Jan 1, 2019

Cory Diary : 2018 Equity Performance

Year 2018

2018 has been tough for local equity investor. The STI ETF registered -6.48% after dividends. For people who is new to this, STI ETF is traded in SGX like shares in stock market. The last traded price is 3.117. (Stock Quote is ES3). It is often use as a benchmark to measure against investor portfolio performance as the ETF closely follows Straits Times Index which tracks the performance of the top 30 companies listed on the Singapore Exchange.

There are few methods to measure STI ETF Performance. I use XIRR after considering dividends distributed over the year. ( Typically twice annually ). XIRR is a function in Excel to calculate annualized returns. So we can do apple to apple comparison to my Investment performance. On the right table computed is how I obtain STI XIRR -6.48% including dividends.

My XIRR for 2018 Performance is -3.28% which is closely match to -3% portfolio losses. If I am to exclude US stocks, it will be XIRR -2.12%So 2018 is the year where I am in the negative after dividends. My test drive in US Stock is quite bad in timing and the only consolidation is only a few % of my portfolio. So as mentioned in my earlier article, every % counts. The other lesson learned is on SME stocks that are more towards capital gain to size them up correctly smaller as they are more volatile in bad market condition and to realize them. 

What I did well is to contain and manage my losses and therefore outperform STI by 3.2% if I am to include US Stocks or 4.6% for local equity alone. This is especially important to me because over the years my portfolio has grown quite significantly. Every 1% move is quite a delta in $ number today than 5 or 10 years ago. Another thing I did well is work :). I got good bonus and this basically covered all my losses.

Cumulative Performance Comparison

Comparison is more meaningful if we do cumulative to minimize the luck component. This differentiate the men from the boys. However comparison to STI is tricky reason being you cannot decide when you are born therefore cumulative 30 years STI returns can be vastly different from cumulative 10 years STI returns from now. So is very misleading in my opinion if one advocate index investing purely without taking timing into consideration. Since I start actively with sizable portfolio 12 years ago, that will be the benchmark I will use. There are others assumptions made but let's ignore for simplicity.

I check multiple times on STI from 2007 onward. Excluding dividends if you have been doing index investing, is actually -0.2% annualized returns for STI. Which means about 3% returns after dividends.

For myself, 5.4% annualized 12 years compounded. The figure is expected to go on a down trend due to recent years of market weakness similar to STI however I have added disadvantage on aging and need to allocate to lower yield bonds, and much larger allocation of cash injection in later years. I would see the returns going down to 5% to match my portfolio dividend yield if the broad market continues to be flat or negative. Nevertheless is still better than leaving them in the banks.

My New Year Wish is to be able to help my wife manage her portfolio. She has been pretty damn lucky that I won't wish to touch. I have 2 more other wishes for 2019. 

Happy New Year !



  1. Hi, happy new year! Good results for beating the index!

    just some queries, last year you reported 11 years return of 7% annualised return, but this year you reported 5.4% annualised return over 12 years. Is there a mistake in your calculation?

    1. Did a double check. Is right. 2017 is a good year. 2017 annual XIRR is double digit % gains. Another reason is that portfolio size grew about 7% more in 2018. So a negative year has double whammy on XIRR performance. This is not a bad thing in the sense is a good problem to have. The key thing is to keep losses low in absolute as portfolio grow. This is why I also mentioned XIRR will go lower with weak market and growing portfolio.