In my first reflection post, I shared about my key learning this year. In second, its about strengthening my portfolio for passive income. This third one is about diversification beyond our local shores to reduce exposure risk.
US & HK Markets
Besides Singapore, the two key markets that I have sizeable positions are US and HK.
US is because it is the largest free capitalist market and it provides the opportunity to invest in the biggest and/or the most innovative companies in the world.
HK is because it is a familiar capitalist market where the rules of the games are well established and it is a key door to the larger China hinterland, which is the second largest economy in the world and still growing fast.
At the start of 2020, the values of the US and HK shares, ETFs and Unit Trust that I hold was about 15% of my total equity. Today, it is 25%, a gain of 10% in a year, at the expense of STI companies :).
I am happy with this outcome.
I started growing my US and HK portfolio purposefully two to three years ago. It increased by a few % each year but this year marks the largest gain I managed to make.
Part of it was due to the significant drop in their equities price during the stock market meltdown early in the year. And when equity prices fell, they really nosedived. You may be wondering what does it got to do with increasing my holding of overseas companies.
Well, at that time, many US companies were enjoying high valuation. I felt it was risky to invest at that level. But when the price collapsed, I felt more comfortable to venture in.
I remembered getting a few Apple shares at ~$225 after it crashed from ~$300+. The 30% drop felt like an opportunity to grab a piece of this super company at a lower risk. I was fortunately that the fall did not continue, in fact, Apple shares like many others rose subsequently to almost $500 before it spilt into 4.
I did the same for my HK holdings but as you would probably know, it didn’t enjoy that same amazing rally like the S&P 500 … which is unbelievable, to start with, in the midst of a COVID pandemic.
Furthermore, since the time of the meltdown in Mar/Apr, I have cultivated the habit of buying US and HK unit trusts monthly. All these have helped to build a larger portfolio of overseas holdings today.
Venturing Overseas has been Rewarding so far
As you can see in the table below, both Hang Seng and S&P 500 outperformed STI. For the same dollar, I would have made more money or lose less if I invest in S&P 500 or Hang Seng Index compared to STI.
This has given me confidence to increase my overseas exposure further – for start, I would target a combined US and HK holding of >30% for 2021 and see where it would lead me.
|STI||HK Hang Seng Index||S&P 500|
|Start of Year 2020||3,223||28,225||3,240|
|@ of Today||2,842||26,386||3,687|
|Abs. Annual Change||– 381||– 1,839||+ 447|
|% Annual Change||– 13.4%||– 7.0%||+ 12.1%|
Wishing all a great investment week ahead.
I am not sure if I have another inspiration for a 4th reflection post. Hopefully it comes …