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.
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Changing My Mind
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Is this a Sucker Rally?
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The SRS Fund Dec 2022 Update
While reviewing on the topic to share the year, all the stars seems to align and invariably point back to this recent memo by Howard Marks.
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The SRS Fund Nov 2022 Update
Does low interest rates cause inflation or inflation brings about higher interest rates?
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