May 20, 2017

Cory Diary : Time Dependent Performance

Often people ask for annualized returns over the entire investment horizon of index or fund. This is wrong simply each human investment lifespan is limited to their relevant period and changes as we age. How the world managed financially 100 years ago, 50 years ago, 30 years ago and today can be very different too. Depending when we are investing actively determines our performance during this periods.

For myself, the active investment period is about few years before the global financial crisis till ongoing now. That's 10-12 years mark. Therefore, it is meaningless to me when fund promote their result across 20 years or 30 years horizon where tons of things can happen in-between.. 10 years before it may be mega bull or era where they face different government regulatory, technological or whatsoever industry in focus. If i have started the same, my annualized can also be different from today.

Not strictly speaking, the weight-age even for same period can be different. A single salaried person will have more and more money later into her career for investment whereas a married person may have lesser. This is crucial to understand. Because a millionaire today do not have a million dollar 15 years ago to invest to compare. For DIY Investors, your recent fund invested are likely one of your largest or heavier amount in your investment life. Recent market change can skews your returns a lot more personally.

Fund that start right before GFC 2008 and after can be just a year apart but their result can also be totally different. So we need to be very careful when reading materials given to us. How many people will know or remember this ?

A sample of Cory returns each year as below. Annualized whole period about 6.8%.

A peek on Temasek performance, their 10 years and 20 years mark are 6% annualized.

GIC returns are a little complicated as they are oversea focus. A strong SGD will not help or fair. Using USD, is about 5.7% @ 20 years. This beats nominal MSCI index.

Now, how about STI Index, my favorite. Using 1st Jan 2007 (updated) to now. Is only 0.28% annualized (updated). If we are to include dividends say 3.x% to round it off, that's 4%(updated). Dividends play a huge part in returns or damping growth depending which side you are in. 10 years before (1997) is about 5% including dividends..

Seems so far our CPF can still get the money needed. If this funds go much lower, either CPF has to give lesser, Land sales price has to go up, more tax from us or SGD will have to weaken. You choose.



  1. Yes. STI has been flat for last 10 years.

    1. That's right. Many people thought that STI 7% applicable to them need to understand the implication when they invest in STI on that assumption. Tf the next 10 years still similar returns that will be 20 "lost" years. How many 20 years we have in our life span ? :-)