The SRS Fund Sep 2024 Update

The Chinese Rebound

In last month’s review, I pointed out that the STI benchmark will be hard to beat going forward and any outperformance of the SRS fund will likely be contributed by our China-related holdings. 

At that point of writing, there were simply no signs to suggest we would be witnessing one of the strongest equity market rebounds in history. As of this writing, Chinese equities have had a strong run-up since their government announced a coordinated stimulus aiming to put a floor to China’s property market decline.

The month of September further saw more activities including new investments into AEM Holdings and Food Empire.  These investments further cement the fund’s resilience as an all-weather fund capable of index-beating performance over the long term.  Partial divestment of SGX also enables the SRS fund to be recycled capital into higher-yielding investments

With 20 holdings already in the SRS fund, I will likely look inward towards these companies when investing additional capital. Companies in the portfolio are generally high quality with high return on equity and low debt level.

The SRS Fund has gained 14.8% year to date versus the STI benchmark of 11.5% year to date. With this lead in place, it is likely the SRS Fund will outperform the index for the 2nd straight year.

Portfolio Segments

The SRS Fund segment is becoming more diversified. While still heavy in finance due to the bank holding, services and manufacturing segments, both grew to be significant parts of the portfolio make-up.

Dividends

Q3 dividend of $6,452.09 was collected 22% more than the Q3 period in the prior year. The dividend is on course to make a record high by year-end.

SRS Fund Value

The SRS Fund value hits a consecutive record high of $437,293.43. The SRS Fund’s return is boosted by surging China-related equity. All 3 direct China exposures of HST, YZJ Financials and Yanlord contributed significantly to this outperformance.

Cash Levels

Cash level at 5% during the month end was quickly deployed in Oct as more opportunities emerged within the portfolio. As of this writing, the remaining cash balance is only $4000 going into Q4.

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