Performance Of The Different Sectors In My Portfolio In The Past Year

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This is going to be a relatively short post and coincidentally, this is the 100th post of this blog!  Therefore I think it is a good time to evaluate how the different 'sectors' within my investment portfolio is doing over the past year till 20th October 2023 in such turbulent times of high interest rates and high inflation.

SGX REITs:

As seen above, the past one year has not been kind to REITs.  The sharp increase in interest rates over the past year has been a severe drag on the price performance of REITs, which is an interest-sensitive sector due to the leverage they are exposed to.  The past week, which has not been captured in the graph above, has been even more turbulent for REITs as the war in the Middle East and propelling oil prices are reigniting the fears of high inflation, and the creeping 10-year yields towards 5% yield is definitely exerting more stress and pressure on REITs.  Although it seems that the value of the REITs in my portfolio remains approximately constant over the year, that is due to the increase in capital injected into the REITs.  This is made worse by the 4.6% crash in Parkway Life REIT in the past week, the largest REIT holding in my portfolio by capital, escalating the drop.  Overall, the performance is bad, and has finally dipped into the red, including reinvested dividends.

SGX Non-REITs:

For the Non-REITs in my portfolio, it consists of financial institutions and defense and technology.  Contrary to the REITs, the performance for this sector is positive through the year.  High interest rate environment has not been kind to REITs, but its compensated by the better than expected earnings and margins for financial institutions, especially the bountiful dividends paid out for the year.  Nonetheless the past week has not been kind to the market overall, thus the sector is still experiencing volatility, and thus dipped as well.

US Growth:

For US Growth shares, the big tech companies remain the frontrunner for the year.  Though the first half of the year was in the red, but the second half turned for the better and became profitable.  However as 10-year yields creep up towards 5%, it created stress on the valuations of the big tech, and thus causing the correction in the share prices and performances of the big tech firms in the past week.  However, the tune of the FED aiming to keep interest rates higher for longer is also creating stress to the performance of US equities, thus volatility is here to stay (outlook is gloomy as even tech giant Alphabet drops more than 9% in a day after earnings due to underperformance of the cloud and AI sector).  In the past week where the continuous drop in big tech companies and S&P 500 index, the US Growth shares has hit breakeven point.

Overall the performance to date is not bright, brought down mainly by the REITs (as the weightage of the REITs is about 50% of my entire portfolio).  Nonetheless, the diversification in my portfolio helped to mitigate and cushioned the losses.  I will just continue to hold on to my portfolio and tide through whatever near term difficulties it may face.  I believe quality and fundamentally sound companies will be able to tide through these difficult times and perform better in the longer term, though in the short term, the value of my portfolio will remain depressed.  Meanwhile, I shall continue to slowly accumulate the shares and collect more dividends in future (though I should experience dividend cuts in the near term).  Barista FIRE, here I come...!

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