Q3 2020 Portfolio Review

We’ve entered the final quarter of 2020 – and congratulations – we are all in the final stretch in a year which changed history forever.

With a pandemic still raging and uneven recovery efforts across the world, coupled with the upcoming US presidential elections drawing closer, we can expect not only uncertainty to remain but also elevated volatility in financial markets.

The quarter saw financial markets rebounded from their lows, and they have not seen a significant correction yet. The S&P 500 has made new highs despite the pandemic, buoyed by loose monetary policies and helicopter money in the US.

I know many people are still expecting a huge correction to come, I personally don’t think we will see the lows in March again, but the election results might change that.

Portfolio adjustments

I’ve removed the overweight on my tech positions and sold down these positions during the historic run-up, locking in close to 30%-40% gains on them.

I believe that technology valuations need to come down before being attractive again, so I’d be looking to re-enter when there’s a correction. If there isn’t, I’ll be holding them in their market weight anyway.

Long-term, they are still very attractive with strong revenue-generating capabilities. But paying an expensive valuation premium especially in what’s seemingly a crowded trade is not something I’d prefer at this point.

While selling down tech, I’ve added positions into my globally diversified ETF (VWRA). I do believe that there will be an ongoing rotation from growth to value as the coronavirus impact subsides. While I am unsure about the duration and timing of this rotation, I’ve decided to stay market neutral without the heavy tilt towards growth stocks.

These subtle quarterly tilts, and periodic put options selling, have given my portfolio some slight outperformance (~5%) against simply holding an S&P 500, VT, or 80/20 portfolio.

General portfolio performance (1Y)

Roboadvisory portfolio

I’ve leveraged Endowus’ new Fund Smart which allows customized portfolio options to build your own portfolio with funds, in addition to my normal advised portfolio and cash smart portfolio with them.

I started with a 70/30 Asia-tilted portfolio with an initial $5K investment – will let you guys know how this portfolio goes in a subsequent update.

I also started creating multiple goals for savings and housing since their funds are denominated in SGD, which makes it really useful for a Singaporean investor without the FX losses.

These are mainly low-risk and low-volatility funds since I might require their liquidity in the near future.

I really like them because of their SGD exposure, which keeps my portfolio isolated from the heavy FX impact on the rest of my portfolios (IBKR, crypto) which are largely denominated in USD.

Learning from the lessons

What investing in the financial markets taught me is that time in the market beats timing the market.

Since 2018, there were so many reasons to stay out of the market or completely exit your positions and wait on the sides for a better entry.

For example, in late 2018, just one month after I created my IBKR account, the US-China trade war started and led to an immediate 18% correction. Then it rebounded higher until the start of this year, where it came crashing worse than before during the coronavirus pandemic, before recovering to new highs once again.

I think these are good investing lessons, and we need to go through them to feel comfortable investing with our money. Short term pains are necessary for long-term gains.

Stay safe 😉

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    1. 40% Dimensional World Equity Fund
      15% Dimensional Global Core Fixed Income Fd
      15% PIMCO GIS Global Bond Fund
      10% First State Dividend Advantage
      10% First State Regional China
      5% PineBridge Asia ex Japan Small Cap Eq
      5% Franklin US Opportunities Fund

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