Some Thoughts

SG Hedge Funds Underperformance

I have been following the performance of Singaporean based hedge funds who practice value investing. It is interesting they have been under-performing the Asia Pac Ex Jap index based on last 5 years’ returns. I am guessing that part of the reasons is due to higher returns from tech shares and these hedge funds have under-weighted tech shares.

Tech shares have seen declines recently. If this trend continues, we may see these funds outperforming the index this year.

	Returns
	2016	2017	2018		2019	2020	Cumulative
Aggregate Asset	11%	13%	-10%		2%	4%	20%
Inclusif Class A	-	-	-9%		9%	6%	5%
Heritage Fund	21%	12%	-13%		8%	-1%	26%
Lighthouse Advisors	5%	21%	-21%		-5%	13%	8%
Lumiere Capital (SGD)	-8%	11%	-14%		8%	-3%	-8%
Asia Pac Ex Japan*	7%	30%	-11%		19%	19%	77%
FTSE Asia ex Japan Index ETF (HK 2805)	6%	40%	-14%		17%	24%	83%
*Extracted from Aggregate Asset webpage

 

Over-diversification?

I have been wondering lately if I have over-diversified my holdings and hence affect the performance of my stock portfolio

	Number of Stocks
At end 2016	21
At end 2020	39
At 5 Mar 2021	35

 

In 2021, I have started to reduce my holdings with the following allocation guidelines:

·         Initial stock position of 3%

·         Can build to 5% if the stock prices fall further or there is secular growth trend behind it

·         Can build to at most 8% if the stock is very undervalued

·         Stock position cannot be more than 20%. (This has not occurred so far, as I will start to reduce the position as the stock price rises)