Coffee Meets Investing

Held on 7 July 2018, Saturday

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Coffee Meets Investing
  • Asked by Anonymous

    Lok Yang Teng
    Lok Yang Teng

    Top Contributor (Dec)

    254 Answers, 349 Upvotes
    Answered on 30 Nov 2018
    QDII scheme was created by China to allow domestic investors to invest overseas. So you'll have to be a Chinese national to invest through QDII.
  • Asked by Anonymous

    Amanda Ong
    Amanda Ong
    5 Answers, 11 Upvotes
    Updated on 11 Sep 2018
    Hi! Just to share, we have just reimbursed the witholding tax refund last week to all clients who are entitled to it for the FY2017. If you received a reimbursement, you would have received an email from us informing you of this :)
  • Asked by Alvin Leong

    Tai Zhi
    Tai Zhi
    23 Answers, 29 Upvotes
    Answered on 07 Jul 2018
    You may wish to note that "period-based" rebalancing is inferior and does not achieve the two main objectives of portfolio rebalancing, namely (i) risk management and (ii) the ability to lock in extra value-add returns. This is well-documented in David Swensen's book “Pioneering Portfolio Management”. FYI, David Swensen was the first institutional investor in the world to adopt and formalise portfolio rebalancing as an investment technique. David Swensen is highly regarded in finance and investments globally. Anyway, here's why "period-based" portfolio rebalancing is inferior and does not achieve the two main objectives. Imagine an investor who experiences the trade tension in 1Q 2018 and subsequently in Jun 2018 markets fully recovered back to where it was before the market correction. (i) Risk management - the portfolio will be underweighted in Stocks and overweighted in Govt Bonds during the heat of the market correction in Feb 2018. This means the risk level of the portfolio will no longer be consistent with what the investor originally wanted and this inconsistent risk situation may well persist for some time (it did persisted till Mar 2018). (ii) Ability to lock in extra value-add returns - An investor who adopt "period-based" rebalancing would have missed out the interim opportunity to sell Govt Bonds when it has appreciated in value and missed out the interim opportunity to buy Stocks when it has declined in value in Feb 2018 at the heat of the correction. Similarly, the same investor who would only spend 5 mins on 30 June 2018 would subsequently missed the opportunity to take profit when markets rebound and Stocks appreciate back to where it was. In "threshold-based" rebalancing, which AutoWealth adopts, portfolios are analysed and monitored daily to identify material deviations from the original intended portfolio allocation weights. Whenever there is a material deviation, the portfolio is automatically rebalanced. This means the portfolio risk is managed and consistent with what the investor originally wanted. This also means AutoWealth can capitalise on excessive day-to-day, short-term market volatility to lock in extra value-add returns for clients. Statistically, portfolio rebalancing achieves 0.5% to 0.7% extra value-add returns on average over the long term, depending on which portfolio risk level the investor selects. We note that the 0.5% to 0.7% extra value-add returns adequately covers the fees we charge our clients. Therefore, it is much more cost-efficient to invest through AutoWealth as compared to DIY.
  • Asked by Anonymous

    Tai Zhi
    Tai Zhi
    23 Answers, 29 Upvotes
    Answered on 10 Jul 2018
    FX Risks At present moment, FX hedging is very costly especially for portfolios below S$1m in size. We do not foresee FX hedging cost reducing to a cost-efficient level over the next few years. As and when hedging cost significantly reduces to a cost-efficient level, we will be more than happy to offer FX hedging option to our clients. You may also note that USD and SGD are major currencies and they tend to be relatively more stable compared to other emerging markets currencies. Therefore, while FX risk is material, FX risk is not significant. This is especially so for investors who have a medium to long term investment horizon. For example, the AutoWealth Balanced Portfolio (60% stocks, 40% govt bonds) achieved 15.7% returns net of fees on a USD basis over the last 26 months since inception. The same portfolio achieved 16.4% net of fees on a SGD basis over the same period. Therefore, the difference of 0.7% due to FX impact is relatively small. Tax Implications The U.S. imposes a withholding tax on dividend payments made out of U.S. listed securities. These are automatically deducted at source before the net dividends are credited into the client's custody account in his/her legal name. Despite a relatively higher withholding tax, ETFs listed in the U.S. are still preferred over ETFs listed in other countries like the U.K. after taking into consideration factors including liquidity, bid-ask spread, expense ratio, ETF fund size amongst other factors.
  • Asked by Anonymous

    Tai Zhi
    Tai Zhi
    23 Answers, 29 Upvotes
    Answered on 07 Jul 2018
    Unlike other robo-advisors with complex strategies and algorithms, AutoWealth adopts a simple, easy-to-understand market-tracking investment strategy. An investor can expect his/her investment returns to approximate the general market returns of world stocks and govt bonds through a market-tracking strategy. The risk of underperformance is strongly mitigated. However, a market-tracking strategy does not necessarily means that investors will certainly not make a loss all the time. At times when general markets are declining, an investor would expect his/her portfolio to decline about the same extent. However, do note that at some point portfolio rebalancing may be triggered to sell govt bonds (take profit on safe haven asset in a downturn) and buy stocks (buy risk assets when its cheap). Eventually when general markets rebound, the rebalanced AutoWealth portfolio will now generate higher returns as compared to general markets. Standard & Poors Dow Jones maintain an extensive research on active vs passive (ie market-tracking) for more than a decade now. The results have been consistent over the years. Due to its comprehensiveness, its extensive coverage and consistency, this research has now became the authoritative conclusion between active vs passive. You may read the research here: https://us.spindices.com/documents/spiva/spiva-us-year-end-2017.pdf
  • Asked by Anonymous

    Tai Zhi
    Tai Zhi
    23 Answers, 29 Upvotes
    Answered on 10 Jul 2018
    Unfortunately, AutoWealth only accept cash investments at this moment.
  • Asked by Derek Ang

    Loh Tat Tian
    Loh Tat Tian

    Top Contributor (Dec)

    198 Answers, 292 Upvotes
    Answered on 24 Nov 2018
    40% stocks. What kind of stocks? The economy is intertwined. There are economic cycle for different phase of development or seasonal cycles (like O&G, shipbuilding, consumer goods etc) which can fall between defensive or growth (and higher risk). REITS are just 1 segment where you are like a landlord. Rising interest rates can be a concern for higher gearing REITS. Also rights issues, etc. REITS also have sectors from hospitality, industrial, commercial, residential. Unit trust and Funds are similar like stocks but doing a basket, and could be region/country specific. You need to read the prospectus and what sectors they are investing in. Too many questions, so sorry if I can't give you an answer.
  • Asked by Anonymous

    Jonathan Chia Guangrong
    Jonathan Chia Guangrong, Fund Manager at JCG Fund
    277 Answers, 400 Upvotes
    Answered on 03 Oct 2018
    Kopi, when I do order. Nowadays just grabbing the caffeine fix in the form of a double latte from the office coffee machine
  • Asked by Anonymous

    Kenneth Lou
    Kenneth Lou, Co-founder at Seedly
    310 Answers, 742 Upvotes
    Answered on 03 Oct 2018
    This is a very good question and we built the Seedly app with security in mind. Around 2 years back, when we started Seedly, we aimed to create a seamless place to sync and aggregate all your finances in place. Today, we have over 50k users in Singapore. We also graduated from the DBS HOTSPOT program in 2016 and was funded by NUS Enterprise. More importantly, you can find out more about our security policies here: https://seedly.sg/security :) We understand that the banking credentials are of extreme importance and secure, hence we don’t store these and instead it operates on a one-time login, hence everytime u want to sync a new set of transactions, you will need to re-login and sync again. This is a read-only service. We also store your data securely using Asymmetric encryption. This method ensures security of the data you send over the Internet through the Seedly app. Asymmetric encryption algorithms are essential in the securing banking systems, web-applications and protocols. These algorithms allows us to hide sensitive data such that outside sources are unable to visualize or manipulate it. Behind the scenes, we’re working with the banks on the direct APIs but as always it takes time :) we have seen that it has happened in US, Canada, now the EU by end 2018, hence we feel SG could be next very soon for a more seamless experience. Cheers! Feel free to ask us or the community here :)
  • Asked by Anonymous

    Choon Yuan Chan
    Choon Yuan Chan
    44 Answers, 109 Upvotes
    Answered on 23 Sep 2018
    As stated by fellow community members, build up your investment knowledge, there are a few financial bloggers who touch on personal fiannce and warn you on the trappings of Singapore society. Some of them include Budget babe and me (yours truly); however if you want in depth and comprehensive table form, you can consider investmentmoats by Kyith. He is very detailed in his write up and puts in mathematical concepts. As self advertisement: Below is my guide for young investors to know of basic finance http://investmoolah.blogspot.com/p/good-financial-knowledge-to-learn.html
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