The SRS Fund Feb 2024 Update

The Singapore Budget

It is the time of the year when the Singapore government plans and proposes the nation’s budget for the next fiscal year. Since Singapore is a very small nation, the impact of government spending will be rather substantial and the direction that expenditure will give a hint of where the money will flow to the bottom lines of companies.

Singapore will run a small budget deficit in the forthcoming year. However, make no mistake that it will be the largest expenditure ever proposed. Total expenditure of $111.7b will be a record spend even before top-ups and special transfers to the various funds the government has set up for future spending.

This expenditure will be supported by record tax revenue due to tax rate increases and a projected strong economy in 2024. Going into March, signals of economic vibrancy are already abound judging from record visitorship during the Chinese New Year holidays period as well as an economic boost from 6 nights of Taylor Swift concerts.

The SRS Fund ended Feb down 3.86% as the earnings season comes to a close. There were several hits and misses but in general, the portfolio of companies did very well in 2023.

Overall the SRS Fund continues to underperform the STI Index by 1.6% however we can see the gap close slightly since the 2% difference in Jan. While I have no idea how the SRS Fund will do over the next weeks, months or year, I do expect it to outperform the index over the long term. Average year-on-year returns are expected to continue at over 7% and had been the case since inception 15 years ago.

A new addition was made to the SRS Fund in Feb as I invested in Haw Par healthcare business and also UOB indirectly via their investment portfolio. A post written on the investment can be reached at the following link. https://mynest.sg/2024/03/01/haw-par-the-well-know-value-trap/

Portfolio Segments

Segments in the SRS Fund remain stable with the finance sector still making the bulk of it. The services segment expanded due to investment into Har Paw while the rest of the segments remained stable.

Dividends

Dividends begin to trickle in with $1,173 collected in Feb. With many up-and-coming AGMs on the way, the bulk of the dividend collection will only be received in Q2. Hence Q1 dividend will likely be very muted.

SRS Fund Value

The SRS Fund remained flat month on month at $366,138.60 with substantial volatility within the portfolio. This may also suggest the SRS Fund is getting the resilience it needs as it transforms into an all-weather portfolio.

Cash Levels

The cash level remains at a record low level as the investment into Haw Par essentially used up most of the cash available in the fund till more dividends are collected.

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