The SRS Fund Nov 2023 Update

Roller Coaster Yield
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.

The end results was a bout of relief for interest rate sensitive sectors such as REITs and property. Bank stocks were weak in Nov as investors anticipate eagerly for the first rate cuts. REITs investors cheered as there may be finally some light at the end of the tunnel.

My take is that the direction of interest rates may somewhat fall in between. With rates staying put for longer until there is significant drag to the US economy. Overall in a stabilised environment business tends to do better than constant fluctuating interest environment.

The SRS Fund is up again eeking out a 0.75% year to date versus the STI negative 5.48% returns. Absence of any major negative events in Dec it will be rather safe to say that the fund is back to beating the index after a 2 years underperformance.

During Nov the Jumbo group had annouced a stellar full year results with its Singapore operations firing at full cylinders. In line with my thesis of the revenged travel article, Jumbo’s full year revenue jumped 54.7% turning in a net profit of $14.2m. With a strong balance sheet and excellent cashflow generation, I am sure investors will recognise its value over the 12x earnings that it is currently trading.

There were also some positive news over at Venture corp as the management proposed to buyback 10m shares. This gave a temporary boast to the share price while longer term value creation will still depends on getting more sales.

Portfolio Segments

Portfolio allocation is likely to remain the same till end of the year as opportunities to dispose holdings are unlikely to present itself during the lull Decemeber period. Nevertheless, the goal still remains to structure the fund to be an All Weather Fund and the dependence on the finance sector to be reduced over time.

Dividends

Diviend for Q4 remains on track to exceed the previous year with $2162 recieved during the quarter. The dividend includes a 800 share of Keppel Reit which was paid out through the ownership of Keppel Corp. The investment in Keppel seems to be paying off as management starts to return value to shareholders after paying dividends, shares in Seatrium & Keppel Reit and share buybacks.

SRS Fund Value

The SRS Fund value recovered slightly to $359,572.71 during the month as weakness persist in the China economy and banking sector.

Cash Levels

Cash level remains roughly at 4.4% level and should build up over the course of 2024 as more dividends are collected.