The SRS Fund Dec 2022 Update

Sea Change

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.

https://www.oaktreecapital.com/docs/default-source/memos/sea-change.pdf?sfvrsn=a69a4066_10

His memo spells out exactly what I would like to share with fellow investors and would be a disservice to both readers and Howard if I have rewritten something that is a reminiscence his work. 

As such I present his full true form writing here and hope investors get some takeaway from his memo.

To sum things up an extract his original quote below give his perspective of how the sea has changed.

We’ve gone from the low-return world of 2009-21 to a full-return world, and it may become more so in the near term.  Investors can now potentially get solid returns from credit instruments meaning they no longer have to rely as heavily on riskier investments to achieve their overall return targets.  

Lenders and bargain hunters face much better prospects in this changed environment than they did in 2009-21.  And importantly, if you grant that the environment is and may continue to be very different from what it was over the last 13 years – and most of the last 40 years –  it should follow that the investment strategies that worked best over those periods may not be the ones that outperform in the years ahead.

That’s the sea change I’m talking about.

Howard Marks

The SRS Fund Review Dec 2022

The SRS Fund manage to eke out a slight positive for the year of 2022. To put things in perspective it under performs its benchmark for the 1st time in 5 years as the REIT sector is under heavy repricing following the sudden spike in interest rate in the 2nd half.

Nevertheless the fund manage to receive record dividend income of $14,236.33 which is the highest since inception. For the month of Dec 2022, 5,000 shares of CICT was sold for rebalancing purpose as I took the opportunity to scale down REIT exposure while the investment still in the green.

Going into 2023 the SRS Fund looks set to perform as high interest rate is expected to boost banks earnings as well as REITs benefiting from the reopening of the Chinese economy from Covid.