I have been investing my Supplementary Retirement Scheme (SRS) funds in unit trusts for the past 7 years. Yet, it is amazing that I have never reviewed how my SRS investments have been performing on an annualised basis. I do not know for sure whether the returns have beaten the inflation rate, the CPF Ordinary Account rate or the Special Account rate.
Today, I have finally carried out a review of my SRS investments. They have returned 3.8% on an annualised basis since I first made my initial contribution to the SRS account in Nov 2006. A breakdown of the returns from the various unit trusts I have invested in are as follow.
| Fund | Allocation | % Change | % Return |
| LionGlobal Infinity Global Stock Index | 38% | 0.67% | 7.04% |
| UOBAM GrowthPath 2040 | 38% | 0.40% | 3.11% |
| Nikko AM Shenton Short Term Bond | 15% | 2.23% | 1.98% |
| Phillip SGD Money Market Fund | 8% | 0.51% | 0.50% |
| Cash | 1% | ||
| Total | 100% | 3.83% |
The 2 main unit trusts are LionGlobal
Infinity Global Stock Index and UOBAM GrowthPath 2040. Investments in them are
made on a monthly basis using the Dollar Cost Averaging methodology. The Phillip SGD Money Market Fund is used to hold the cash required for the monthly investments into the 2 main unit trusts. The Nikko AM Shenton Short Term Bond Fund is used as a parking facility for excess cash beyond those required for the monthly investments.
The % return in the table above shows the actual annualised return obtained
from the unit trusts. The % change shows the annualised change in the price of the unit trust from the time I started investing my SRS funds in Nov 2007 till now. With the exception of Nikko AM Shenton Short Term Bond Fund, most of the unit trusts have not changed much, as shown by the figure below.
 |
| Performance of Unit Trusts Since Initial Investment |
In fact, both LionGlobal
Infinity Global Stock Index and UOBAM GrowthPath 2040 have just recovered
to their original prices in Nov 2007. However, through regular investing with Dollar Cost Averaging, the unit trusts have returned 7.0% and 3.1% on an annualised basis respectively. This proves that Dollar Cost Averaging works. In fact, in an earlier blog post, I concluded that Dollar Cost Averaging works best with volatile stocks and unit trusts.
The LionGlobal
Infinity Global Stock Index has performed to expectation for a stock index, especially considering the fact that it underwent a severe correction during the Global Financial Crisis. However, the UOBAM GrowthPath 2040 has disappointed for a balanced fund. One of the main reasons for the underperformance is due to the fund manager reducing the allocation to stocks to below that assigned by the original asset allocation model for whatever strategic or tactical reasons. You may wish to read Experience with Lifecycle Unit Trusts for more info. I will probably be selling this fund and switching to an index fund, to be consistent with my risk preference.
As for the other 2 unit trusts, the Nikko AM Shenton Short Term Bond Fund has returned 2.0% on an annualised basis, which is within expectation for a bond fund, while the Phillip SGD Money Market Fund has returned 0.5%, which is also within expectation for a money market fund. The key objective of these 2 unit trusts is to preserve the capital required for monthly investments into the 2 main unit trusts, which they have done reasonably well. I will be keeping these 2 unit trusts as a result.
Finally, in my previous blog post, I mentioned that letting unit trust investments run on auto-pilot can have both good and bad effects. The good thing is that investors are able to ignore all the noise and invest for the long run, thus allowing the magic of compounding to happen. The bad thing is that some unit trusts might fly off-course if not monitored regularly. I believe a review on an annual basis should be sufficient to achieve the good results and avoid the bad consequences of unit trust investing on auto-pilot mode.
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