*Official* Shiny Things club - Part 2

[matcha18]

Can you tell me which day in the last 52weeks was the price of IWDA 38.36?

From here

https://finance.yahoo.com/quote/IWDA.L/

 

[deathman91]

What's the amount to hit before using IB will be cheaper in terms of fees compared to SCB ?

SCB - 0.25%, min USD10
IB - At least USD10/mth

I would assume at least 4k USD / mth before IB starts to get cheaper? But why is it that ST recommended an earlier user who is investing 3k every 3 months to go with IB?

 

[limster]

From here

https://finance.yahoo.com/quote/IWDA.L/

i guess this is why they say you should never believe anything you read on the internet without verifying.

doesn't the 1-year graph in the link you provide look wrong to you?

 

[swordsly]

From here

https://finance.yahoo.com/quote/IWDA.L/

Just google IWDA and see the graph generated by Google finance.

 

[matcha18]

Just google IWDA and see the graph generated by Google finance.

Thanks for the lead. In fact, I got this Yahoo info from my iphone “Stocks” app. Thought I can trust Yahoo Finance!

 

[Shiny Things]

Which would you recommend?

- Sell A35 and use the proceeds to buy MBH
- Keep existing A35 and only buy MBH from here on
- Split the bonds component equally between MBH and A35

Option 2. A35 is a perfectly fine investment, there’s no pressing need to switch out of it, but for future investments you might as well go for MBH. (If you have a big lump of A35, and you seriously care about the extra yield, this may change; but for the vast majority of us, no, it doesn’t matter.)

Hi Shiny, just wanted to check if you have any experience of is there any with holding tax on Muni Bonds ETF (IIM) and 20 years treasury bonds ETF (TLT) and if it is possible for a singaporean to purchase the USA treaury bonds directly instead of using an ETF.

1. Muni bonds have no tax; the tradeoff is that the yields are (generally) lower than the headline yields on other bonds.
2. TLT is a special case; BBCW has looked at this, and it doesn’t look like they report in a way that makes them exempt from withholding tax. I don’t think it’s appropriate for non-US investors.
3. You can, but maintaining your own portfolio instead of just buying an ETF is kind of a pain?

I guess my questions are: why Treasuries in particular, why USD in particular, and why the long end in particular? Unless you have some particular special case for wanting to own those particular parts of the bond market, there’s no good reason not to just put it in LQDA (listed in London); higher yield, no withholding headaches, and a more widely diversified pool of issuers.

The missus and I are actually using SSB to put aside our money (a grand a month) for the next 3 - 4 years to save up for our own place. We're only a few months into it. We got it because of the guaranteed capital when we redeem it and a nicer yield, rather than keeping it in our joint bank acct.

Would you recommend us just keeping to pumping money into SSB or get MBH instead?

Mmm - yeah, in your case, SSBs are totally fine. They might yield a little less than you could get from MBH, but since you’ll need this money pretty soon, SSBs are a great capital-guaranteed place to keep it.

Hi Shiny,
The MBH seems pretty illiquid...today there is only 1 trade and the trade value is only SGD19k.
The A35 is volume is also very low, only 4 trades, SGD35K.
Is this a concern? thanks

Liquidity is not about how much it does trade, it’s about how much you can trade. If there’s a market-maker in MBH who’s standing ready to buy and sell $10k at a time, that’s great for average investors; and for larger investors, they can buy and redeem directly with the fund manager if they want to do $50k or more.

Hi Shiny and all,

How would you compare Vanguard's Index funds vs ETFs (e.g. VWRD/EIMI) ? which is better to invest?

ETFs. Vanguard’s index funds aren’t available directly to the average Singapore investor as far as I know.

Hello, I cant justify myself that an accumulating etf is better than a distributing etf.

Think about it this way. If you buy a distributing ETF, what are you going to do with the dividends? You’re not going to leave them sitting in the bank for thirty years; you’re going to reinvest them.

An accumulating ETF just reinvests those dividends for you.

Lmfao. Yeah figured, only banks can do LIBOR (or any. BOR) because they’re.. well.. banks.

Lol yeah basically; but sometimes there can be an advantage to not being a bank!

Short term treasuries are lookig attractive but apparently in IBKR bond scanner i cant tell normal tbills apart from the zero coupon ones.

Um. Bills are always zero coupon…?

Hi Shiny Things,

IWDA is currently at its highest 54.39 and its lowest in the last 52w was 38.36, which seems rather volatile. Why is this counter still highly recommended at this price given its volatility?

Because your investing horizon is not twelve months, or even five years. You’re investing for twenty or thirty years.

And because IWDA is a great way to buy a nice, diversified portfolio of global stocks without paying huge fees to a fund manager who needs to keep up his Maserati habit.

What was its trend in the past?
Can we still buy at this price?
Are there any US ETFs that we could consider?
Thanks.

1. Generally up, though sometimes down, just like any other stock or ETF.
2. Yes. It might go down a bit, it might go up, but generally over the long term stocks tend to go up.
3. No. You don’t want to buy US-listed ETFs, as a rule, because you’ll pay higher tax on dividends than you’d pay elsewhere.

What's the amount to hit before using IB will be cheaper in terms of fees compared to SCB ?

SCB - 0.25%, min USD10
IB - At least USD10/mth

I would assume at least 4k USD / mth before IB starts to get cheaper? But why is it that ST recommended an earlier user who is investing 3k every 3 months to go with IB?

Because of the FX spreads. Stanchart charges a much wider spread on USDSGD currency conversion (about 0.5% if memory serves) than IBKR (basically zero).

 

[Lasogette]

1. Muni bonds have no tax; the tradeoff is that the yields are (generally) lower than the headline yields on other bonds.
2. TLT is a special case; BBCW has looked at this, and it doesn’t look like they report in a way that makes them exempt from withholding tax. I don’t think it’s appropriate for non-US investors.
3. You can, but maintaining your own portfolio instead of just buying an ETF is kind of a pain?

I guess my questions are: why Treasuries in particular, why USD in particular, and why the long end in particular? Unless you have some particular special case for wanting to own those particular parts of the bond market, there’s no good reason not to just put it in LQDA (listed in London); higher yield, no withholding headaches, and a more widely diversified pool of issuers.

Hi Shiny,
1. Why treasuries in particular? - This interest rate bet is part of my 10% portfolio where I am free to do what I want with the cash, Its like an insurance portfolio where I try to get some hedging against the market against the grain. So now when interest rates are set to rise, the current best bet for me is to buy what is unloved at the moment. kind of like the soothing the itchy fingers portfolio so I will at least limit the losses to 10% instead of my main portfolio.

2. Why the long end in particular ? -I might be wrong on this but the long end might have more upside if the rates goes against the market consensus, just what I thought

3. Why USD in particular ? - I tried doing a PH1S in sgx but it is too illiquid and I would need to pay too much spread to get in.

 

[zissou]

Option 2. A35 is a perfectly fine investment, there’s no pressing need to switch out of it, but for future investments you might as well go for MBH. (If you have a big lump of A35, and you seriously care about the extra yield, this may change; but for the vast majority of us, no, it doesn’t matter.)

Thank you, ST.

 

[kent07]

Which would you recommend?

- Sell A35 and use the proceeds to buy MBH
- Keep existing A35 and only buy MBH from here on
- Split the bonds component equally between MBH and A35

my current portfolio consists of ES3, VWRL and A35. moving forward, i'm leaning towards MBH for my future bond component.

similarly, IWDA seems a better options for the equities due to the reinvestment of the dividends. as such, will it be better to accumulate IWDA for my future equities or just stick to VWRL. might make things extremely complicated with 2 bond funds and 2 equities ETF when it comes to rebalancing.

ST, care to shed some light?

 

[ravenintiate]

Hi all, I’ve open my ibkr acc some time back left a sum of money inside but have not buy anything . They like nv minus any comms leh isit they will minus only when I’m holding some stocks

 

[SpeedingBullet]

Lol yeah basically; but sometimes there can be an advantage to not being a bank!

Um. Bills are always zero coupon?

Reminds me of the days (3-4 yrs ago) where funds were buying European banks’ loan books at steep discounts en masse. I think they had to shed their books to comply with Basel III. One DD fund acquired like 1.2b worth of Spanish real estate. Large swaths of land lol.

Ok I hate this, i always use T bills, notes, bonds interchangeably I now keep mixing things up. What i meant was, it was tough telling them apart in the bond scanner (am i using it wrong).

Do you recommend I just stuff my cash into LQDA and stop trying to be smart?

 

[wira]

Hi
Not sure if this has been answered before but have a question on the logic to buy equities and bonds to protect against downturn.

Understand logic is bonds and equities should move in opposite directions. But in a rising interest rates scenario won’t both bonds and equities fall ..?

what is best investment to get if we expect interest rates to continue to rise ?

 

[Wishdom]

Hi
Not sure if this has been answered before but have a question on the logic to buy equities and bonds to protect against downturn.

Understand logic is bonds and equities should move in opposite directions. But in a rising interest rates scenario won’t both bonds and equities fall ..?

what is best investment to get if we expect interest rates to continue to rise ?

I don't believe in having bonds unless you are in the withdrawal phase.

Full Equities portfolio will most certainly perform better for a 20 years investment horizon.

Also, your questions seem very off tangent to the philosophy of this thread. If you really want a textbook answer: bank Equities are the best investment for a rising interest rate environment.

Sent from Ilovennp using GAGT

 

[churnmaster]

Hi guys ... I'm new to this forum.

Regarding MBH, are they going to pay dividends like A35 or should we just expect higher NAV and accordingly higher market price over time?

 

[crystalnox]

Hi guys ... I'm new to this forum.

Regarding MBH, are they going to pay dividends like A35 or should we just expect higher NAV and accordingly higher market price over time?

Yup they will be paying out dividends.

 

[viventa]

Hi
But in a rising interest rates scenario won’t both bonds and equities fall ..?

what is best investment to get if we expect interest rates to continue to rise ?

Not all equity valuations suffer when interest rates rise. Banks and insurance companies will potentially benefit.

 

[revhappy]

Hi guys ... I'm new to this forum.

Regarding MBH, are they going to pay dividends like A35 or should we just expect higher NAV and accordingly higher market price over time?

Hi Churnmaster, welcome to the forum!
(To the rest of the guys, I know Churnmaster from the Fundsupermart forum )

 

[toletmirror]

Hi all~ have been lurking this thread since my uni days, leeched lots of awesome info from you guys hehe.

Just graduated and starting to figure out how to manage my money.

Planning to BTO next year's Nov launch. Just a quick question:
> I'm very very certain that it's safe to put my (our) BTO savings into SSB just to earn that small bit, both for the downpayment as well as the future renovations.
We've decided to put in all our BTO savings into SSB every year or so, and that's including the amount we're setting aside for when the flat is completed and we need to pay for renovations (~4/5 year timeline). That's a sound plan, right?

I'd just like reassurance from anyone who's familiar with such stuff about our plan really.

 

[revhappy]

Hi
Not sure if this has been answered before but have a question on the logic to buy equities and bonds to protect against downturn.

Understand logic is bonds and equities should move in opposite directions. But in a rising interest rates scenario won’t both bonds and equities fall ..?

what is best investment to get if we expect interest rates to continue to rise ?

Found this chart, it shows in a rising rate environment, bonds fall, equities rise.

 

[Shiny Things]

Hi Shiny,
1. Why treasuries in particular? - This interest rate bet is part of my 10% portfolio where I am free to do what I want with the cash, Its like an insurance portfolio where I try to get some hedging against the market against the grain. So now when interest rates are set to rise, the current best bet for me is to buy what is unloved at the moment. kind of like the soothing the itchy fingers portfolio so I will at least limit the losses to 10% instead of my main portfolio.

2. Why the long end in particular ? -I might be wrong on this but the long end might have more upside if the rates goes against the market consensus, just what I thought

3. Why USD in particular ? - I tried doing a PH1S in sgx but it is too illiquid and I would need to pay too much spread to get in.

Cool cool - I like that you know what you're doing and you're trying to put an explicit market view in place.

OK, couple of options for you, and BBCW might want to chime in here if I've missed any extremely obvious tax implications:

1. Buy US treasury-bond futures, instead of buying the ETFs. You could buy the 10s or even the 30-year futures, not worry about dividend tax (because everything comes in as capital gains), and just roll the futures every few months.
2. If you'd rather not do futures, look at DTLA LN - it's the UK-listed (and thus no-withholding-tax-worries) version of TLT. I'm personally comfortable taking investment-grade credit risk at the moment, so I'd be inclined to look at VCLT US - Vanguard's long-term corporate bond ETF (again, though, haven't checked the tax treatment on this one.
3. If you really want to yolo it up, you can buy 30-year STRIPS. These are Treasury bonds with all the interest payments stripped off, so they become textbook zero-coupon bonds. It's literally just "you pay x today, you get y >>> x in 30 years' time". These have maximum exposure to interest rates (because bond math), maximum losses if the Fed keeps hiking... also because there's no coupon payments there's no WHT worries.

VCLT US would be my pick, assuming there's no unfavourable WHT treatment, just because I'm comfortable taking investment-grade corporate risk but not comfortable yoloing it up in 30-year zeroes. Your call, though.

Update: I had a look at this for my own curiosity. The longest STRIPS with a price that I can see are the 15-May-2048s, offered at about $37.125 for $100 face (you pay $37-ish now, you get $100 in 29-and-a-half years' time). That's a yield of about 3.38%, and a duration of (obviously) 29.5—so a one-percentage-point move in long-end yields gives you a 29.5% move in the price of the bond. You feeling lucky?

my current portfolio consists of ES3, VWRL and A35. moving forward, i'm leaning towards MBH for my future bond component.

similarly, IWDA seems a better options for the equities due to the reinvestment of the dividends. as such, will it be better to accumulate IWDA for my future equities or just stick to VWRL. might make things extremely complicated with 2 bond funds and 2 equities ETF when it comes to rebalancing.

ST, care to shed some light?

1) I like the idea of moving your future contributions to MBH instead of A35.
2) On the other hand, if you're already buying VWRL, just stick to that, because it's basically the same as IWDA.
3) When you rebalance, just treat A35 + MBH as one big lump. If you need to buy extra, just buy MBH; if you need to sell some, just sell the A35.

Ok I hate this, i always use T bills, notes, bonds interchangeably I now keep mixing things up. What i meant was, it was tough telling them apart in the bond scanner (am i using it wrong).

Do you recommend I just stuff my cash into LQDA and stop trying to be smart?

1) Oh derp, yeah, no worries, I do that as well. Real bond guys would be horrified.

2) Mmmm depends if this is your long-term position or your fun-money position. Whatever's easiest, really.

Understand logic is bonds and equities should move in opposite directions. But in a rising interest rates scenario won’t both bonds and equities fall ..?

what is best investment to get if we expect interest rates to continue to rise ?

So it's not that they'll move in opposite directions, it's just that they won't be 100% correlated. Anything less than 100% positive correlation gives you a diversification benefit—it makes your portfolio less volatile, which means you're less likely to panic and spew it all out at the lows.

And no, in a rising interest rates scenario, some things will generally go up. Short-end bond funds, for example, have performed pretty well through this whole hiking cycle, because they regularly have bonds maturing and they can reinvest the cash in higher-yielding bonds.

And the thing to remember is that the market is already pricing in "rates continuing to rise"—assuming you're talking about the US market, it's already pricing in three hikes over the next twelve months or so. If you buy an "US interest rates are going to rise" investment, you're betting that there's going to be more than three hikes by the end of 2019.

Hi guys ... I'm new to this forum.

Regarding MBH, are they going to pay dividends like A35 or should we just expect higher NAV and accordingly higher market price over time?

They pay dividends. Welcome aboard!

Just graduated and starting to figure out how to manage my money.

Planning to BTO next year's Nov launch. Just a quick question:
> I'm very very certain that it's safe to put my (our) BTO savings into SSB just to earn that small bit, both for the downpayment as well as the future renovations.
We've decided to put in all our BTO savings into SSB every year or so, and that's including the amount we're setting aside for when the flat is completed and we need to pay for renovations (~4/5 year timeline). That's a sound plan, right?

I'd just like reassurance from anyone who's familiar with such stuff about our plan really.

Yep, that's a good plan. If that's cash you're going to need in three years or less, it should be in a high-interest bank account or in SSBs, not in stocks.