Persistent high inflation of everything from food, transport, housing and utilities are essentially diluting value from all walks of life. Many have blame the war, supply chain issues and pandemic for this problem. However, I believe the truth lies with the record monetary stimulus the world had ever seen.
Warren Buffett recently reiterated that in the environment of high inflation, the best thing one can do is to be exceptionally good at something. The best doctor, lawyer or barber will still be able to charge prices above inflationary rate due to the scarcity of such skills. The same can also be said in investing for companies that are the best in their fields.
As a large portion of the SRS funds consist of REITs and so the question to ask is whether REITs will continue to do well in a high inflationary environment. The most important factor lies in the skill the REIT manager.
The exceptional REIT manager will be able to first increase revenue through careful planning of tenants mix that position rent to scale much faster than inflation. Second, the manager will also carefully devise capital management strategy to cater for all likely interest rate scenarios.
In a difficult environment the skill of the REIT manager will shine through resulting in better DPU growth compare to their peers. This skill similar to a good doctor will be worth paying a premium for exceptionally well managed REIT.
SRS Fund Portfolio
The SRS fund portfolio remains stable despite market volatility especially in foreign markets. The fund added additional units in Mapletree Com Trust as well as HS Tech ETF during the month. Q2 dividend started to trickle in starting with $540 from DBS. The bulk of dividend will be receive in May and June which should easily exceed the amount received in Q1.
LATEST POSTS
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The SRS Fund Dec 2023 Update
By the end of Nov, the SRS Funds barely broke even as the struggle was real throughout the year with much volatility. Much has been rumoured about a rally Santa brings around the year’s end which I have never witnessed in my short investment lifetime really did come true.
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The SRS Fund Nov 2023 Update
Despite the Federal Reserve hawish stance on interest rate the month of Novemeber brings about a roller coaster ride on yield. First US 10 year bond yield touch 5% then very quickly reversed plunging quickly as data suggest a winning war against inflation.
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The SRS Fund Oct 2023 Update
If there is one particular month to deploy cash this would be the month. The SRS Fund was not spared as the traditional blood-letting month lived up to its name bringing the funds back into slide negative territory for the year.
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The Normalisation of the Yield Curve
Historically inversion of the yield curve had forewarned a recession in the making. After 2 decades of low-interest rates, runaway inflation post-Covid had finally pushed the federal reserves to increase the short-term rates at an unprecedented pace, now at over 5.5%.
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The SRS Fund Sep 2023 Update
September was a rather non-eventful month in the stock market. However, I have continued to optimise the SRS Fund in its transition from a finance and REIT-heavy fund to an all-weather fund with less volatility.
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Why is it worth topping up to SRS
Two sure things one cannot avoid in life, Death & Taxes. While avoiding both remains futile, we can try to live a longer life and pay less taxes. The SRS now allows for contributions of up to $15,300 for annual tax relief. However, 50% of SRS withdrawal is also taxed at the then prevailing tax…
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