Common Investment Mistakes – and how to avoid them: Kenny Loh Live with The Financial Coconut

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In December 2021 I was invited to an interview with The Financial Coconut, where I discussed various topics such as How to avoid Common Investment Mistakes, How I personally choose stocks to invest and How to allocate your investment portfolio depending on the stage of life you are in. 

A summary of content is below, timestamps provided.

 

3 Stages of Losing Money: Common Investment Mistakes that I made (1:10)

  1. Ignorance: Simply listening to word of mouth in what to invest. Investing in something despite not knowing anything about the stock itself. 
  2. Not enough experience: Investing without the required experience in the market or sector (2:16)
  3. Putting all your eggs into one basket: A very common mistake. One of the companies that I invested in was discovered to have commited fraud after an audit, resulting in the suspension of the stock. (4:16) Diversifying your portfolio is very important.

Why Diversification is so important (and why I do so for my clients) (7:53)

Behavioural Coaching, focusing on your primary objective when you invest (8:44)

What makes a Diversified Portfolio? (10:04)

Don’t chase stocks that are going up. Stocks are usually cyclical. (9:43)

How and why do different asset classes rotate?  (12:32)

Smart Money and 2 main groups of retail investors: (15:00)

  1. Momentum investors (chasers)
  2. Value investors: Those that look at financial ratios and pick the right stocks

Differentiating “noise” and business facts (16:35)

  • Is a business is not doing well because of poor financial ratios;
  • or because of “noise”? (One time events like the pandemic)

How I personally choose stocks to invest, how I enter the market and how much do I choose to allocate (16:35)

How do I diversify my Portfolio, at my stage of life? (21:10)

  • Unit Trusts are a good way to diversify your portfolio with a small amount of funds.
  • Fresh grads: Build a more aggressive portfolio to maximise growth over the long-term. Better to use a Monthly Saving Plan for Dollar-Cost Averaging (DCA) (21:31)
  • Late 20s-30s, preparing for marriage, BTO etc: A little more defensive portfolio, while ensuring your investments are mainly liquid (in case you need to pay for mortgage, etc). A mix-and-match of asset classes like REITs, Bonds, Equities etc. (24:13)
  • 40s-50s: Midlife crisis may mean losing your job is a possibility. A more defensive portfolio, more dividend-based stocks (e.g. REITs). To be able to rely on dividends in case you lose your job. A larger focus on growth stocks may be desired to further grow your wealth as you head into retirement. (25:49)
  • Close to Retiring/Retirees: Focus on building a passive income portfolio. The main focus at this stage is to protect your wealth.  (29:56)

Confessions of a Full-Time Trader: Why it (probably) isn’t for you (28:27)

Different Ways of Diversifying your Portfolio (34:29)

  • Asset Classes (Commodities, Bonds, REITs, Equities, Alternative Investments, Cryptocurrencies etc.)
  • Geographical (Different Countries)
  • Sectors (Different Sectors in each Asset Classes, e.g. Technological Stocks, Commodity Stocks etc)

An overview on S-REITs in 2022 (38:59)

Kenny Loh is a Senior Financial Advisory Manager and REITs Specialist of Singapore’s top Independent Financial Advisor. He helps clients construct diversified portfolios consisting of different asset classes from REITs, Equities, Bonds, ETFs, Unit Trusts, Private Equity, Alternative Investments, Digital Assets and Fixed Maturity Funds to achieve an optimal risk adjusted return. Kenny is also a CERTIFIED FINANCIAL PLANNER, SGX Academy REIT Trainer, Certified IBF Trainer of Associate REIT Investment Advisor (ARIA) and also invited speaker of REITs Symposium and Invest Fair.  You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement
 
You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement

Continue ReadingCommon Investment Mistakes – and how to avoid them: Kenny Loh Live with The Financial Coconut

Money & Me: Optimism for S-REIT’s given earnings signals and mapping the possibilities for shareholders in the Mapletree merger

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21 February 2022

Money and Me: Optimism for S-REIT’s given earnings signals and mapping the possibilities for shareholders in the Mapletree merger

A conversation between Michelle Martin and Kenny Loh, REIT Specialist and Independent Financial Advisor that takes a look at the S-REITs earnings season — big and not-so-big winners — and what MCT shareholders can expect from the Mapletree merger to MNACT.

Timestamps

0:00 Intro

1:23 S-REITs Earnings Season: more than 50% of reported REITs reported an increase in DPU and NAV

2:11 The Impact of Interest Rate Hikes on S-REITs: Sell-off reaction is overblown, S-REITs are currently rebounding strongly

3:50 With Singapore reopening borders, will Hospitality and Retail Sectors deliver positive results?

5:16 Outlook on Industrial and Logistics REITs, restructuring to New Economy REITs

5:56 MCT and MNACT Merger: Are the terms fair to MCT and MNACT unitholders? Why I think the deal is beneficial to both MCT and MNACT unitholders alike.

8:55 Unitholders options regarding the MCT and MNACT Merger

MCT and MNACT Merger

With a scheme consideration of $1.1949 per MNACT unit, and the current NAV/unit of $1.225, this would give a P/NAV offering of 0.975, which is close to the high in July 2019. Charts can be found on the StocksCafe REIT Screener.

MNACT Price/NAV Chart, past 5 years.
 
MNACT NAV/Unit Chart, past 5 years. NAV has been on a downtrend since Q1 2019 at $1.44, most recent NAV/Unit (Q4 2021) is $1.225.
   

REIT Course

Conducted by SGX Academy, I have recently launched a REIT course “Building a Diversified REIT Portfolio” happening on the 5th and 12 March 2022. 

Course Syllabus:

  • Introduction to REITs (what is a REIT, its business model, REITs vs Physical Properties etc.)
  • The REIT Market and Macro Environment
  • REIT Sectors and Geographical Distributions of properties
  • Terminology and the various Financial and Fundamental Ratios of REITs
  • Impact of COVID-19 on S-REITs (new!)
  • SGX New Initiatives (ESG, Transparency Index)
  • Where to obtain REIT-related Information
  • How to select REITs for your Investment Portfolio
  • Technical Analysis techniques to time your entry (and exit) in/out of the market
  • Tools and Techniques to increase your returns on REITs
  • How to build a Diversified REIT Portfolio
  • Hands-on Case Studies

Read more by clicking on the links below. Limited Seats! Registration Closes 28th February 2022.

 
Course Prospectus (PDF)
Register Here (SGX Academy Page)
 

Listen to his previous market outlook interviews here:

2021

2020

Kenny Loh is a Senior Financial Advisory Manager and REITs Specialist of Singapore’s top Independent Financial Advisor. He helps clients construct diversified portfolios consisting of different asset classes from REITs, Equities, Bonds, ETFs, Unit Trusts, Private Equity, Alternative Investments, Digital Assets and Fixed Maturity Funds to achieve an optimal risk adjusted return. Kenny is also a CERTIFIED FINANCIAL PLANNER, SGX Academy REIT Trainer, Certified IBF Trainer of Associate REIT Investment Advisor (ARIA) and also invited speaker of REITs Symposium and Invest Fair.  You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement
 
You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement
Continue ReadingMoney & Me: Optimism for S-REIT’s given earnings signals and mapping the possibilities for shareholders in the Mapletree merger

Manulife US REIT: Missing Expectations, but Promising Future if…

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The earning season is well underway with 13 REITs yet to report Q4 2021 results. Of the 26 REITs that have reported results (as of 13th Feb 2022) a majority (15) have reported a positive year-on-year change in NAV/Unit. 3 REITs reported no change in NAV/Unit, while 8 REITs have reported a negative year-on-year change in NAV/Unit. The chart below shows the y-o-y change to NAV/Unit.

 

MUST’s 2H FY2021 Results

 

 

2 REITs standout in this table. First REIT (SGX:AW9U) with a -26.61% in NAV/Unit and Manulife US REIT (SGX:BTOU) with a -8.22% in NAV/Unit. First REIT’s NAV drop can be attributed to the issuance of 791,062,223 rights units on 24 February 2021, as well as the restructuring of the REIT. The graphs below show the NAV/Unit, Gearing Ratio and Distribution Trends since MUST’s inception.

 

A Summary of Manulife US REIT’s fundamental and financial ratios. Source: StocksCafe REIT Screener

 

Since its inception, MUST’s NAV/Unit has been dropped from US$0.84 in Q3 2016 to US$0.67 in Q4 2021, a CAGR of -4.22%. Its gearing ratio has increased from 36.8% to 42.8% in the same time period.

 

Manulife US REIT (SGX: BTOU) Net Asset Value / Unit since inception, CAGR: -4.22%. Source: StocksCafe REIT Screener
 
Manulife US REIT (SGX: BTOU) Gearing Ratio since inception. Source: StocksCafe REIT Screener
 

 

The above (and below) data of MUST (and all 39 other REITs) can be found on the StocksCafe REIT Screener. Use code “kennyloh” for one free month.

MUST’s DPU trend has been relatively stable since its inception, however. It has reported a 2HFY2021 DPU of 2.63 US cents, up 1.5% y-o-y. This has resulted in a very attractive trailing-twelve-months yield of 8.08%, which is much higher than the S-REIT average of 5.97% on February 5th, when we published the S-REIT February Monthly Market Update.

 

Manulife US REIT (SGX: BTOU) DPU graph since inception. Source: StocksCafe REIT Screener

 

We decided to reach out to Manulife US REIT, with regards to the increasing gearing trends and declining NAV per Unit trends for the past 5 years. The following is their response.

 

Jill Smith, CEO of MUST: Gearing has been negatively impacted by COVID-19 due to appraiser assumptions of higher vacancies, higher tenant incentives and leasing commissions, and lower/zero rent growth in the first two years. NAV per unit has declined over the same period due mainly to fair valuation losses and factoring in also the recent private placement priced at a discount of US$0.649 below the NAV per unit.

That said, we have started to see positive valuation of 0.4% for same-store in 2H 2021. Also, in the past year, we have been minimising expenses and deferring non-essential capital expenditure, while focusing on leasing. In 2022, MUST has plans to rejuvenate the portfolio (e.g. disposition of lower cap assets, swapping for higher yielding assets) by increasing its exposure to high growth cities/tenants, recycle capital, and raise a higher portion of equity versus debt for future acquisitions in order to contain gearing.

 

Analysts have maintained their ‘buy’ calls in their reports, despite MUST’s 2H FY2021 results missing expectations.

 
 

MUST is the Highest Rated S-REIT in MSCI ESG ratings

MUST is a frontrunner in achieving sustanability goals, with a 5-star GRESB (Global ESG Benchmark for Real Assets) Rating and an MSCI ESG Rating of AA. This is on par with Capitaland Invest, higher than Capitaland Integrated Comemrcial Trust, Keppel REIT and Keppel DC REIT (all with A ratings).

 

 
Manulife US REIT is a promising REIT, with a clear emphasis on sustainability. With a current attractive ttm yield of 8.08%, MUST has the potential to be a promising REIT. However, it remains to be seen whether MUST can turnaround its negative gearing and NAV trends, and deliver on their promises.
 
 
Kenny Loh is a Senior Financial Advisory Manager and REITs Specialist of Singapore’s top Independent Financial Advisor. He helps clients construct diversified portfolios consisting of different asset classes from REITs, Equities, Bonds, ETFs, Unit Trusts, Private Equity, Alternative Investments, Digital Assets and Fixed Maturity Funds to achieve an optimal risk adjusted return. Kenny is also a CERTIFIED FINANCIAL PLANNER, SGX Academy REIT Trainer, Certified IBF Trainer of Associate REIT Investment Advisor (ARIA) and also invited speaker of REITs Symposium and Invest Fair.  You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement
 
You can join my Telegram channel #REITirement – SREIT Singapore REIT Market Update and Retirement related news. https://t.me/REITirement
Continue ReadingManulife US REIT: Missing Expectations, but Promising Future if…