In my last post, I revealed all the holdings in our Family Portfolio (note: there have been some changes since). In this post, I’d like to go deeper into each of the top 10 holdings and share about why I have those positions and what my plans are for each of them.
This portfolio is jointly held between my wife and I, and is much larger than our own separate individual stock portfolios. We started this portfolio back in late 2016, so it’s roughly 4.5 years old.
Before we start, I’d like to preface this post. I’m posting this as a way to track how our portfolio changes or evolves over time. I won’t be sharing any dollar amounts, so everything will be in percentages. Our portfolio is not large by any means, but I’m not comfortable showing any dollar amounts to avoid any comparisons, intentional or otherwise. IMO, percentages are sufficient for me to convey my message meaningfully.
So, let’s take a look at the top 10 holdings in our Family Portfolio.
First, some high level portfolio stats. The top 10 holdings account for 42% of the Family Portfolio. Our portfolio is pretty diversified, with 39 holdings in total. All other positions outside the top 2 broad-market ETFs are below 4% weightage.
In the past, I’ve been cutting my winners but I intend to stop doing that and let my winners run instead. I realized that by cutting winners I’m naturally left with a portfolio of loser stocks. In hindsight, that’s just common sense though not so common to me at the time.
I will also be scrutinizing losers and hopefully have the discipline to cut them early. By letting my winners run, hopefully they will naturally run higher than 4% weighting. I intend to allow for up to 10% weightage for individual stocks and up to 15% for broad-market ETFs.
Now, let’s take a deeper look below into each of the 10 holdings, why I have them in our portfolio and what my my plan is for each position going forward.
#10 – Singtel or Singapore Telecommunications (SGX:Z74)
Singtel has performed terribly, massively underperforming even the benchmark STI which is already performing very poorly. What surprised me about Singtel was how reliant it was to roaming revenue and tourist spending. I had (mistakenly) thought of Singtel as a solid dividend payer in a defensive industry, but the pandemic has shown me otherwise. Singtel’s dividend which had been growing steadily over the past few years, was down by 30% in 2020. Competition from Mobile Virtual Network Operators (MVNO) aka virtual telcos have decimated profit margin even prior to the pandemic. One silver lining is the award of digital full bank license by MAS to Grab-Singtel partnership, but so far few details have been released about their plans. I plan to just hold this position as a recovery play and monitor for more news on how Grab-Singtel plan to implement their digital full bank license. In the meantime, at least Singtel pays a decent 4.1% dividend.
#9 – Keppel Infrastructure Trust (SGX:A7RU)
KIT has held up very well during the pandemic, proving itself to be a truly defensive counter. Stock price dipped in March in line with the wider market but bounced back strongly to pre-pandemic levels within just 3 months. Thankfully dividends were unaffected, with KIT still yielding a cool 6.9%. I’m happy with my exposure and may only add to this position later if I want to increase my dividend cash flow.
#8 – Ascendas REIT (SGX: A17U)
Ascendas has somewhat underperformed its industrial REIT peers since recovering from the pandemic dip. Ascendas recently completed a preferential offering at $2.96 per new unit to fund acquisitions in Australia, US and Europe, which may explain why the stock price hasn’t increased much. I like Ascendas for its exposure to industrial & logistics properties in mature developed markets, strong sponsor in Capitaland, healthy balance sheet, and well-diversified portfolio of properties. I think Ascendas is good value at this price, but the portfolio is currently maxed out on REIT exposure so I will only be able to add to this position if I sell out of another REIT.
#7 – Invesco QQQ Trust (QQQ)
QQQ is one of my newer core ETF holdings. For those unfamiliar, this ETF tracks the Nasdaq-100 Index which includes the 100 largest non-financial companies listed on the Nasdaq based on market cap. I’ve always found this ETF a bit odd in that it’s restricted to only companies listed on a certain stock exchange, the Nasdaq. For some reason many large-cap companies on the Nasdaq tend to be growth companies, so this ETF becomes a sort of large-cap growth fund. Anyway, as long as it performs well and holds the companies I like, I will continue to DCA into this ETF.
#6 – Microsoft (MSFT)
MSFT is my best performing stock by far and still one of my favourite to add on dips. MSFT will continue to benefit from the remote work trend through its suite of enterprise and productivity tools, and Azure cloud services. Recently, MSFT also entered the autonomous driving race through an investment into GM’s self-driving startup Cruise, which may potentially be a new revenue stream. MSFT also just recently reported stellar Q2 FY21 earnings, which reinforces my bull thesis on the stock.
#5 – iShares 20+ Year Treasury Bond ETF (TLT)
TLT is used as a portfolio diversifier and hedge against market corrections, since treasury bonds are widely considered to be safe havens and tend to do well when market volatility increases and stock prices drop. With the Fed’s multi-year QE bond-buying spree pushing treasury bond prices higher though, TLT might become less effective in protecting the portfolio against volatility in stocks. My target allocation for bond ETFs is 10% so I’m still under-allocated with only 2.7% in TLT and 2.2% in BND, which is a broad-market bond ETF. As bond yields increase (and inversely bond prices decrease), I will be DCA-ing into TLT.
#4 – Amazon.com (AMZN)
This was a somewhat ill-timed buy practically at AMZN’s all-time highs. Since then AMZN has been trading in a channel between $3000-$3300, and we might continue to be stuck in this channel for some time. However, I’m still bullish on AMZN and believe its stock price will continue to move higher. I think their core e-commerce platform and AWS cloud services segments will continue to experience tailwinds, and the company should be able to sustain strong revenue growth. AMZN also continues to invest in new markets like live-streaming video (Twitch), drug delivery (PillPack), grocery stores (Whole Foods), and robo-taxis (Zoox), which could provide other avenues of growth.
#3 – DBS Bank (SGX:D05)
I started accumulating shares in DBS on a monthly basis since Feb 2020, and the position has quickly grown into the largest individual stock holding. DBS is one of the safest banks in the world (named safest bank in Asia for the 12th consecutive year in 2020), so high exposure to the company doesn’t concern me. Interest rates are expected to continue to be low, so margins could continue to be under pressure for some time. DBS might also face stiffer competition from the new digital full banking license winners Sea Limited and the Grab-Singtel partnership as they enter the Singapore banking market.
#2 – Vanguard Total World Stock ETF (VT)
VT is one of the broadest and most diversified ETFs that I could find. As the name suggests, this ETF holds the largest companies from all over the world. This position is to provide the portfolio stability and to skew the performance towards the market average. Since US stocks make up more than 50% of ETF holdings, VT has been performing pretty well. I have been and will continue to DCA into this ETF roughly once a quarter. I like this ETF because it’s so broad so I don’t have to spend much time monitoring it.
#1 – NikkoAM STI ETF (SGX:G3B)
This position was gradually built up since mid-2016 through a monthly regular savings plan. Unfortunately while I’ve been accumulating, STI spent most of its time in the 3000-3300 range. Only recently did STI recover back to 3000 level. Hopefully it will break this 3000 psychological level and go higher. STI’s price performance has been disappointing over the long term, basically going nowhere for more than a decade. STI which is heavily weighted towards financials (Singapore’s 3 largest banks) seems IMO to be more suitable as a dividend play. Dividends were affected due to the pandemic, but I expect dividends to recover in parallel with the economy now that we have a vaccine. I’ve stopped accumulating more shares and may consider paring down this position slightly, but will definitely continue to hold this counter long-term for the dividend income.
Conclusion
So that’s it, the top 10 holdings in our Family Portfolio. Hope this gives you a good flavor of our main portfolio, and some context to my blog posts.
Let me know in the comments if you have any of these stocks in your top 10 as well, and maybe even share your top 10 holding too.
Thanks for reading!