Friday, August 17, 2012

Poems and Unit Trusts

I recently explored Poems in detail and was pleasantly surprised by all the upgrades done to its internet system. I must admit Poems (as in this one, by Phillip Securities) has one of the most powerful internet system for fundamental research. They might also have a good one for technical analysis but I am no expert here.

The current platform allows you to do screens, and access poems research database and look at past 5 year financials for all companies that you can trade on poems, which includes US, UK, ASEAN, HK/China and even Japan markets. Man, this is really powderful. I played with it for a while and concluded that this is probably one account that any serious Singapore investor should setup.

Go down to Raffles City today, they have an office at the Raffles City Tower and get the account done. Well you can actually do online, but they would need to snail mail stuff to you, get signatures and all the crap, so it might be easier to just make a quick trip down and settle stuff once and for all.

Oh and do remember to bring the relevant docs like IC, bank account book, CPF contribution history etc, do check their website for the documents required. It might also be prudent to bring your your PSLE and O Level certificate, a 300 words self-introductory essay, your Facebook photos with at least 3 friends and your next of kin or significant other, just in case. This is Singapore after all. We want to verify everything.

Ok, lets take a look at the system. I always intrigued by the stock screener. So I went in to play a bit. To access the research, all you have to do is to go to the top column, click stocks -> research. Then you can see a whole bunch of cool stuff like MyResearch, Singapore, Regional Market Focus, Dataline, News and at the right end -> Stocks Screener.

Here’s a screen shot:

Sadly I remember the old screener to be slightly better. The new one, you are given dropdown menu to choose. And to my dismay you can’t really get the dividend screen right. Bcos it only allows you to choose 0,5,10,…,50% dividend yield. Now most co. give only from 0-5% dividend yield. So how to sieve out say 3% and above? The answer is cannot… Here we have one of the most dividend hungry nation and our best brokerage house can’t get the dividend screen right. What the… But I believe they will improve this soon. Someone pls feedback.

Well you still can do PE, Debt to Equity and PB screens lor. And you can also screen overseas market.

But the coolest thing on Research is this thing called Dataline. Again to access go via Stocks->Research->Dataline.

Here once you get in, after agreeing that the info you get may not be accurate so pls use at your own risk blah blah, you can basically access the past 5 year historical financials for any companies that you can buy via poems. And you can also access analysts’ estimates and some snapshots of ratios and valuation. Well good enough for something that comes free with just signing up.

Below is a snapshot of F&N’s balance sheet. Amazing right?

So with this one account, you can do a lot of work without pouring through pdfs and paper copies of annual reports. Of course, this step is more for doing quick checks. When you do the deep dive analysis, you still need to read annual reports. Sorry bro, no shortcuts.

Besides the powerful research, I also explored Poems unit trust, or Phillip Unit Trust. For the longest time, I believed that most unit trusts take too high an upfront sales charge. In prehistoric times (ie maybe 10 or more years ago), it was like 5%! And investments only earn you 5-8% return per year… So you just gave 1 yr’s return to the distributor. But things are changing. As in the fees are coming down.

For the un-initiated, a unit trust, also known as a mutual fund, is an investment vehicle that allows retail investors to put money with a professional fund manager to help manage and grow the money. Usually the fund manager will be given a mandate, like to try to beat the S&P500 index, or the STI, or a commodities index.

Ok, for those following this blog long enough, we know that 80% of all fund managers never beat the index. Why put money with them? Just buy the index. That is true. Hence ETFs, or exchange traded funds has ballooned in recent years. ETFs charge much less management fees (usually less than 1%) and no upfront fees and you trade it like a stock. It’s so popular that the amount of money with ETFs would probably eclipse unit trusts within the next decade. Since I was at it, I estimated that the Asset Under Management (AUM) for Singapore ETF is probably around $4-5bn while that of unit trust is at $40-50bn. Yes, 10x difference now, but one is still growing fast while the other is stagnating. Btw, total AUM in Singapore is mind-boggling 1.3 trillion!

Ok, since ETF is so great, why buy unit trust then?

The answer is ETF has less offering for bonds and other asset classes (outside equities). As a normal retail investor, it is virtually impossible to build a bond portfolio by buying bonds yourself, esp in Singapore, where one bond has the face value of $200k. So unless your portfolio is like $10m, and you split $5m for stocks and $5m for bonds, then your bond portfolio can buy 25 bonds. For most of us, we struggle to buy 1 bond :)

So the alternative would be to buy a bond unit trust, which will have bonds of different companies in one offering. Yes, we then have to pay up the 1+% management fee. But in order to build a resilient investment portfolio, that might not be a bad option for now.

Next post, we discuss Phillip’s advantages and offerings of bond unit trusts.

By the way, PhillipCapital is hosting a Value Investing Conference with Mary Buffett attending. Do take a look!

PS: This is a sponsored post.


  1. hi what about the brokerage fees and other charges for trading singapore and foreign stocks eg hong kong?

    mind to share?

  2. I believe its the same as other brokerage houses in Singapore. Min $20 for local stocks and 0.3-0.5% for higher amounts. For foreign stocks, usually it is slightly higher (in my experience, it's about $30-80 per transaction depending on which markets, HK is at the expensive end bcos of the high fees that HK exchange charges)

    On top of commission, the brokers also charge a custodian fee of $2 per foreign stock if you don't do 2 trades a month or so. These are quite similar for all local brokerage houses.

    Hope this helps

  3. Hi 8%pa,

    Do you have vickers account from dbs? They also have a somewhat similar service. Take a look if you are interested. Good to cross check even if this is a shortcut to FA, haha :)

  4. Hi la papillion!

    Long time, thanks for dropping by. I havent used DBS for a long time, Will check it out, thanks!

  5. DBS Vickers no good, they only support Internet explorer.