets. Though the markets are not our enemies, but our approach towards them should not be that of overconfidence and we cannot bank on them behaving as we thought they should be. Like situations on a battlefield, markets are erratic and unpredictable, and may spring a surprise that may benefit or frustrate you.


#2: Concentration May Bring High Returns, But High Risks, Too


If we plowed our entire investable resources into one asset class / region / country / sector / company, and that thing generated huge returns, we could say that we had hit the jackpot. However, if the thing went downhill, so would our resources and we could end up worse off. An example would be a play into technology back in 2020, after which the sector flourished and massive returns were enjoyed. However, if we did not know the coming of COVID-19 and went all-in the tourism sector, that would be catastrophic. 


#3: If You Are Not Sure, Go For A Broad Approach

If you are unsure of how to go about investing (or knowing the future of) a certain asset class / region / country / sector, the safest and easiest way would be to go for a broad approach using exchange traded funds (ETFs). In this way, your risks would be distributed and thus reduced. Always start from the asset class level, then go down to the region / country / sector levels after you are familiar with them. For example, for equities you could begin with global equities ETFs before going into region or country specific ones, and then into sectoral ones, and so on. The returns of the broad approach may not be as high as a concentrated one, but at least your capital is better preserved when things go downhill.

Tuesday, August 24, 2021

Inside The Bedokian’s Portfolio: Vanguard FTSE Developed Markets ETF

Inside The Bedokian’s Portfolio is an intermittent series where I will reveal what we have in our investment portfolio, one company/bond/REIT/ETF at a time. In each post I will briefly give an overview of the counter, why I had selected it and what possibly lies ahead in its future.


For this issue, I will talk about the Vanguard FTSE Developed Markets ETF (ticker: VEA).




VEA is an ETF from Vanguard, one of the largest and established ETF providers in the world. VEA uses the FTSE Developed All Cap ex US Index as the benchmark, and previously it was tracking the MSCI EAFE Index, in which EAFE stands for “Europe, Australasia and the Far East”. As indicated in the current and previous index names, the ETF does not contain any US listed companies in its holdings. In addition, the ETF contains listed companies from the developed countries in the said regions, such as Japan, United Kingdom, South Korea, Australia and Canada, to name a few.


Why VEA?


As I had mentioned in my eBook1, since passive income is prerogative for The Bedokian Portfolio, it is advisable to go for financial markets that are developed, in which the economies are matured and stable and hence, a steady stream of dividends can be expected from the established listed companies. Also, for my overseas investment strategy, rather than going for a global-wide ETF, I decided to break it into US-based and EAFE-based as I believe there are merits in holding a sub-portfolio of US-listed equities (both ETFs and individual securities) and a sub-portfolio of EAFE ones.


The choice of VEA as the ETF to go for is obvious; it has the largest assets under management (AUM) (currently USD 102,820 million) and has one of the lowest total expense ratio (TER) (0.05%)2. An ETF with a high AUM tends to be more liquid in the market and brings about an economies of scale in fund expense management, and interestingly VEA’s TER is relatively low compared to others.


EAFE Going Forward


The growing polarisation between the United States and China could bring a scenario of what I described as “the dichotomy” of the world’s two largest economies. Though geo-political and historical wise, some of the EAFE countries tend to side one faction over the other, but as a “third party” there could be some positive spillover effect resulting from “the dichotomy”.




Bought VEA at:


USD 41.47 at Feb 2014

USD 40.65 at Sep 2014

USD 38.05 at Oct 2014

USD 37.695 at Dec 2014

USD 36.00 at Aug 2015

USD 35.10 at Mar 2016

USD 33.20 at Jun 2016

USD 39.50 at Aug 2019




1 – The Bedokian Portfolio, p107

2 – (accessed 23 Aug 2021)

Friday, July 30, 2021

Bedokian Portfolio Blog’s Fifth Anniversary (Short) Message

Today marks The Bedokian Portfolio blog’s fifth anniversary. 

It has been more than a year and a half since the COVID-19 outbreak, and we are still seeing second or third waves cropping up in parts of the world. Vaccination is in full swing in most countries as governments want to protect its citizens from the virus and bring back normalcy in daily lives. 


Despite all these happening, we are seeing the rapid recovery of the financial markets; as of 29 July 2021, the S&P 500 had gone up slightly over 90% since its lows back in March 2020. Similarly, the local STI index had gone by about 30% in the same period. Some see it as a divergence which indicated a sort of mismatch between the state of the economy and the markets, which implies a bubble. Others view sectoral/regional play is at work here and capital just flow from one sector/industry/region/country to another.


Whatever it is, we should always go back to the basis of portfolio management, and that is diversification. Regardless of whether tech is facing a slowdown, or a country’s sector is being regulated and facing relegation to a non-profit model, being diversified meant that you are protected from being over-exposed to a certain asset class, region/country, sector/industry, company or events/occurrences.


And this is my fifth anniversary message.


Stay diversified, stay safe.

Sunday, July 4, 2021

Rebalancing Bob’s Bedokian Portfolio

Bob had done his rebalancing on 30 June 2021, which I had reflected here, with another SGD 5,000 injection.

Bob had opened another brokerage account for the purpose of investing in overseas securities. For his inaugural overseas investment, Bob had purchased five SPDR S&P 500 ETF (SPY) shares as his first step into the U.S. market. 


Also, he had added some positions to the ABF Singapore Bond ETF, given the decline of its price in the last six months.


In a related development, from 30 June 2021, the SPDR Gold Shares ETF can be traded in both USD and SGD on the Singapore Exchange1, which means going forward, Bob could choose either currency for his gold ETF.


1 – SPDR Gold Shares ETF Now Traded in Both USD and SGD. 29 June 2021. (accessed 3 July 2021)

Thursday, June 24, 2021

Diversifying Time?

While managing an investment portfolio, we need to consider diversification. Be it asset class, regions/countries, sectors or even companies, diversification helped to spread the risk across positions. Hence, we have the adage of “do not put your eggs in one basket”.


We can do our due diligence in diversifying by selecting appropriate investments to fit our portfolio, there is one asset that, despite our best efforts to “control” it, it is not possible to do so.


And that asset is time.


Different investment portfolios, as I had stated before, perform well at different points of time, e.g., a United States (U.S.) based 60/40 equities/bond portfolio performed better than the U.S. based Bedokian Portfolio between the years 2011 and 2020, but it is vice versa for the 2001 to 2010 timeframe.


And that is not all; what if we decided to drawout the portfolio and it so happened on a very bad year, like in 1997, 2009 or 2020?


The Future Is Unpredictable


The key thing about why time as a variable is hard to gauge is because of its unpredictable nature. When most of us were young, we held lofty ambitions and goals; fast forward till now, I guess most of us did not achieve those dreams due to circumstances and experiences. Let alone a 10-year investment plan, we do not know what is in store for us at the end point.


In these situations, how do we really protect our investment portfolios to withstand the test of time? Short of just waiting for your portfolio to get better, there are a few ways, though all are not totally robust, but at least they can give some fighting chance in protecting your monies.


#1: Staggered Portfolios


Instead of starting an investment portfolio at a point in time, why not create one or two others at different points of time down the road, say at a few years later? To begin, first create a portfolio a year zero, then start off the next portfolio when there is a prolonged market pullback. If you can afford, create a third portfolio at another later pullback. You can adopt the same portfolio make-up for both or all, or do different ones (e.g., Bedokian Portfolio as the first portfolio, then the 60/40 equities/bond for the next).


This is a good form of diversifying time, and the plus point is pretty obvious; you can choose the better/best performing portfolio to drawout first years later, and can afford the time to wait for the other(s) to reach their deemed high before liquidating them.


The minus points are the opportunity cost of storing the cash for the next portfolio(s) and the large capital outlay in servicing the portfolios. If planning is done properly, new capital can be raised in the years leading to the next portfolio, while still injecting monies piecemeal into the current one.


#2: Low Volatility Portfolios1


Low volatility portfolios tend not to have extreme up and down movements due to its non-correlated features of the asset classes in their make-up. They usually display lower standard deviations and/or drawdowns and the growth of the portfolios are relatively steady. With formulas that utilise the standard deviation, like the Sharpe and Sortino ratios, their scores of the said ratios are comparably higher.


The advantage of such portfolios is that on an annual basis, the positive returns were quite respectable, and the negative returns were not so disastrous (around single digit based on my findings). The disadvantage is that generally, the overall returns were somewhat lower than portfolios with higher standard deviations and/or drawdowns.


Thus, the compromise of low volatility portfolios is the assurance of having some growth with little deviation over having better returns that comes with a roller coaster ride. They are, in my opinion, are suitable for passive investors with very low risk tolerance/appetite.


#3: Sector/Region/Country/Market Rotation


An active investment strategy, sector rotation involves the movement of investment monies from one sector to another. Rather than sitting tight on a mix of sectors regardless of economic conditions, rotating to different sectors is seen to generate more returns as the capital is shifted from down or loss-making ones to those which are rising in the prevailing market period.


Like sector, regions and countries can be rotated, too. Even though the various economies in the world are interlinked with one another, there are bound to have instances where one part of the planet is doing better than the other. Related to this point would be the shift between developed, emerging and frontier economies and markets. With rotation, in theory we are capturing the “best moments” and the returns would highly likely be in the positive side.


Although this is one of the ways of diversifying time, time itself is also this method’s disadvantage, specifically timing. You may know of some strong and/or seasonal indicators to point to one or a few sectors/regions/countries/markets, but if the shift was short-lived and/or when you are in the last to jump on the bandwagon, then you may be caught off-guard.




Diversifying time is understandably a tricky business, since we really do not know what the future really holds. Some of the mentioned methods are based on past data, in which ironically does not take the future into account (so it goes “past performances are not indicative of future results). Still, we need some form of hedge, and having this hedge is better than none.




1 – Backtesting of Harry Browne’s Permanent Portfolio and Ray Dalio’s All-Weather Portfolio using statistics from Portfolio Visualizer (


Monday, May 31, 2021

REIT Mergers And Blurred Sectoral Lines: Shall I Go For A REIT ETF Instead?

The period of 2019-2020 had seen some of the big REIT mergers. To name a couple, we had the merger of CapitaLand Mall Trust and CapitaLand Commercial Trust, resulting in CapitaLand Integrated Commercial Trust, and OUE Commercial REIT absorbing OUE Hospitality Trust.

The concept of merger has its advantages. When REITs merge, there will be economies of scale in managing the whole thing, whether on debt management or acquisition of new assets. There is also the notion of size: the bigger a REIT is, the bigger its market capitalization would be, and of course the better its liquidity in the market.


From a retail investor’s point of view, such mergers may blur the lines between the different types of REITs, and with some observers expecting more mergers, the next obvious question will be: wouldn’t it be better to just buy a REIT ETF?


This is an interesting question to ponder, and I can already see two distinct plus points in going this way. The first will be no administrative hassle for the investor when it comes to mergers. Rather than the individual investor counting how many units of the newly merged REIT entity he/she will be getting (and calculating how many units to purchase to make the holdings a round number), the ETF manager would do all these behind the scenes. The second plus point is greater diversification: if REIT mergers bring about diversification of the assets, why not getting a bigger diversified “universe” covering these merged REITs via ETF?


However, going through the ETF way has its minuses, too, and surprisingly they are related to the advantages in the previous paragraph. The main crux is the lower expected returns in investing through an ETF rather than owning REITs direct (though this may not be the case across all instances). Firstly, managing an ETF requires expenses, which translates to the total expense ratio (TER) (and yes, this includes the ETF manager doing the “administrative hassle” as stated above). The TER is calculated as an annualized percentage of an ETF’s assets, and over the long run it may impact returns. Also, the diversified nature of an ETF meant that the returns and yield are averaged from across its holdings.


So, what is the conclusion? As always, my answer would be “it depends”. In investing, there are many styles and methods to it, just like there are different individuals with different preferences and risk appetites. In deciding on whether to go for REITs or ETFs (or both), you would still need to consider other points beyond my abovementioned pluses and minuses.


If you want to be an active investor and have more control, then you can go for REITs direct. If you are a passive investor who just rebalances your portfolio once or twice a year, then the ETF path is good (and save the headache of missing corporate actions related to mergers). The third way is to go for a core-satellite approach, and that is owning both REIT ETFs and REITs themselves, and for this you would need to be an active/passive hybrid investor.


Remember, there is no correct way in investing, for “correct” is a subjective word in this field.