Thursday, December 31, 2020

2020 Review, 2021 Preview And Bob

2020 is coming to a close, and there is one word that I would sum it up with: tumultuous.


2020 Review


2020 will be taken as a lost year of sorts, depending on whose perspective. However, from this doom and gloom emerged the scale and speed of adaptability and pivoting which we had not seen before. Thoughts had become ideas, and ideas manifested into practical applications. The COVID-19 pandemic inadvertently created a huge social experiment on a global scale, and humans were either welcomed or forced to change their habits and styles, which is now deemed as the “new normal” (one of the most overused phrases of the year).


The financial markets had seen its fair share of a roller coaster journey throughout this pandemic year. The STI (as at 31 Dec 2020) year-to-date (YTD) was at -11.76%, recovering from a -30.22% YTD on 23 Mar 2020, its lowest point. The S&P500’s YTD was even more impressive: +15.52% (as at 30 Dec 2020), despite a fall to a low of YTD -30.75% (also on 23 Mar 2020). The disparity between the two could be attributed to one main factor; the S&P500 contained a number of technology counters, in which the sector and industry (and anything related to it) experienced a super huge boost in their relevance and importance in paving the way of the new normal.


Speaking of which, 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 2020:


HACK: +41.31%1

IPAY: +33.49%1

ICLN: +142.08%1


To me, they are still relevant in 2021, and the years to come.


2021 Preview


As usual, I would like to give a disclaimer that I really do not know what the future holds, with the very big real-life COVID-19 example which almost all of us did not see it coming, and not expecting it would still be current, unlike SARS that faded off within a year.


2021 would still be dominated by the COVID-19 narrative, and with it affected sectors and industries such as overseas air travel and tourism will remain as it is. However, true to the resiliency and innovation of humans, activities such as domestic tourism are keeping a semblance of activity to keep the economic machine going. The pent-up demand is there, not just for the tourism business but others, too, and as long as the supply is available, it would be life as per normal (or new normal), even with COVID-19 is around.


Technology would be “invading” (instead of creeping) into our lives, as we are looking at more ways and methods to get our things done without physically mingling with others (read: social distancing). However, humans are social creatures, so some semblance of face-to-face meeting is here to stay, so do not write off places like malls and offices totally.


The next “market down” due to the pandemic, if it happens in 2021, may not be as drastic as the 30-ish percent fall back in end March 2020, partially credited to the vaccines which are being rolled out and the general populace starting to get inoculated, and COVID-19 does not come as a surprise anymore. However, while not trying to be a fortune teller, there might be a fall due to the downstream repercussions of the COVID-19 reaction, which may happen this year, next year or even not at all. Having a balanced portfolio is still key in reacting to the economic situations around us.




As at 31 Dec 2020, Bob’s Bedokian Portfolio had grown to slightly about SGD 67,000 (excluding the cash component which is not shown) and gained a dividend amount of SGD 1,741.67. All asset classes (except cash) had shown healthy growth for 2020. Bob will rebalance on 4 Jan 2021 with another SGD 5,000 injection, so stay tuned to his portfolio.


Happy 2021!




The Bedokian is vested in ICLN and IPAY.




1 –, YTD as at 30 Dec 2020 (accessed 31 Dec 2020)

Friday, November 20, 2020

When The Sky Is Falling…

When it looked like the sky was falling for the markets back in March 2020, do you remember what was your first reaction? 


If your answer to the first question was “fear”, “panic” or any other associated synonyms, then you are normal. This feeling stems from our basic instinct of “flight or fight” when faced with precarious situations.


And what was your first decision that came to your mind after the reaction?


If your answer to this question was “liquidate”, “sell everything and run for the hills” or something like that, it is still normal. This is the feeling of “loss aversion”, where (according to studies) people prefer not to have losses than to have gains.


Imagine if you had carried out that decision, and looking at it retrospectively, what would be your immediate feeling and thoughts?


If your answer is “regret”, “I should have known” or something along that line, it is normal. This is called “seller remorse”, a feeling of regret and waste in selling off and you would have wished you did not do it earlier.


Looking back at the above answers, you would have noticed that it is normal to have such sentiments in our minds when presented with the questions. Being human, there is nothing wrong as we are naturally emotional creatures. However, from the investment and trading perspective, going with the flow of those same thoughts would bring more pain to your portfolio.


When one wanted to start investing, the typical advice would be to start reading up on material about things like equities, bonds, portfolio management, etc. However, after seeing some live examples around me, I would say the first thing to do is to prep one’s mind and emotions. It sounds easy but it is difficult to carry out as we have the tendency of not admitting our faults and over-estimate our abilities. Even if you think you have emotional control, when the actual crunch time comes, the original “you” will take over your supposedly calm “you”, since the former is your basic personality and character.


I admit there is no way one can completely switch from one emotional mode to another within a short moment (unless that person has a split personality or probably a robot instead), but we can reduce such emotive interferences in affecting our analysis and decision making. Here are a few tips you can use in bringing the rational “you” into the picture:


Tip #1 – Keep calm

Keeping calm is the very first thing you need to do when faced with news of a plunging market. Running around like Chicken Little does not help to alleviate the situation, and the situation itself is very much beyond your control, so there is no point fretting over. Investment is a long-term journey and plunges such as the one back in March 2020 are part and parcel of the market and economic cycles. Instead, take stock of the whole thing and look at the next tip.


Tip #2 – Think contrarian

Rather than viewing a down market with doom and gloom, why not see it as an opportunity to grab? In March 2020 (and also during 2008), almost all share prices were dragged down due to the fear and subsequent sell-out by investors who did not keep calm. It was also precisely at this moment that bargains were galore. However, it is also important to sieve out the good bargains from the bad, therefore some analysis and discretion is necessary to look for the right ones.


Tip #3 – Relook at money

Most of us love money, so much so that most people would attach a huge dose of emotions to it. Imagine the investment portfolio that was built up over time with your hard-earned savings, suddenly lost 10%, 20% or even 50% of its value; I could imagine the pain of the loss (hence the phenomenon of loss aversion). We have to train (and meditate to) ourselves that, once money had crossed into an investment portfolio, it becomes nothing more than a resource in your portfolio building journey. Move them around as if they are pieces on a chess board or units in a computer wargame, and deploy them wisely at the appropriate places and portions in your asset allocation.


Tip #4 – Remain diversified

Adopting a diversification strategy would save you some headaches as it remains a good hedge of protecting your portfolio. Though some said diversification dampens your overall returns (e.g., I gained 20% overall in a 100% equity-only portfolio as compared to just 10% returns from a mixed equity-bond one), it could also dampen your losses if you look the other way around. There will be a compromise between returns and risk, but I always advocated getting lesser returns than to have a greater risk, due to future uncertainties.


Tip #5 – Stay invested

As I had stated in Tip #1, investment is a long-term journey (at least 10 years in my definition). Do not let the poor market conditions scare you off from investing; good times and bad times, they are here to stay. Carry on with your strategy and style, learn from the markets and the economy and move on. Just like your school, work and personal lives, there will be ups and downs in investing. Strength is not all about winning, but also how you pick yourself up after a fall.


I hope the tips above would strengthen you mentally and be prepared for the roller-coaster ride that the markets bring us.



Sunday, November 1, 2020

Is The Straits Times Index That Bad In Performance?

I have been hearing comments and opinions about how not-so-good the Straits Times Index (STI) is doing for a long time. In this post, we shall find out quantitatively if this is true.

But first, a little caveat…


Introducing The iShares MSCI Singapore ETF


Since it was the weekend and I did not want to burn my brains calculating past returns from the two available local ETFs that tracked the STI, I had gone the easier way of using a proxy: the iShares MSCI Singapore ETF (EWS). The EWS ETF was launched in the US markets on 12 Mar 1996, which by the way was “older” than our very own SPDR STI ETF (ES3, listed on 17 Apr 2002) and the Nikko AM STI ETF (G3B, listed on 24 Feb 2009), so at least we could gather data a bit further back.


EWS tracked the MSCI Singapore 25/50 Index (Note: prior to 1 Dec 2016 it was tracking the MSCI Singapore Index), and the constituents and their respective weightages are comparable to the STI’s (see Figures 1 and 2 below):


Fig.1: Constituents of EWS (did not include cash component of the fund)1. 


Fig.2: Constituents of the STI2.


To top it off, here is a screenshot from Yahoo Finance, showing the close correlation between EWS, ES3 and G3B:


Fig.3: Chart of EWS, ES3 and G3B3.

Comparison With S&P500


I will use the SPDR S&P 500 ETF (SPY) for our analysis, since a number of people were using it for comparison. SPY has an even older history (incepted on 22 Jan 1993), so it is quite fitting to “track” their journeys together. I used Portfolio Visualizer ( to generate the numbers and here it is:


Fig.4: Performance Summary between EWS and SPY, with an initial USD 10,000 investment from Apr 1996 to Oct 2020. Final Balance and CAGR numbers are shown before inflation.


The statistics in Figure 4 did not paint a very good picture for EWS on all fronts, including returns and risk factors. Making it worse, after factoring in inflation, we get negative returns (CAGR -0.38%) instead.


So, is EWS (or STI) really that “bad”?


We return to the same figures came out by Portfolio Visualizer, and look at the annualized rolling returns:


Fig.5: Annualized rolling returns of EWS and SPY, based on full calendar year periods.


Assuming that EWS and SPY were bought on 1 Jan and sold on 31 Dec (hence the stated full calendar year) and going by my philosophy of holding your investments for at least 10 years, EWS actually performed better, with an average of 7.89% as compared to SPY’s 6.20%. Going down further, for the 15-year annualized rolling return, EWS returned an average of 7.54% over SPY’s 6.28%.


Judging from the results in Figures 4 and 5, it seems that the performance is neither good nor bad, because whatever the views on the outcome and answer, it boils down to the two famous words that I always use in replying to questions: it depends. We shall not touch on why SPY’s performance is better than EWS’/STI’s, but rather we would tackle it from a portfolio management perspective.


It Depends #1: The Holding Period


If you noticed in Figure 5, EWS’ 10-year annualized rolling period ranged between 1.89% and 16.57%, which meant that certain 10-year periods gave better results than others. Delving deeper, this is akin to a gamble; a lucky investor would get 16.57% per year after 10 years while another would get back a measly 1.89% annually if he/she picked the wrong 10-year window. 


The problem is we do not really know what would happen to our investments after 10 years, and if we are unlucky to plan the withdrawal on years like 2008, 2009 or even 2020, then it would be better to put it off and maybe wait for another few years to withdraw when things get better.


It Depends #2: Past Performance Is Not Indicative Of Future Results


This is a very common clause (or something similar to it) found in almost all investment literature, like prospectuses, factsheets, etc. I am bringing this up because what we were looking at was past data and we were inferring the results based on them. As reiterated in the previous section, we do not know what is in store for us; who knows, suddenly Singapore may become a hub of sorts and companies flock to set up shop and/or list in our exchange, thus growing our markets comparable to the S&P500’s.


On a macro scale, business and consumer trends, geopolitical issues and economic conditions may change the factors and parameters that produce the results that we obtained from our backtesting. Rather than hoping for things that may or may not happen, it would be prudent to adopt a more diverse and defensive approach to prepare for multiple scenarios, and this goes back to my basic emphasis on diversification, first by asset classes, then by regions/countries, sectors/industries and finally companies.


It Depends #3: Diversification Is Important


The scenario in Figure 4 assumed that an investor only held EWS since its inception and was the only holding in his/her investment portfolio. What if we used the famous 60/40 equity/bond portfolio, with EWS making up the 60% and the remaining 40% with a bond fund (I used a mutual fund, the Vanguard Total Bond Market Index Fund Investor Shares, or VBMFX, as it is currently one of the oldest bond funds around to match with EWS’ history)? Using the same timeline (Apr 1996 to Oct 2020), here are the results:


Fig.6: Performance Summary of portfolio with EWS (60%) and VBMFX (40%), Apr 1996 to Oct 2020, with an initial investment of USD 10,000. Rebalancing is done annually. Final Balance and CAGR numbers are shown before inflation.


Fig.7: Annualized rolling returns of the same portfolio, based on full calendar year periods.


With diversification, the results are more positive as compared to the ones in Figures 4 and 5. The returns are better, the volatility is lesser (based on standard deviation, worst year and max drawdown) and you still get almost the same average 10-year and 15-year annualised rolling returns, albeit with better “Low” scores (which mitigates the issue faced in ‘It Depends #1’). 




It is natural to view individual counters and assess its past performances and analyse its fundamentals as stock picking is a common trait among most investors (myself included). However, it is advisable to see things on a higher level, which is why I kept on harping about looking at our investments on a macro, portfolio level and the importance of diversification.


The STI ETFs (ES3 and G3B) are just a type of equities, which in turn is a component of a larger investment portfolio, akin to a piece of furniture (ETF) within a room (asset class) in a house (portfolio). While it is a good practice to look and inspect the furniture individually, we must not forget its place and role in the room and finally, in the house. 


1 – Detailed Holdings and Analytics. iShares MSCI Singapore ETF. iShares. 29 Oct 2020. (accessed 30 Oct 2020).


2 – STI Constituents. FTSE ST Index Series. FTSE Russell. 19 Aug 2020. (accessed 30 Oct 2020).


3 – Yahoo Finance as at 30 Oct 2020.


Further Note


There are a few assumptions on the statistics generated by Portfolio Visualizer, some of which includes (from the Portfolio Visualizer website):

  • All portfolio returns presented are hypothetical and backtested. Hypothetical returns do not reflect trading costs, transaction fees, or taxes.
  • The results are based on information from a variety of sources we (as in Portfolio Visualizer) consider reliable, but we (as in Portfolio Visualizer) do not represent that the information is accurate or complete.


Tuesday, October 13, 2020

Screeners: Your First Line Of Review

Screeners are tools, usually found online, to assist the investor in filtering and sifting through the huge number of financial instruments using parameters, such as financial ratios, regions/countries, sectors/industry, etc. It is a very handy tool to start off looking for potential securities to invest in.

There are a number of screeners available on the internet. Some are free of charge, some are paid services, while others are somewhere in-between (i.e. getting basic information for free but require payment if you want to know more). The main difference between paid and free screeners is that the former tends to have almost all of the information and/or more in-depth parameters available within their one-stop platform (so-called data or information aggregation), with a majority of them providing graphics for data visualization. While one may argue that we are in the age of Googling and such data can be easily obtained without paying for it, the compromise would be the time spent in looking for them, as compared to giving a fee to save time and effort in finding and calculating the required figures.


Most screeners have one thing in common: they have an interactive interface for the investor to input and/or select the parameters and criteria. After these are keyed in, a list of counters which fit the bill will be displayed. Not all screeners, however, are built equal. There are those which are country specific, and there are those that cover only certain financial instruments, especially exchange traded funds (ETFs). Some screeners tried to be jack-of-all-trades and cover everything but lost out to certain niche screeners that have more coverage and relevance.


Here is a list of (free) screeners that I usually use in my research on equity, REIT and ETF securities. Bear in mind there are other good screeners, too, so this list is not exhaustive:


  • Yahoo Finance. My first go-to site to view ratios and summaries, Yahoo Finance has an extensive equity screener that covers a number of parameters (from the simple price-to-book ratio to the Altman Z Score) which I think is more than sufficient for a basic overview. They have other screeners for mutual funds, futures and ETFs, though for the latter I would prefer to use others (see below). Look out for “Screeners” in the main page heading.
  • SGX. Our very own Singapore Exchange has screeners for stocks, ETFs and structured warrants (from the main page header, Securities > Prices & Screeners) that are listed in itself.
  • Stockscafe. Stockscafe is a one-man, homegrown site and I used it to track Bob’s Bedokian Portfolio. It contains a screener that covers the United States, Singapore, Japan, Malaysia and Hong Kong markets. The screener is available for use once you sign up a free account with Stockscafe.
  • and For ETFs that are primarily listed in the United States, I would use either of these two sites to do my screening. In my opinion these screeners are more comprehensive than the ones mentioned above since they focus solely on ETFs, and their screeners included expense ratios, asset classes, number of holdings, etc. For the screener is under ETF Tools & Data > ETF Screener & Database header while for, the screener is located under Tools > ETF Screener header.
  • REITData and REIT Oracle. Though technically they are not screeners, they instead provide a one-look-can-see-all list of the locally listed REITs in a table form, and you could sort the various headers like gearing and yield in ascending or descending order to make comparisons. Furthermore, REIT Oracle provide information on other REITs listed in Malaysia and Thailand. For REITData, it also contains information on non-REIT trusts such as NetLink and Keppel Infrastructure Trust. 


Caveat And Conclusion


The use of screeners is just one part of your overall fundamental analysis process and it should not be the only determinant in your transaction decision. Further research and analysis are necessary such as looking deeper at the ratios, the sector and industry, the overall economic conditions, and geopolitical and natural factors at play. Sometimes different screeners may produce different numbers on the same stock/ETF/REIT, due to the source of the data and/or the basis of the ratio calculations, therefore warranting a more careful review.


Cheers and happy screening!

Monday, October 5, 2020

Inside The Bedokian’s Portfolio: iShares Global Clean Energy ETF

Inside The Bedokian’s Portfolio is an intermittent series where I will reveal what is actually inside our investment portfolio, one company/bond/REIT/ETF at a time. In each post I will talk a bit about the counter, why I had selected it and what lies ahead in the future.

Today, I shall introduce a sector-specific ETF and that is the iShares Global Clean Energy ETF (ticker: ICLN).


The Green Revolution


I had identified alternative energy as one of the sectors to go into back in Dec 2017 (here) after analysing the then-trends and formulating a series of educated guesses, or “guesstimates” as I liked to call them. Going green is nothing new as some organisations and activists around the world had been promulgating it for decades, but this movement had gained some serious momentum in the recent years.


During my “next big thing” analysis, there were some catalysts that prompted me to look in this direction; one of which was the increased awareness of climate change amongst the global population; another was the trend of electric vehicles that is going to be in the spotlight for the next decade; and yet another was the push for carbon-neutrality in some countries and organisations. Then of course later on, we had the famous “How dare you” speech by Greta Thunberg in Sep 2019.




There are a number of green ETFs available (not locally listed, though. You need to look for them in the U.S. markets), ranging from geographically focused (e.g. KGRN which is on China), energy type focused (e.g. TAN which is on solar power) to carbon focused (e.g. ECLN which tracks companies that seek or having a positive carbon impact). I had selected ICLN namely for three reasons:


  • It has a broad focus that includes manufacturers and providers related to alternative energy; covers different types of energy sources (wind, solar, fuel cells, etc.); and spanning across different countries (China, New Zealand, United States, etc.).
  • It has one of the lowest expense ratios (0.46%).
  • Its asset-under-management (AUM) is about USD 1.5 billion, which is so far the largest alternative energy ETF to date. An ETF with a large AUM tends to have higher trading volume and thus higher liquidity, which makes it easier to transact. An ETF with a high AUM also has economies of scale to reduce expenses, thus keeping the expense ratio low.


The Way Forward


The impetus to go green has never been this accelerated recently as compared to past instances. The awareness of climate change is quite widespread, probably thanks to social media platforms (read: technology sector) that enable messages to be shared far and wide. Some traditional oil companies such as Shell are moving into low-carbon or green energy, signaling a potential change of paradigm amongst the oil players.


Though the ICLN investment had almost hit the one-bagger mark (USD 19.08 as at 2 Oct 2020), it made up only about 1% of our portfolio. There is still some headway in the green/alternative energy sector, so I might be expanding this toehold by averaging up on this ETF in the near future.




Bought ICLN at: 

USD 9.58, January 2018



Wednesday, September 23, 2020

Barbells, Pyramids And Your Portfolio

If you have been investing for some time, you may have heard or read about some other portfolio strategies. Two that were often mentioned would be the barbell portfolio strategy and pyramid investing strategy, which I will call them barbell and pyramid respectively.

Most investment portfolios and funds come in the form of a pie chart, denoting the various asset classes, geographical locations, sectors and industrials, companies, and their respective make-up, usually in percentages. Some argued that such charts do not necessarily convey an important component of portfolio management, and that is risk. I can show a pie chart that is made up of 60% tech stocks that had gone way above their valuations and 40% junk bonds, but to the novice (or even a seasoned investor if he/she is not careful) the risks are not clearly defined. The barbell and pyramid enable a viewer to see the risk factor of each financial instrument roughly in their respective places.


Let us take a closer look at these two.




In the mainstream barbell portfolio strategy, securities and financial instruments are grouped into either low-to-no-risk or high-risk categories, and there is no middle ground. An example would be to have government bonds and defensive counters at the low-to-no-risk part, while placing those highly valued tech stocks on the other. If a 50-50 split is adopted, it would look something like this:


We could see an asymmetric-looking barbell, depending on the risk appetite and profile of the investor. If an investor prefers more safe instruments than riskier ones, then the bottom triangle would look larger; or for an aggressive, high-risk taker, the top would be larger instead.


Some variations of the barbell included a middle ground, with medium-risk securities making up the middle (e.g. corporate bonds), forming the “handle” of the barbell. This portion kind of give a “best of both worlds” scenario of having counters between the risk spectrum.




The pyramid investing strategy, or sometimes called the risk pyramid, labelled investments into three main tiers: low-risk forming the wide base (typically 40% to 50%), medium-risk as the body (30% to 40%) and high-risk being the apex (10% to 30%), as shown below:


Usually low-risk assets such as cash, government bonds, etc. are at the bottom, followed by the typical dividend-paying equities, corporate bonds, REITs, etc. in the middle, and volatile counters at the top. In some combinations, the pyramid is further split into more than three, especially in the middle part where the medium is further classified into lower-medium, medium-medium or upper-medium, much like our current description of the current social middle class (e.g. lower-upper middle class).


Side Note: Defining Risk


The very first issue on using such strategies would be the definition of risk, since it is this very parameter that you are classifying your investments. Risk is subjective: it means different things to different people at different times. We could say about government bonds being low risk, since it is after all the debt of a country, but different countries have different risk profiles, and some provide yields that are comparable to those of our local REITs’. Also, some counters which are deemed defensive in nature years ago may not appear to be so now (case in point: a telco counter that had went to a 12-year low recently).


We could use numbers to define them, such as standard deviation on measuring volatility, a typically used risk metric, or ratios like Sharpe and Sortino. The main problem in using them is they are not easily found online, and even if available, they may not be free, especially figures of local counters. The other way is to calculate them out, and spare time and Excel know-how is needed.


Another easier way is to use the beta coefficient (or beta for short), which is the measure of a security’s return relative to the general market. With the market’s beta as 1, a counter with a lower beta is seen as less volatile than the market. Beta numbers are easily searched; Yahoo Finance has them. The problem of beta is due to its relativity to the market returns, and a low beta does not mean it is not volatile by itself.


In addition, these statistics are based on the past, not the future, so the risk definition is at best backward looking. While it is understandable to use past data as an indication, it is not foolproof, but we have to make do with whatever information is at hand at least to have a clear set of criteria.


Application On Investment Portfolios


Summarizing my views, which I would elaborate below, in terms of visualizing risk, the barbell is good for looking at one portfolio, while the pyramid is more for looking at multiple portfolios and a risk overview of your total finances.


Let us take a look at the barbell. Using the balanced Bedokian Portfolio (35% equities, 35% REITs, 20% bonds, 5% commodities and 5% cash), I would place the cash and government bonds at the low-to-no risk portion; corporate bonds, low volatile/defensive equities and REITs at the middle (by the way I am using the handle model, which I will state why later); and the higher volatile/growth counters and commodities at the top. If I have other portfolios using my Central Provident Fund, Supplementary Retirement Scheme monies and/or with my disposal income (investment or trading), I can convert them to barbells, too.


With the few barbells, I will create a pyramid by corresponding their risk levels from each barbell: the high-risk parts will form the apex, the financial instruments in the handles will form the middle (here is the reason why I used the handle model), and the low-to-no-risk parts at the base. To make your pyramid more holistic, you may want to include all other holdings outside of your investment and trading portfolios, such as your emergency funds, cash savings, insurance savings plans, etc.




The barbell and pyramid models work well for investors who diversify their portfolios by risk and/or follow the simple equity-bond portfolio. As for myself, I will view them as risk-perspective models that I can transform my pie-chart to for a better understanding. However, I still hold my diversification belief in the order of asset classes, regions/countries, sectors/industries and individual companies and organisations, that would reduce risk.

Sunday, September 20, 2020

Inside The Bedokian’s Portfolio: Keppel DC REIT

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, we will look at Keppel DC REIT.




Keppel DC REIT (KDC) was (and still is) the only locally listed, dedicated data centre REIT. Listed in 2014, it began with eight data centres in Singapore, Malaysia, Australia, United Kingdom, Netherlands and Ireland. Fast forward to 2020, KDC had expanded, holding 19 assets spread across eight countries. 


Let us look at some key statistics of KDC1, 2, based on its closing price of SGD 3.03 on 18 Feb 2020:

  • Trailing Dividend Yield: 2.66%
  • Price-to-Book Value: 2.59
  • Gearing: 34.5%
  • Weighted Average Lease Expiry: 7.4 years


Why KDC?


Back in 2014 while researching on the viability and future trends of E-commerce using associative investing, I had identified a few areas where I could tap onto this potential, and one of them was data centres. The opportunity came around that time when KDC was about to be listed and I had managed to secure some shares at the IPO phase.


Over the past six years, the developmental direction of the internet was not just moving along the E-commerce route, but other areas as well, such as cloud storages, the explosion of various social media platforms, and recently due to COVID-19, the push for the mass adoption of digital and virtual solutions. It was also mainly because of these factors that KDC showed resiliency, and its price went to an all-high time, despite suffering a slouch during the market’s dive back in March 2020.


The Future


With the current trends that I am observing, internet-based technologies and usages (including those that were mentioned in the previous paragraph) are on an upward trajectory, and data centres (and subsequently the REITs that are owning them) will benefit from this. Proving their importance, Mapletree Industrial Trust had completed its acquisition of their remaining interest in 14 data centres in the United States3, and is looking to acquire one more4, setting themselves for the potentiality of data centres.


There are challenges to be faced by data centres themselves, majority of which comes from the things that keep them going. Infrastructure issues like power management and efficient cooling need to be addressed constantly. Couple this with the increasing awareness of being green (data centres are known to be power guzzlers), these could form make-or-break factors in a tenant’s selection criteria.


Nevertheless, data centres in general (not just KDC’s) are the way to go.




Bought Keppel DC REIT at: 


SGD 0.93, Dec 2014 (IPO)

SGD 1.155, Nov 2016 (Rights issue)

SGD 1.71, Sep 2019 (Preferential offer)




1 – Yahoo Finance. Keppel DC REIT. 18 Feb 2020. (accessed 19 Feb 2020)


2 – Keppel DC REIT. First Half 2020 Financial Results. 21 July 2020. (accessed 19 Feb 2020)


3 – Mui, Rachel. Mapletree Industrial Trust completes acquisition of 14 data centres in US. The Business Times. 2 Sep 2020. (accessed 19 Feb 2020)


4 – Mui, Rachel. Mapletree Industrial Trust to buy US data centre for up to US$262.1m. The Business Times. 14 Sep 2020. (accessed 19 Feb 2020)

Monday, September 7, 2020

Frasers Centrepoint Trust’s Acquisition Of AsiaRetail Fund’s Singapore Assets

In what is to be one of the recent biggest news in the REIT scene, Frasers Centrepoint Trust (FCT) is going to acquire the remaining 63.1% of the AsiaRetail Fund (ARF) assets in Singapore, which comprises of Century Square and Tampines 1 in Tampines, Hougang Mall in Hougang, Tiong Bahru Plaza and Central Plaza in Tiong Bahru, and White Sands in Pasir Ris. Also announced in the news is the divestment of Bedok Point to their sponsor Frasers Property for about SGD 108 million.

Finance wise, FCT is proposing to raise about SGD 1.39 billion via equity, in the form of private placement and/or preferential offering, to fund the acquisition and to repay existing debt. Post-acquisition and divestment, on a pro forma basis there would be an 8.59% distribution per unit accretion and the net asset value of FCT would be at SGD 2.21.


The acquisition also marks FCT’s first foray into offices in the form of Central Plaza, which contributed about 4.9% of the net property income (NPI) of the ARF Singapore assets in the financial year (FY) of 2019.


More information can be found in the official presentation slides here.


The Bedokian’s Take


What interested me is the two maps which were shared in the abovementioned presentation slides, which showed the catchment area (or “location of influence” in my write up here) of the malls (Figure 1) and their proximity to the MRT stations (or “location of complements” in the same said write up) (Figure 2). I had just written a piece about FCT a while back here where I had described them as the King of the North. With the full acquisition of the ARF properties, FCT is poised to have a huge retail influence and foothold not just the population centres in the north, but in the north-east and east, too.

Fig.1 - 3km catchment (or radius) of FCT and ARF malls

Fig.2 - Locations of FCT and ARF malls and their walking distances to the nearest MRT stations

Despite competition coming in for retail businesses in the form of online shopping and e-commerce, and the recent COVID-19 situation which saw a decline in footfall due to prevention measures such as circuit breaker and social distancing, the crowds are still there. Just visit any shopping centre (FCT’s or others’) during the peak periods and you can see for yourself. The additional advantage of FCT’s malls is that most of them are situated at the residential heartlands, which traditionally act as a hub for nearby home dwellers to run their errands, have their meals (dine-in or take-away) and/or fulfilling other social and recreational needs such as meet-ups. Malls and shopping centres, in our local context, do fill a special place in our way of life. Factoring in the new phenomenon of work from home, I do see potential in this enlarged REIT.


The divestment of Bedok Point is seen as a good move, since it was not ideally located due to its proximity to the much bigger and nearer-to-the-MRT-station Bedok Mall (owned by CapitaLand Mall Trust), and it contributed only about 1.91% and 1.85% of FCT’s NPI in FY2019 and FY2018 respectively (note: NPI did not include those from Waterway Point and ARF malls)1


An extraordinary general meeting will be convened on 28 September 2020 to pass the resolutions which include the proposed fund raising and the divestment of Bedok Point.




The Bedokian is vested in FCT.


1 – FCT Annual Report 2019 p31. (accessed 6 Sep 2020)


Further references:


FCT Circular dated 3 Sep 2020. (accessed 6 Sep 2020)


Lee, Marissa. Frasers Centrepoint Trust to raise up to S$1.39b to take over AsiaRetail Fund. Business Times. 3 Sep 2020. (accessed 6 Sep 2020)

Sunday, August 30, 2020

The Accounting Equation And How It Helps In Your Fundamental Analysis

Those who had studied accounting or have had an accounting subject back in school would have encountered the accounting equation, which is:


Assets = Liabilities + (Owners’ / Shareholders’) Equity




A = L + E


For the uninitiated, the accounting equation shows that a company’s assets are made up of debt (liabilities) and shares issued to shareholders (equity). The equation forms the basis of the double entry accounting system which is universally used by accountants worldwide.


The practical application of this equation is shown in a balance sheet, which is one of the three financial statements reported by companies. Here is an example of the A = L + E in real life:

Fig.1: Balance Sheet (excerpted from Singtel 2019 Annual Report, p139)


From Figure 1, you can see that 48,914.1 (A) is equal to 19,105.1 (L) plus 29,807.7 (E).


So how does it help in my fundamental analysis (FA)?


As you can see from the balance sheet, there are many details and things that made up the assets, liabilities and equity parts. For this post I will not go into their intricacies, but instead I will provide an overview with a few pointers and nutshell explanations, which could be useful for people who do not know where and how to start their FA.



Two ratios can be derived with this accounting equation alone, and that is debt-to-asset and debt-to-equity ratios, which are L / A and L / E respectively. A high number in both ratios indicates that the liabilities portion is large, especially so when the L / A ratio is closer to 1. For L / E, it is common for some companies to have liabilities larger than the equity portion, depending on their sector and industry.


On a related note, you can roughly tell the constituents of the assets of the company by just looking at the liabilities and equity numbers. Still, a thorough FA is required to look deeper into the nature of these components so as to form a better opinion of the whole scheme of things.

Calculating Net Asset Value


From the accounting equation, you can also see how the net asset value (NAV) of a company share can be calculated. By knowing the number of shares outstanding (which can be found in the company’s annual report), NAV is simply:


A = L + E


E = A – L

NAV = (A – L) / number of shares outstanding


Bear in mind NAV alone may not give a full picture of the true value of a company share, and other valuation methods may have to be taken into account, like price-to-earnings, discounted cash flow, etc.

Rights, Bonds, Bank Loans, Perpetual Bonds And Preferential Shares


A company has three main ways of raising additional capital; rights, bonds and bank loans. In the accounting equation, rights are considered equity, while bonds and bank loans form the liabilities part. The addition of rights meant that equity will increase, which translates to having more shares being issued and thus creating a dilution effect, i.e. more “slices” of the company pie are being created. For bonds and bank loans, their additions will increase the liabilities part, and along with it a rise in the debt-to-asset and debt-to-equity ratios.


The tricky part is there are some types of securities that may be considered either as liabilities or equity, depending on how one views them, like for instance perpetual bonds and preferential shares. While conducting FA, there is no hard and fast rule on how to treat such securities, though some prudent investors may treat them as liabilities in their calculations, while the more optimistic ones may take them as equity.