Author: The Investment Blueprint

SPIVA: Doomsday for active fund managers?

If there is ever a financial research piece that active managers would love to banish to the deep depths of hell, it would be the SPIVA Scorecard. SPIVA stands for S&P Indices Versus Active and the SPIVA Scorecard is a research paper published by S&P DJI that compares the performance of actively managed funds against their appropriate benchmarks. The results are not exactly rainbows and sunshine for the active fund houses. Pretty much a train wreck. The ultimate objective of an active fund is to outperform its benchmark aka generating alpha. Key takeaways from end-2018 SPIVA report  For the...

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Weekly Highlights 13 Oct: How US brokers survive with 0 commission

#1 Idle cash saves US brokers For the past month or so, it has been an absolute bloodbath for major US brokerages. From Charles Schwab to Interactive Brokers, major US brokerages are offering commission-free trading. Apparently, the key to survival in the new world is the idle cash, i.e. the cash sitting in your brokerage accounts. One source of revenue for brokerages is to loan out clients’ cash to the market. As of August 2019, the idle cash sitting in Schwab clients’ account total to about $3.7 trillion. And as of 2018, Schwab makes around $10.1 billion in net...

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The peril world of Leveraged ETFs!

What if I tell you when the index/market moves DOWN by 1%, your investments could potentially move UP by 3%. Welcome to the world of Leveraged ETFs!!! What is Leveraged ETFs? Leveraged ETFs are financial products that give an investor amplified market exposure. The magnitude of the amplified market exposure varies from double leveraged to triple leveraged. As the name implies, double leveraged would give an investor double the market exposure. When the market increases by 1%, the double leveraged ETF increases by 2%. Similarly, triple leveraged would give an investor triple the market exposure. Not all leveraged ETFs...

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Weekly Highlights 6 Oct: Brokerage war erupts in the US

#1 Brokerage war erupt in the US I believe it all started from Interactive Broker when they introduced IBKR Lite which charges 0 commission. Shortly after, Charles Schwab, TD Ameritrade and E*Trade followed suit respectively. Things are looking pretty good if you are a resident in the US! Buying stocks with no commission. One can only dream that in Singapore. Well, in Singapore, investors using local brokerages are still paying ‘sky-high’ commission. Relatively speaking. Face-palm for our local brokerages. https://www.cnbc.com/2019/10/02/e-trade-drops-commissions-on-trades-joining-schwab-td-ameritrade-in-brokerage-fee-war.html #2 Metro shut down in Hong Kong Metro stations had to be closed due to the ongoing clashes between...

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Investing in China? Top Passive ETFs for your consideration

When it comes to the selection of broad market ETFs for the Chinese market, investors in Singapore are not exactly spoiled for choices. The selection in SGX is downright pathetic. Investing in US-domiciled ETFs listed on US exchanges expose an investor to the 30% dividend withholding tax. As a result, to optimise your returns, I will only be listing ETFs that are listed on the Hong Kong Stock Exchange (HKEX). For Singaporeans investing in HK-listed ETFs, the dividend withholding tax rate is 0%. Background on the Chinese stock market Navigating the stock markets in China can daunting considering the...

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