My Unit Trust Asset Allocation
Dear all,
After nearly one year, I guess it is time for another summary on my unit trust asset allocation. You can refer to my previous one at the link below:
https://ghchua.blogspot.com/2025/09/my-unit-trust-asset-allocation.html
For asset classes, I have done nothing much other than consistently adding onto the list of unit trusts that I had been holding for CPF Investments. I have been a bit more aggressive for the past one year, adding onto my Global, Asia Pacific Excluding Japan and Emerging Markets equity funds on market corrections. Having said that, I have been adding onto my short duration bond fixed income fund too. This had resulted in a slightly increased equity allocation to above 80%. For balanced funds, I have continued to add onto them using CPF-SA monies.
For geographic exposure, Emerging Markets, Japan, Singapore, Taiwan and Korea funds were the out performers in the portfolio. Asia Pacific Excluding Japan and Asia excluding Japan funds also did well. Laggards include single country equity funds with exposure to India and Indonesia.
Going forward, my strategy is to add onto existing funds, while continue to maintain a more defensive positioning in terms of asset allocation. I would not commit into adding more to equity or fixed income funds, as expectations on higher interest rate might continue to pressure fixed income funds, especially on the longer end. The key is still to keep fixed income duration exposure short, which means I will still be looking at short duration bond fixed income funds. For equity funds, the key is to avoid concentration risk which means looking at regional and/or global equity instead of single country funds.
Asset Class
Equity 81.00%
Balanced 12.64%
Fixed Income 6.36%
Geographic
Global 18.36%
Asia Pacific Excluding Japan 14.97%
Emerging Markets 14.78%
Japan 12.63%
Singapore 8.93%
US 7.58%
Asia excluding Japan 6.19%
Taiwan 5.41%
Europe including UK 2.78%
Korea 2.75%
Thailand 1.68%
India 1.49%
Malaysia 1.25%
Indonesia 1.20%
Welcome comments (if any) on my unit trust asset allocation.
Labels: CPF, Others, Portfolio, Strategy, Unit Trust
posted by ghchua at 1:14 PM
5 Comments:
How do you decide which balance funds to purchase using CPF-SA? Is the fund benchmark an important consideration as some allocates 70% to equities as they are benchmarked against 70% MSCI World NR?
Hi weii,
There are limited number of balanced UT funds available for CPF-SA investments and so the decision is quite straight forward. I would need to choose those that cover global and regional in terms of geography. In terms of allocation, yes, I think more allocation towards equities would be better since CPF-SA investments are for very long term and higher allocation towards equity would have a better chance of beating CPF-SA risk free interest rate.
Thanks. How will you balance between leaving money in CPF-SA versus investing? The long lock up period of 10 years in Retirement Account and the subsequent low interest rate return of estimated CPF Life of around 2.6% may make it more attractive to invest CPF-SA monies all the way till one is the mid seventies.
Hi weii,
First of all, unlike CPF-OA investments which incur quarterly fees and buy/sell charges on the CPF agent bank side, there is zero cost in maintaining investments with CPF-SA monies, except of course fund level expenses. This meant that you are free to hold onto those investments for as long as possible, without charges eating up your returns.
I do agree with you that it make sense to hold onto your CPF-SA investments for as long as possible, but do take note that CPF Nomination does not cover your investments. So, you need to make other arrangements like writing down in your will who you wanted your investments to go to if one is no longer around.
For me personally, I only intend to leave the first $40K in my CPF-SA which cannot be invested. Other than that, amounts above that will be invested. Subsequently, when the Retirement Account had been created, the flexibility is still there. You can still decide whether to sell some (or all) of your CPF-SA investments to fund your Retirement Account, or as you have mentioned, stay put till your later years whereby you can start selling your CPF-SA investments every month to fund your expenses.
As to your point on CPF Life returns, I think one should look at it as an annuity risk pool rather than a pure investment product. Which means, the focus should not be on return, but rather income for life. It is different from doing your own investments as you might run out of cash eventually if you keep drawing them down. Of course, with careful planning for more savvy ones, one might generate higher return and still pays them for life from their own investments. CPF Life is just a baseline for the general population.
Very well written and thanks for the detailed reply. I agree with all the points stated.
Post a Comment
<< Home