Saturday, November 26, 2022

My Unit Trust Asset Allocation

Dear all,

After slightly more than one year, below is another update on my unit trust asset allocation. You can refer to my previous one at the link below:


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. However, I have increased my allocation in the short duration bond fund slightly, to take advantage of the increasing interest rate on the short end of the bond duration.

For geographic exposure, there had been a major drag in Asia Pacific Excluding Japan, Emerging Markets and Asia excluding Japan funds, as China and Russia are the major draw downs. Tech sell-offs had also affected tech heavy single country equity funds with exposure to Korea and Taiwan. This had been compensated by better performances in India and SEA markets like Singapore, Thailand, Indonesia and to a lesser extent Malaysia. US and Europe including UK also suffered, but to a lesser extent as compared to the major drags.

Going forward, my strategy is to continue to add onto existing funds, while attempting to maintain a more defensive positioning in terms of asset allocation.

Asset Class

Equity 84.57%

Balanced 12.68%

Short Duration Bond 1.61%

Fixed Income 1.14%


Asia Pacific Excluding Japan 17.64%

Global 16.25%

Emerging Markets 14.46%

Japan 11.24%

US  8.04%

Singapore 7.78%

Asia excluding Japan 5.74%

Thailand 3.64%

Indonesia 3.26%

Europe including UK 3.26%

Taiwan 3.07%

India 2.29%

Malaysia 1.81%

Korea 1.54%

Welcome any comments (if any) on my unit trust asset allocation.

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Blogger weii said...

Personally I feel that an allocation of 12.68% to unit trusts with a balanced portfolio in the CPF account is too high in this inflationary environment. This is due to the high management fee charged by these unit trusts and the availability of alternative Singapore Treasury bills that are of a high calibre and likely provide a higher risk-adjusted return than the bonds in these balanced portfolio. Any plans to split up this allocation into separate equities unit trusts and Singapore Treasury Bills?

12:30 AM  
Blogger ghchua said...

Hi weii,

Those balanced funds are invested using CPF SA monies. Therefore, I could not do the split as you have suggested as pure equity funds are not included in CPF SA investment scheme. Only CPF OA funds could be used for them.

It is either I invest in T bills or balanced funds for CPF SA monies. Since CPF SA pays a minimum of 4%pa, T bills is not an option. Therefore, I have selected to invest in balanced funds, which has the highest chance of beating CPF SA interest rate in the long term.

1:10 AM  
Blogger weii said...

Thanks for your clarifications.

A quick check on FSMOne platform reveals that on a 5 year and below period, no unit trust eligible to purchase under CPF SA is able to beat the 4% per annum offered by CPF Special Account. For the 10 year period, only 3 unit trusts can beat the 4% per annum with Schroder Multi-Asset Revolution A DIS SGD having the highest annualized return of 5.17%.

5:46 AM  
Blogger ghchua said...

Hi weii,

We must understand that 2022 is an unique year, whereby equities and bonds all fall badly together. In this kind of situation, a balanced fund will be as bad as any equities fund, since the bond component could not offer any downside protection. I think if you look at the past 10 years or so, we did not have a situation as bad as this year.

So, if you take a very bad Year 2022 into the equation, we would have the kind of results that your quick check had revealed. But in normal years, there would be a decent list of funds that will beat CPF SA returns, and most of them would be balanced funds. Also, do take note that taking 10 year period return also mean that one bought all their funds 10 years ago and hold onto it until now. Realistically, most don't do that. Most will actually be investing every month/year when there are new contributions to their CPF accounts.

Therefore, consistent effort counts. Though it is not guaranteed, but my view is still that balanced funds offer the best opportunity to beat CPF SA interest rate in the long term. By saying long term, it can be as long as 30 or more years, not 10 years. Because one could not do much with their CPF SA, so when one starts working, they should actually be planning to invest their CPF SA monies, after setting aside the minimum sum of $40k that could not be invested.

6:06 AM  

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A self-directed investor, looking to invest for retirement needs and bypass all those expensive financial planners/insurance agents. Investing is fun, profitable or most important of all, knowledge gained is useful for the rest of your life!

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