Jeffery Lee, CIO of Phillip Capital Management Outlook for 2021. In it he has 3 Salient points: • Bright Outlook Ahead • Opportunities Amidst Crisis • Identifying superior growth To find out more, please read the full article.

Phillip Capital Management (S) Ltd recently published an article titled “1H2020 Review of Phillip Singapore Real Estate Income Fund”. In the article, we shared our insights on the actively managed Phillip Singapore Real Estate Income Fund that invests primarily in S-REITs, based on its performance in 1H2020 and further discussed about how the Fund is adjusting to the changes in the operating environment for S-REITs in light of the Covid-19 situation. To find out more, please read the full article.

Overcoming Volatility with Regular Savings Plans (RSP)

Other than asking what to invest in and how to invest, investors are also often concerned about having sufficient funds to invest and finding the right time to invest.

“As investors, there are times when we are fixated about timing the exact peaks and bottoms of the markets.”

However, timing the market is extremely difficult, especially during such volatile times.  

Time in the Market is Better than Timing the Market

Let us show you why time in the market is important with the example below: Chart 1: Performance of a $10,000 investment in S&P 500 from 3 Jan 2000 to 31 Dec 2019 Source: JP Morgan’s Guide to Retirement 2020 Assuming in year 2000, you had $10,000 to invest. If you stay fully invested in the S&P 500 for 20 years:

• Your portfolio returns would be 6.06%
• Your portfolio value would have increased to more than $32,000 at the end of the 20-year period.

However, if you miss the 10 best days in the S&P 500 during this 20-year period:

• Your portfolio returns would have reduced to 2.44%
• Your portfolio value would have increased to approximately $16,000 only.

While there is exposure to market risks, there are also growth opportunities which you can enjoy. Especially for long-term investors, staying engaged in the market will help you to compound your wealth over time.  

Don’t Let Emotions Affect You

“Then, there are emotions, and emotions are tricky.”

Decisions by emotions are usually impulsive and not based on information gathered. Investment decisions based on emotion – such as fear – is the main reason why many people are buying at market tops and selling at market bottoms instead. Remember, having personal feelings for your investment will not improve your winning probability, but a longer investment horizon will.  

So, what now?

Fret not!

“RSP(s) can help you to overcome these two stumbling blocks -

Time and Emotions.”

Instead of trying to perfectly time the market, you can have time in the market by adopting Dollar Cost Averaging (DCA). Diversify your risk by taking advantage of DCA, buy more unit trusts when prices are low; buy less unit trusts when prices are high. This enables you to smooth out the returns and also reduce the stress in investing as you will not be required to decide whether it’s the right time to invest.   Here’s how it works: Assuming Amy and Bob have $300 each to invest. Amy chooses to invest all $300 in January and receives 30 units at $10/unit. Bob however, chooses to invest $100 monthly into an RSP. Here’s the calculations for Bob’s investment:

	January	February	March
Amount Invested (a)	$100	$100	$100
Price/Unit (b)	$10	$5	$8
Units Received (a÷b)	$100 ÷ $10 = 10	$100 ÷ $5 = 20	$100 ÷ $8 = 12.5

 

Amy’s Investment	Bob’s Investment
Unit Price: $10/unit	Average Unit Price (Total Price ÷ No of transactions) $(10+5+8) ÷ 3 = $7.67/unit
Cost of Investment: $10/unit	Average Cost of Investment (Total Cost ÷ No of Units purchased) $300 ÷ 42.5 = $7.05
Total Units Received: 30	Total Units Received: 42.5

  At the end of three months, Amy would have a total of 30 units at a cost of $10/unit. However, with DCA, the average unit price is $7.67. Therefore, Bob would have received a total of 42.5 units, at an average cost of only $7.05/unit. As prices fluctuate all the time, it is difficult to time the market. Adopting DCA as an investment strategy may potentially result in a lower cost per unit that is lesser than the average price per unit over time.   At PhillipCapital, the RSP begins from as low as $100*, allowing investors to start investing at affordable amounts. What’s more, you get to enjoy 0% Platform Fees, 0% Sales Charge and 0% Switching Fees when you trade via POEMS. Visit the Unit Trust Website to learn more about Unit Trusts, RSP and the choices available for you to choose from. Begin your investment journey with us today!

Phillip Capital Management (S) Ltd has published an article titled “Being Nimble With Innovative Cash Management Solutions”. Owing to the recent market volatility, we understand that a number of investors are sitting on the side-lines, with surplus cash idling in bank savings accounts. This phenomenon calls for a review of how investors should manage their surplus cash. In the article, one of the Top Financial Advisor-cum-Trading Representative in Phillip Securities Pte Ltd speaks about a more efficient parking facility for surplus funds that has benefited many of her clients. To find out more, please read the full article.

Join Joyce Tan, Co-Head of Fixed Income Asia & Singapore, as she updates on the Q1 performance of the United SGD Fund, and discusses the fund positioning and outlook amid COVID-19.   [embed]https://youtu.be/osLRUe7VYS8?list=PLUc9eMJO6adONVGitaO003aOjjoYNJJf5[/embed]

Phillip Capital Management (S) Ltd is pleased to inform you that Phillip Money Market Fund ("PMMF") has hit a significant milestone of reaching SGD $1 billion in asset-under-management ("AUM") during the first quarter of 2020. In the similar period, we have seen how markets went into risk-off mode and investors rushed for safety just as the COVID-19 escalated into a global pandemic. This gives us the indication that more investors are embracing PMMF for its high defensiveness. Their latest article is about the value that PMMF brings, with a past case study involving a government agency parking its excess daily cash flow into the fund. To find out more, please read the full article.

Phillip Capital Management (S) Ltd has recently published an article titled  “Abundance Of Liquidity To Create Opportunities In Tech Space Once Again”. The article seeks to answer some of these questions:

• Why is our Global Opportunities Fund taking on a risk-on view on global markets?
• What region to be overweight on, US or China?
• How does a global fund with a balanced mandate offer investors potential long-term upside while still maintaining a level of stability?

To find out more, please read the full article.

Phillip Capital Management (S) Ltd has recently published an article titled  “Favourable S-REITs Yield Spreads Against 10-year SGS”. The article highlights some of the insights our fund managers gathered:

• As at the start of April, the market seems to have priced in an average 20% cut in DPUs for S-REITs (base case scenario)
• In our worst case scenario (from perspective of April), assuming a 50% cut in future DPUs, S-REITs as a whole would yield about 4.16%
• Compared to the 10-year SGS, yield spreads were 5.63% and 3.14% for base case and worst case respectively
• During GFC, yield spread between S-REITs and 10-year SGS was only 3.5%

To find out more, please read the full article.

Allianz Global Investors Insights Please find Market Insights article from Allianz Global Investors below: Insights April 2020 - How to rethink US allocations during the coronavirus crisis   

Should I Invest In US Funds Amid COVID-19 Pandemic?

Markets have been extremely volatile due to the coronavirus (COVID-19) situation and oil price war. Panic has seeped into the global stock markets and caused a market carnage. It is not just the volatility, but also the velocity of the market crash that caught us by surprise. On 11 March 2020, S&P 500 fell more than 20% from its recent peak and took the shortest amount of time in history, a record of 16 days to go into bear market. The market has since entered an extended period of panic, with S&P 500 recording the worst start to a quarter in history. United States may still be able to turn the tide despite COVID-19. Pent-up demands could drive the economy recovery in the second half of the year. The COVID-19 pandemic has yet to peak, hence we may see more selling pressure before witnessing a US comeback. Recently, investment houses have been racing to cut their economic growth outlook as economic data are expected to reflect the massive negative impact due to COVID-19. While there is still ongoing fear and anxiety, the pandemic shall eventually pass and consumption behaviour will return to some sort of normality just like it did after previous crisis such as 9/11.   Is the Market Correction over? We are closely monitoring signs that possibly suggest the end of market corrections caused by COVID-19. Table 1: Market Bottoming Signals

Key Bottoming Signals	My View
Peak in daily new cases and deaths	Global daily new cases and deaths have not yet reached their peaks.
Policy Response	We may see more policy support as all industries have been affected by the COVID-19 pandemic.
Market does not respond to bad economic data	Economic data has yet to show the full impact of COVID-19 pandemic.

  Key Bottoming Signals

• Peak in daily new cases and deaths

Chart 2: Daily New Cases and Deaths of COVID-19 Source: Worldometer, 1 April 2020   Chart 3: Total Cases and Total Deaths from COVID-19 Source: Bloomberg Data, 1 April 2020 Daily new cases and deaths have not reached their peaks. Furthermore, global confirmed cases and death toll have both shown steepening curve.  

• Policy Support

In term of policy support, governments and central banks are trying to use monetary and fiscal policies to support the economy and let markets to bottom out. The US Federal Reserve has vowed to buy unlimited Treasury bonds and mortgage-backed securities. We may see more policy support as all industries have been affected by the COVID-19 pandemic.  

• Market does not respond to bad economic data

US equity market may face selling pressure upon the release of more negative economic data. But if the stock market does not respond to worsening economic data and rebound instead, then this could be one of the bottoming signals as market may have priced in the impact of negative economic data.   Overall, we are not calling for the market bottom yet as there are still no clear signs of market bottoming based on various indicators. However, it is unlikely that investors could perfectly time the market and buy at the exact market bottom. Thus, we advocate dollar-cost averaging approach in this volatile market. Dollar-cost averaging is a long-term strategy that allows you to make regular investments. For example, you have $1000 to invest, and you invest $100 every month instead of $1000 at one go. This is an attractive strategy as it helps to "smooth” your purchases – lowers the average cost of investment – over time, and reduces the woes of entering the market at a “wrong” time.   With as little as S$100 a month, you can start a Regular Savings Plan on POEMS to reduce the impact of volatility.   Keep Calm and Carry On While we are still expecting bouts of volatility in the US market, we believe fortune favours those who are prepared. Investors should have a list of investment products worthy of long-term investment. While we think the COVID-19 led sell off may not be done despite recent stock market plunge, we believe the market dips provide opportunities for you to get started with trading in the US equity market given the fair valuation. Investors could look to build a long-term portfolio through the dollar cost averaging approach.     Fair Valuation While US equity’s valuation is considered relatively expensive when compared with Asian equity, the valuation premium is justifiable if investors consider the high growth potential in US companies and state of US economy. Chart 4: Forward PE for S&P 500 Source: Bloomberg Data, 1 April 2020   Chart 5: Forward PB for S&P 500 Source: Bloomberg Data, 1 April 2020   The recent market weakness resulted in fair valuations for S&P 500. The S&P 500’s price-to-earnings (PE) ratio and price-to-book (PB) are both trading near their 10-year mean. We are cautiously optimistic in longer term as we believe pent-up demands and resumption of economic activities should induce growth for the US economy in the second half of 2020. However, a V-shaped recovery may be too optimistic as we have not seen the full magnitude of the coronavirus-led economic disruption.   Why should you invest in US mutual funds? Unlike investing into individual stocks that are exposed to single counter and concentration risks, a mutual fund manager could invest into a basket of stocks to benefit from a diversified portfolio. A mutual fund is actively managed by professional fund managers. During market volatility, a fund manager could actively switch in or out security selection to ensure the fund is well positioned to weather market volatility.   US Equity Mutual Funds Investors may consider adding large cap mutual funds into their investment portfolio as large cap companies generally have sustainable profitability and healthier balance sheet to better weather tough times. We also favour mutual funds that focus on sustainable, multi-year growth trends as high quality, growth companies are well positioned for a recovery. Investors should prepare a list of quality US equity funds to position for long term.   How to get started? With a wide variety of US equity funds on POEMS, you can select from more than 80 US equity funds across 17 fund providers based on your investment needs. You will also get to enjoy 0% platform fees, 0% sales charge and 0% switching fees for your Unit Trust investments on POEMS. Visit our website at https://www.poems.com.sg/fund-finder/ to explore your options!   Want to Learn More? Get your insights at our upcoming Unit Trust Semi-Annual Webinar: Navigating the COVID-19 Panic on 30 May, 10 am. Join this informative session to get insights on what investors can do during the current trying market conditions. Click here to register and find out more: https://zoom.us/webinar/register/WN_tXvwY8UZSkms2ZHYiXfmJQ