Where investors can invest in 2019 amid market uncertainties
Increasing trade tensions are creating problems for global stock markets. This creates market uncertainties and increases market volatilities.
Investors have a few strategies they could adopt in an attempt to cushion anticipated volatility.
• Invest into large cap, growth stocks with sustainable growth in earnings. Stocks with rising earning trend tend to move up over time.
-> This includes Alphabet, Alibaba, Adobe, Boeing, Berkshire Hathaway, Mastercard, Home Depot, Tencent and Visa etc.
-> Investors can also gain access into large cap growth stocks via fixed coupon note.
• Clients who want yield without taking on equity risk can buy into investment grade or relatively safe bonds. They get to enjoy yields that are more attractive few years ago.
-> Ping An Insurance 4.375% 10Sep2023 (USD)
-> ICBC 4.875% 21Sep2025 (USD)
-> DBS 4.52% 11Dec2028 (USD)
-> Guccoland 3.62% 30Mar2021 (SGD)
-> Frasers Property 3.95% 7Oct2021 (SGD)
-> BNP Paribas 4.35% 22Jan2029 (SGD)
• Investors who want a higher yield than investment grade bonds without taking equity risk can invest into high yield bond funds.
-> Ashmore Emerging Market Bond Fund (6% yield).
-> AB (Alliance Bernstein) Global High Yield Portfolio (6% yield).
• Looking to alternatives.
-> We have hedge funds and PE fund that are less correlated to market. Adding them into portfolio provides good diversification.
-> Sandler Plus
This is a long-short fund that unlike Long-only fund managers, has the flexibility to short companies that they are not positive on. Fund has a net long bias but may run at market neutral.
-> Tiedemann Arbitrage Strategy
Event driven merger and acquisition strategy focusing on complex deals.
• Investing into equity funds that pays dividend.
-> Funds with this focus invest into large cap blue chip companies that own businesses with stable operations and cashflows.
-> Such companies tend to be more resilient during times of slowing economic growth in terms of profits and share price.
-> In addition getting paid a decent dividend to wait for valuations to turn for the better.
-> Schroders Asian Growth Fund (4% yield) and First State Dividend Advantage Fund (4% yield).
• Investors may also consider balanced funds.
-> By diversifying with both equities and bonds, a balanced fund can have a better risk/reward profile, as compared to a pure equity or bond fund.
-> By combining bonds and equities, balanced funds strike a position between wealth growth and wealth preservation.
-> JP Morgan Income Fund (4% yield)
-> First State Asian Bridge Fund (4% yield).
-> AB (Alliance Bernstein) Emerging Market Portfolio (6% yield).
• Invest into healthcare sector.
-> Over 3.65 million people every year are reaching retirement age in the U.S. And this rate isn't expected to slow down until at least 2029. As this cohort of baby boomers hits retirement, the impact of the aging baby boomer population will likely drive national healthcare expenditures and company revenues higher.
-> Healthcare spending is even expected to outpace gross domestic product (GDP) by one percentage point, boosting the healthcare share of GDP from 17.9% to nearly 20% by 2026.
-> Clients can invest into United Healthcare Fund, S&P Biotech ETF (XBI) or Nasdaq Biotech ETF (IBB).
• Invest into China.
-> For the past 24 years, China has faced various crisis. The crisis are Asian Financial Crisis (1998), US Dot Com crash (2001), SARS (2003), Global Financial Crisis (2009), trade war (2019).
-> After each crisis, Shanghai Component Index emerges higher.
-> Mode of entry:
• FTSE China A50 ETF (2822HK)
• China Construction Bank (5.20% dividend yield)
• UBS China Opportunity Fund
• Fixed coupon note on various China ETFs
• Invest into gold
-> Gold has been a safe haven in times of turmoid.
-> All in mining cost for gold is between 800 to 1200.
• Singapore REITs that are domestic focus or rising DPU (distribution per unit) have been resilient. If their share prices have pullback 5%, they will provide good entry opportunities.
-> They are Ascendas REIT (5.82%), Capitaland Commercial Trust (5.06%), Frasers Logistics & Industrial Trust (6.58%), Mapletree Logistics Trust (5.63) and Mapletree Commercial Trust (5.20% yield).
-> Investors can also gain access into REITs via fixed coupon note.
Despite the uncertainties in 2019, investors are not short of strategies. After all, uncertainty breeds volatility which uncover volatility.
Investors have a few strategies they could adopt in an attempt to cushion anticipated volatility.
• Invest into large cap, growth stocks with sustainable growth in earnings. Stocks with rising earning trend tend to move up over time.
-> This includes Alphabet, Alibaba, Adobe, Boeing, Berkshire Hathaway, Mastercard, Home Depot, Tencent and Visa etc.
-> Investors can also gain access into large cap growth stocks via fixed coupon note.
• Clients who want yield without taking on equity risk can buy into investment grade or relatively safe bonds. They get to enjoy yields that are more attractive few years ago.
-> Ping An Insurance 4.375% 10Sep2023 (USD)
-> ICBC 4.875% 21Sep2025 (USD)
-> DBS 4.52% 11Dec2028 (USD)
-> Guccoland 3.62% 30Mar2021 (SGD)
-> Frasers Property 3.95% 7Oct2021 (SGD)
-> BNP Paribas 4.35% 22Jan2029 (SGD)
• Investors who want a higher yield than investment grade bonds without taking equity risk can invest into high yield bond funds.
-> Ashmore Emerging Market Bond Fund (6% yield).
-> AB (Alliance Bernstein) Global High Yield Portfolio (6% yield).
• Looking to alternatives.
-> We have hedge funds and PE fund that are less correlated to market. Adding them into portfolio provides good diversification.
-> Sandler Plus
This is a long-short fund that unlike Long-only fund managers, has the flexibility to short companies that they are not positive on. Fund has a net long bias but may run at market neutral.
-> Tiedemann Arbitrage Strategy
Event driven merger and acquisition strategy focusing on complex deals.
• Investing into equity funds that pays dividend.
-> Funds with this focus invest into large cap blue chip companies that own businesses with stable operations and cashflows.
-> Such companies tend to be more resilient during times of slowing economic growth in terms of profits and share price.
-> In addition getting paid a decent dividend to wait for valuations to turn for the better.
-> Schroders Asian Growth Fund (4% yield) and First State Dividend Advantage Fund (4% yield).
• Investors may also consider balanced funds.
-> By diversifying with both equities and bonds, a balanced fund can have a better risk/reward profile, as compared to a pure equity or bond fund.
-> By combining bonds and equities, balanced funds strike a position between wealth growth and wealth preservation.
-> JP Morgan Income Fund (4% yield)
-> First State Asian Bridge Fund (4% yield).
-> AB (Alliance Bernstein) Emerging Market Portfolio (6% yield).
• Invest into healthcare sector.
-> Over 3.65 million people every year are reaching retirement age in the U.S. And this rate isn't expected to slow down until at least 2029. As this cohort of baby boomers hits retirement, the impact of the aging baby boomer population will likely drive national healthcare expenditures and company revenues higher.
-> Healthcare spending is even expected to outpace gross domestic product (GDP) by one percentage point, boosting the healthcare share of GDP from 17.9% to nearly 20% by 2026.
-> Clients can invest into United Healthcare Fund, S&P Biotech ETF (XBI) or Nasdaq Biotech ETF (IBB).
• Invest into China.
-> For the past 24 years, China has faced various crisis. The crisis are Asian Financial Crisis (1998), US Dot Com crash (2001), SARS (2003), Global Financial Crisis (2009), trade war (2019).
-> After each crisis, Shanghai Component Index emerges higher.
-> Mode of entry:
• FTSE China A50 ETF (2822HK)
• China Construction Bank (5.20% dividend yield)
• UBS China Opportunity Fund
• Fixed coupon note on various China ETFs
• Invest into gold
-> Gold has been a safe haven in times of turmoid.
-> All in mining cost for gold is between 800 to 1200.
• Singapore REITs that are domestic focus or rising DPU (distribution per unit) have been resilient. If their share prices have pullback 5%, they will provide good entry opportunities.
-> They are Ascendas REIT (5.82%), Capitaland Commercial Trust (5.06%), Frasers Logistics & Industrial Trust (6.58%), Mapletree Logistics Trust (5.63) and Mapletree Commercial Trust (5.20% yield).
-> Investors can also gain access into REITs via fixed coupon note.
Despite the uncertainties in 2019, investors are not short of strategies. After all, uncertainty breeds volatility which uncover volatility.
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