CPF-IS Update

When I rebooted my portfolio this year, I decided to track my cash and CPF portfolio as one. Hence, I do not track the TWRR or XIRR return of my CPF portfolio. However, I would still like to know roughly of their ROI, simply by looking at the total return from the cost. With that in mind, I will do a yearly review just to ensure that I am taking a worthwhile risk on the 2.5% CPF-OA interest.

Current Allocation

I am mindful of the near risk-free 2.5% interest that CPF-OA provides. Also, I plan to drawdown my CPF-OA between 55 to 65, before CPF-Life kicks in. So current plan is to keep at least 45% of my CPF-OA untouched. As seen from the above chart, there is still some way to go before the limit is hit.

For stocks, I will keep to a maximum of four counters and as far as possible I will invest up to the CPF stock limit. With the selling of ES3 last month, I have some additional fund for stock purchases which I used some to buy two counters yesterday. As for unit trusts, I plan to spread out my purchases over the next four years and I will just let them grow on their own from 2025 onwards.

Latest Purchase

The first buy I made was to add more SGX at $9.29. At this price, the current yield is about 3.5%. With its strong cash flow, it is highly likely that it can at least maintain its dividend. The second buy was a new position in AEM at $3.40. AEM has been on my watchlist for a few years but unfortunately I have not taken a position and missed its run.

So why now? I am impressed by its growth over the past few years. Its revenue and net profit has grown by about 10 times over the past 5 years. With a projected 500 mil revenue, this will be another record year. Dividend has been sporadic but given the increase in its cash flow and cash position, I am hopeful that there will be another jump in dividend for year end.

I also like what I read from a recent article from TheEdgeSingapore on AEM. I perceive that the company is in good hands and is not resting on its laurels. The change in CEO, the appointment of Chief Technology Officer and the acquisition of DB Design Group indicate the intent to drive the company to a greater height.

With its share price retracting from its recent high of $4.35, I see this as an opportunity for me to initiate a position in a company with a trailing PE of just 11. Assuming an average growth of 15% for the next 5 years, PEG is at only 0.7. Expected EPS for this year would be around $0.40 and assuming 30% dividend payout, that will be a 12 cents dividend which I believe is sustainable going forward. Hence, that would give a yield of about 3.5%.

Current Positions

With the above purchases, the table below summarizes my positions with CPFIS.

Counter	Average Price	Price on 14 Dec	Current Yield (TTM)	% P/L (incl. dividend)
AEM	$3.41	$3.44	2.4%	0.9%
Micro-Mechanics	$1.85	$2.63	4.6%	48.6%
OCBC	$10.33	$10.14	3.1%	0.8%
SGX	$8.56	$9.33	3.4%	10.2%
Aberdeen China Opportunities	$3.749	$5.123	NA	36.7%
Aberdeen European Opportunities	$1.510	$1.903	NA	26.0%
First Sentier Bridge A DIS SGC	$1.597	$1.912	1.9%	19.7%
LionGlobal Japan Growth	$1.048	$1.368	NA	30.5%
Schroder Asian Growth	$3.057	$4.395	1.0%	43.8%
Schroders Multi-Asset Revolution	$1.308	$1.546	1.9%	18.2%

Without going into computing the total, it’s still clear that this year’s investment beats the OA interest by a long way. I am fortunate to have invested in the unit trusts during April, and hence benefitted from the markets’ recovery over the past half a year. I do not expect similar annual return in the future but am hopeful that that my above investment will continue to beat OA’s 2.5% interest on average for the next 9 years.