The SRS Fund Feb 2026

Singapore Budget – A Position of Strength

The Singapore Budget 2026 has set a robust backdrop for local investors. For the third consecutive year, the government is operating from a position of immense “dry powder,” with an overall fiscal surplus of $8.5 billion projected for FY2026.

Strategic Spending Enabled by Surplus

What is most encouraging for the SRS fund is the transition from pandemic-era recovery to future-focused investment. Enabled by a massive $15.1 billion surplus in FY2025, the government has announced a significant 10% hike in total expenditure to $137.3 billion.

Capital Availability: With $1.5 billion added to the Anchor Fund to support local listings, the macro environment is increasingly supportive of the mid-to-large-cap Singapore companies we hold.

AI & Tech Focus: The budget’s heavy emphasis on AI—including the new “National AI Missions”—perfectly validates the SRS fund’s heavy tilt toward the technology and semiconductor sectors.

AEM Holdings: The Multi-Year Upcycle

The SRS Fund investment in AEM Holdings reached a pivotal inflection point this month. While it has been a volatile journey, the thesis we built around HBM4 (High Bandwidth Memory) and customer diversification is now delivering.

Deep Dive: Margin Expansion & Execution

The market has correctly identified AEM’s potential for HBM4 testing, but the real story for 2026 is margin expansion.

• The HBM4 Edge: Traditional testing cannot handle the thermal complexity of next-gen AI chips. AEM’s proprietary thermal control and “Test Cell Solutions 2.0” allow for asynchronous testing, which carries significantly higher margins than standard commoditized testing.
• The New Customer (AMD): Securing a second major customer (widely understood to be AMD) alongside their original customer (Intel) is the single biggest de-risking event in years.
• The Micron Catalyst: Unlike the logic-chip giants, Micron represents AEM’s entry into the high-volume memory testing market. AEM is currently in the late stages of customer validation for its memory test solutions, with initial production shipments slated for late FY2026.
• HBM4 Margin Expansion: Traditional testing cannot handle the thermal complexity of HBM4. AEM’s proprietary thermal control technology allows for higher testing yields. As Micron ramps up its $9.5 billion HBM facility in Singapore, AEM is perfectly positioned as the local “on-shore” testing partner.
• FY2026: The Year of Execution: With revenue guidance set at $460M–$510M, the economies of scale will finally allow AEM to convert a larger slice of revenue into bottom-line profit.

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SRS Fund Performance vs. Benchmark

The SRS Fund reached a new milestone this month, with the total value hitting $672,806.

Performance Comparison

I am pleased to report that the fund is currently outperforming the benchmark Straits Times Index (STI). While the STI has had a historic run—crossing the 5,000-point psychological barrier for the first time in February 2026—the SRS Fund’s concentration in high-growth tech has given us the edge.

Metric	The SRS Fund	STI Index (Benchmark)
YTD Return (Feb 2026)	+10.6%	~+5.8%
Cash Weighting	4.3%	N/A
Top Holding	DBS (21.2%)	DBS (~24.6%)

Why We Are Outperforming

While the STI’s rally has been largely driven by the “Big Three” banks (making up over 50% of the index), our outperformance stems from our Manufacturing segment (30.5%). By holding a larger weight in AEM Holdings and SATS compared to the index, we have captured the extra Alpha that the broader, more bank-heavy STI lacks.

Portfolio Segments

Finance (31.2%): The Resilience of DBS

With the 3-month SORA bottoming near 1.0% in early 2026, the era of easy Net Interest Margin (NIM) expansion for banks is over. However, we remain overweight in DBS (21.2%) for two reasons:

• Fee Income over Interest: DBS is successfully pivotting. Wealth management fees and treasury sales now offset NIM compression. In Q4 2025, wealth AUM hit a record $488 billion, growing 19%.
• Dividend Visibility: Despite “rate headwinds,” DBS has committed to maintaining its $0.15 capital return dividend through 2026 and 2027, providing a yield of ~6%—a massive spread over T-bills.

Manufacturing (30.5%): Our Alpha Engine

This segment, led by AEM Holdings (12.9%), is now our primary driver of capital appreciation. We are seeing a “K-shaped” recovery where tech-heavy manufacturing is far outperforming traditional industrial sectors.

Dividends

Q1 is generally a slow period for dividend collection. With only $410 so far in the first 2 months of the year. Nevertheless, I look forward to another year of near $20k of dividend for the SRS Fund

SRS Fund Value

The SRS Fund has reached a significant milestone, with its total value climbing to $672,806.66 as of February 2026. This performance represents a robust 10.6% YTD return, driven by a strategic pivot toward high-growth manufacturing and resilient financial anchors.

Cash Levels

The SRS Fund currently maintain a lean cash level of 4.3% ($28,738). This “fully loaded” stance allows us to maximize exposure to the ongoing AI and semiconductor upcycle, ensuring our capital is working as hard as possible in a supportive macro environment.

The fund continues to outperform the benchmark STI Index, proving that a concentrated, thematic approach within the SRS framework is a powerful tool for long-term compounding.

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