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AMA Franklin Templeton

The AMA will be held LIVE on Wednesday, 9 Dec 2020 from 7-9pm. Start asking your questions here!

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Do you think it's myopic to just be investing in Singapore and not other countries like US, even though I have a contrarian view that the STI is good?
Chris

Chris

Level 6. Master

Answered 2w ago

Personally, I don't invest in the STI for a few reasons, let me list them out and see if you agree or disagree with me. There are no right or wrong answers, just perhaps a sharing from another perspective: STI is strongly lacking in tech options Tech is a rapidly growing sector, especially with developments in so many subsectors of tech. From cloud computing to artificial intelligence to semiconductors to blockchain, tech is a fast growing space and in my honest opinion, we’re just getting started. With the STI not consisting of any tech options, this will reduce the ability for the STI to capitalise on the growth of tech space in the decade to come. STI is overweight on Financials In the STI, we can see that the bulk of the companies fall into the Financials sector. This includes the banks as well as REITs that comprise the STI. The performance of financials are heavily affected by macroeconomic factors such as interest rates, monetary policy and tax policies. This concentration causes the STI to be much more susceptible to sector based shocks. STI is not fully representative of Singapore's economy A lot of Singaporeans invest in the STI because they believe that Singpaore will do well in the years to come. However, the STI is not representative of the Singapore economy because of this concentration. The STI’s combined market capitalisation is $288 billion while the entire Singapore Stock Exchange (i.e. all the listed companies on the SGX) are valued at $733 billion. This means that the STI only covers about 39.29% of the market capitalisation of all the companies on the SGX. Compared to the S&P 500, which represents around 87.18% of the entire US stock market’s market capitalisation. As such, investing into the STI poses a concentration risk even within the Singapore market. STI is focused on Dividends While this itself is not a bad thing, the focus on dividends further shows a lack in growth opportunities for the companies in the STI. Dividends are usually paid out to shareholders because the management cannot find a better place to use the money that the company has on hand. Hence, the high dividend yields of the STI is indicative of lacking growth opportunities for the STI's big players. All of that said and done, I think it is ok to still invest in the STI (at the right time), but it might not be a good choice to not even consider diversifying into other economies through say, global index ETFs such as IWDA or S&P 500 ETFs such as CSPX.

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Emerging Markets: A strong year, a stronger outlook

Manraj Sekhon, CIO of Franklin Templeton Emerging Markets Equity, highlights structural advantages in emerging markets.

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Could you share some strategies to manage risk and negative performance? What does a professional do when their original investment thesis is proven to be wrong?
If investment thesis is wrong, like you invested into the wrong company then cut loss and move on. Sell the shares when fundamentals change or when your conviction is lost

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A year of lingering uncertainty, but ample global opportunities

Franklin Templeton's Head of Equities Stephen Dover sees opportunity amid upheaval in 2021.

Franklin Templeton

Franklin Templeton

Level 2. Rookie

Updated on 17 Dec 2020

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Hi, what do you think about the Robo advisor platform available in Singapore (Syfe, Stashaway, etc.), how do they compare against actively managed funds?
Syfe

Syfe

Answered on 14 Dec 2020

At Syfe, we believe in passive investing, which is the time-tested approach to grow your long-term savings. As such, our portfolios consist of globally diversified portfolio low-cost index funds. Actively managed funds may try to beat the market. However, numerous studies have shown that active fund managers usually fail to beat their index targets over the long term once costs are factored in. For one, all that buying and selling of stocks racks up large transaction costs. According to the S&P Indices Versus Active (SPIVA) 2019 scorecard, 97% of actively managed large-cap funds have underperformed their benchmarks over the last 10-years. In contrast, passive investments like ETFs (which Syfe offers) don’t try to pick which stock will perform well. Instead, they invest in all the stocks reflected in their benchmark index. By capturing the market’s return at low cost, ETFs typically outperform their active counterparts over the long haul.

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What are your thoughts on endowment plans vs investment?
PolicyWoke

PolicyWoke

Level 5. Genius

Answered on 13 Dec 2020

Hi Anonymous, There are differences in risk and rewards between endowment plans and investments. Endowment plans are savings plans that requirements commitment to hold till maturity/payout to get the most out of it. All endowment plans have this clause: Buying a life insurance policy is a long-term commitment. An early termination of the policy usually involves high costs and the surrender value payable (if any) may be less than the total premiums paid. Hence, ensure that you read and understand the clause before you even decide on buying endowment plans. Disclaimer: PolicyWoke is a traded endowment policies broker.

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Is it better to just buy S&P500 or further diversify into other funds and assets class?
Diversification is a huge, huge topic, there are many ways to diversify. Most people only think of a multi-asset diversification but there are downside to that. (see Ray Dalio's Bridgewater Associates returns; consistently underperforms the S&P500) It is useful if you understand when to enter and how to manage the multi-asset portfolio, but going in across multiple assets at the same time is counter-productive because the different asset classes work differently from each other. Ofc you can argue that is the point (to have less correlation across assets) which is true, so the benefit is reduced volality , disadvantage is reduce growth over time In the stock market itself you can diversify yourself in many ways. You can diversify across different countries/industries/sectors/companies within the same sector If you are more advanced you can diversify across diferent stratergies as well.

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Is there really a 'best' time to start investing?
Musyaffaq

Musyaffaq

Level 6. Master

Answered on 09 Dec 2020

Honestly, no. I think the idea behind DCA-ing is that you don’t put any emotions into your investments. Personally, I got try to “time the market”. And when it didn’t work in my favour, it really affected me like “Shucks I should have bought some” or “I should have sold some”. But with DCA, you don’t really pay attention. If it go up, ok lor I buy lesser. If it go down, ok lor I buy more. For me, as someone who doesn’t do investing full time, it’s better on my mental health. I can think of other things other than the stock market.

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Is Dr Mark Mobius the special guest?
Hi Soon Aun, Dora Seow, Country Head for Singapore at Franklin Templeton is the AMA spokesperson for this AMA.

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