ICYMI bonds have nose-dived since late September, bringing REITs down with them. Granted both were already on a downtrend but the sell-off just accelerated.
Not sure about you but I’ve been waiting for an opportunity to add to my bonds and REITs more substantially. So far, I’ve only added or trimmed small quantities to rebalance the portfolio.
Given also that stocks have run up a lot, so our portfolio is overweight equity and underweight bonds and REITs (I consider both quite similar and correlated).
REITs follow bonds to a certain extent because as bond prices drop (and correspondingly bond yields rise), that increases the floating interest rates on their bank loans. Then when REITs drop, in turn their distribution yields also increase (if they can sustain them).
Today, U.S. 10Y Treasury yield is 5.22%, Syfe REIT+ estimated dividend yield is 6.2%, and Singapore Savings Bond (SSB) 10Y average yield has increased to 2.45%.
I’ll need to add a bunch to our holdings in equity index funds, bonds and REITs to rebalance the portfolio and trim some individual equities (likely DBS which has run up a lot). I find yields on bonds and REITs pretty attractive right now, so would want to lock in some at current yields. SSBs I’m not really interested unless yields exceed 3%.
Typically, what I would do is to add to index UCITS ETFs listed on LSE and add to to Syfe Income+ and REIT+ portfolios for the bonds and REITs respectively. We have a small allocation to crypto, which I’ll add or trim opportunistically just as a small hedge instead of gold.
So far, this rebalancing method has worked quite well for me, forcing me to stay disciplined by trimming positions when high and adding positions when low. I find that rebalancing seems to work when the portfolio is invested in broad and conservative funds with only small positions in individual stocks or alternative investments.