Comments:
All funds except for P2P Lending & Principal China saw a month on month increase as more countries are reopening from the COVID19 lockdown. We see an average rally of 4.5% this month with United ASEAN leading the way. That said, there are major countries where the COVID19 situation is actually worsening like Russia & Brazil. However, my funds have no weight in said countries.
Due to China's recent approval of a new security law over Hong Kong which could potentially threaten HK's democracy, a few of the HK weighted funds suffered from hampered gains. These could be clearly seen in Principal China and to a certain extent, Manulife REIT & StashAway.
Wait, StashAway? Investing in Asia? So they made a big move to reoptimize its portfolio some time in the middle of May. The previous highest risk allocation of 88% US & 12% EU has suddenly turned into 40% US, 40% Asia & 20% Gold, essentially shifting their focus from west to east. Reason for this is StashAway foresees that the USD may lose its value as a result of their aggressive Quantitative Easing measures (i.e. money printing). They cited that the USD depreciated 21% against the RM between 2009 & 2011.
Manulife REITs is still in the deep red because real estate (Retail & Hotel) took a major hit from the COVID19 lockdown. Fallen rents and rise in vacancies have reduced the profitability of REITS. It may take a while before this fund can re-enter the green zone.
The decrease in returns from P2P Lending is expected. More borrowers are struggling to make on time loan repayments as the COVID19 lockdown takes a toll on their business. A lot of them resorted to restructuring (lengthening) the repayment schedule and some barreling towards default.
It is nice to see that my overall Money Weighted Returns (MWR) sitting pretty at 4.1% p.a. which is above my modest target of 3% p.a. (Fixed Deposit rate). Best part is, the economy has not fully recovered yet so we could see an even more respectable MWR in the coming months.
The higher net cash flow this month is due to (1) undertaking of home loan moratorium and (2) lower spending as a result of lock down. The additional RM3,000+ fund has been fully invested into StashAway.
Forward Strategy:
No change in minimum monthly investment allocation, i.e. RM1,500 into FSM Mutual Funds and RM500 into StashAway. I will also continue to take up the moratorium and inject the additional RM3,000 cash into my investments.
I am not happy with StashAway's recent decision to hold 20% Gold ETF (GLD) in their portfolio. This is definitely not in line with my "full aggressive" goal and I could be potentially missing out on any huge gains during these volatile times. However, I will continue to stay invested. On the sideline though, I'm considering to get myself registered with an international broker in case StashAway's re-optimization proves to be.. sub-optimal.