Equity Portfolio Management Analysis

Introduction

The assignment seeks to create two portfolios: a passive income portfolio mirroring the STI as close as possible while the other being the best performer, which would beat the first portfolio. Therefore, the researcher seeks to calculate the rate of return over five years period on the STI, which was discovered to be 6% on average. Then the researcher created a portfolio with companies that had the same outcome as the STI or had the trends that would lead to mirroring- giving the same return and price changes to the Index. After this, the academician sorted the list for the best-performing companies in the Index and created an active portfolio which then calculated a higher return on investment of 10% with a margin of error of CVar of 99.9. The two portfolios are attached. Please refer to the excel sheet provided.

Singapore Press Holdings Limited

Founded in 1984, Singapore Press Holding Limited (SPH) is one of the most established organizations in the region, which operates in retail and commercial, student accommodation (PBSA), senior care, and digital. SPH owns 65% of SPH REIT in retail and commercial terms, and its portfolio consists of three facilities in Singapore, namely Paragon, The Clementi Mall, and TheRailMall. SPH REIT holds 85% shares in the Figure Globe Shopping Center and 50% in the Westfield Marion Shopping Center. SPH also holds 70% shares in the Seller Mall and 50% shares in the two joint ventures that develop integrated development from Woodley Residences and Woodley Mall. SPH is the leader of PBSA and owns and operates an asset portfolio in 18 cities in the UK and Germany. SPH has a complete suite of operations, assets, and fund management features and currently operates the two characteristic brands, Stu. Billings, Mark; Cowdell, Jane; Cowdell, Paul (2001).

Singapore Exchange Limited

The Singapore Exchange, Asia’s driving and confided in market framework, works by trading its capital and thoughts to incentivize individuals, organizations, and economies. With around 40% of recorded organizations and more than 80% of recorded bonds starting outside the country and laying out linkage all over the locale and in the European Union, the company is Asia’s most worldwide and associated trade. Offering an entire set-up of subsidiaries items across Asian value records, wares, and monetary standards, The company is also the world’s best in the fluid global market for the pacesetter on valuing files of India, China, Japan, and the ASEAN. Settled in Triple -appraised in Singapore, It has more than 800 representatives remembering workplaces such as Beijing, Chicago, America, Hong Kong- China, Europe, London, New York, Mumbai, San Francisco, Shanghai, and finally Tokyo.

The Ascendas Real Estate Investment Trust Company

The firm Ascendas Reit is in Singapore and is the first and biggest even recorded business volume and modern land speculation trust. As one of the country’s REIT leaders, the firm Ascendas Reit strongly impacts the propagation of the country’s REIT area, giving an appealing stage to interest in Venture parks and new holdings in Singapore. Ascendas Reit has a non-similar arrangement of 96 holdings in Singapore, 34 holdings in Australia, 49 holdings in the United Kingdom/Europe, and 41 holdings in the United States of America as of December 31, 2021. These holidays have a customer number of more than 1,500 global and relative organizations from a broad scope of enterprises and workings, which includes innovative and invention work, life sciences, data manipulation, designs, product assembling, planned operational specialist co-operation, hardware, and software, broadcast message, fabricating administrations and behind the scenes support office in assistance ventures, among other business endeavors. In Singapore, it is the all-around differentiated property involves commercial and science park holdings, coordinated improvement, conveniences and customer (“IDAR”) holdings, high-details modern holdings, light modern holdings, and planned operations and dispersion focuses

The CapitaLand Integrated Commercial Trust

With a marketplace capitalization of S$13.5 billion as of December 31, 2021, the company CapitaLand Integrated Commercial Trust (CICT) was the opening and most significant land venture trust (REIT) that is listed on Singapore’s STI and the Exchange Securities Trading Limited (SGX-ST). The company debuted on the Singapore Exchange (SGX-ST) in July 2002 using the name ‘CapitaLand Mall Trust (CMT),’ and was changed to CICT as of November 2020. That was after merging with CapitaLand Commercial Trust Company (CCT). CICT holds and capitalizes in value pay, generating resources mostly for business (including retail and office) purposes, and is based in Singapore. CICT’s portfolio includes 20 properties in Singapore, while the first two are in Germany at Frankfurt, the other two in Australia, Sydney, having a net assets value of at least S$22.9 billion as of December 31, 2021, making it the most notable broker for Singapore commercial land. CICT is operated by CapitaLand Integrated Commercial Trust Management Limited, a solely held member of the company CapitaLand Investment Limited (CLI), a principal international property venture executive with a resilient presence in Asia.

Mapletree Logistics Trust

Mapletree Logistics Trust participates in the interest in a differentiated pay arrangement, creating coordinated operations land and land-related resources. It works through the accompanying geological sections: Singapore, Hong Kong, China, Japan, South Korea, Australia, Malaysia, Vietnam, and India. The organization was established on July 5, 2004, and is settled in Singapore.

Venture Corporation Limited

Adventure (SGX: V03.SI) was shaped in 1989 as an electronic administrations provider after the consolidation of three organizations. Today, Venture is a leading universal provider of improvement administrations, articles, and preparations with laid out abilities crossing showcasing examination, strategy, and progression, item, and cycle designing, plan for manufacturability, inventory network the board, as well as item restoration and specialized help across a generally expanded range of high-combination, high-value and composite items. Adventure has brought together ability and protected invention with talent in a few areas. These include life science, genomics, sub-atomic diagnostics, clinical gadgets and hardware, medical services and well-being innovation, way of life buyer innovation, well-being improvement items, instrumentation, test and estimation innovation, systems administration, and interchanges fintech, as well as registering, printing and imaging innovation. The Group deals with an arrangement of more than 5,000 items and arrangements and keeps on venturing into innovation spaces through its coordinated efforts with clients and accomplices in choosing biological systems of interest.

Jardine Matheson Holdings Limited

Jardine Matheson Holdings (JMH), which administers the many interests of its offshoot Jardine Strategic Holdings, supervises an arrangement of market-driving organizations and supports their drawn-out improvement. It was established in China in 1832 and included an expansive arrangement of market-driving organizations, which address a blend of money-producing exercises and long-haul property resources that are firmly adjusted to the undeniably prosperous purchasers of the area. JMH’s auxiliaries incorporate Jardine Pacific and the Jardine Motors Group of companies, the Jardine Cycle company, Carriage, Asian store administrator, a Dairy Farm, and the Hong Kong Land, which possesses impressive property in Hong Kong. Different organizations incorporate monetary administrations, inns (Mandarin Oriental), development, mining, and transport administrations. Individuals from the Keswick family, relatives of the fellow benefactor William Jardine, control JMH and Jardine Strategic through a complicated proprietorship structure.

Singapore Telecommunications Limited

The firm Singapore Telecommunications Company limited, otherwise shortened as SingTel and schematized as SingTel, is a key player in the broadcast communications conglomerate in Singapore and one of the country’s four major telecommunications businesses. With at least 4.1 million supporters and a mutual portfolio supporter base of 640 million clients after the fiscal year 2017, the organization is Singapore’s most popular versatile organization administrator. Up to the year 1995, the company was recognized as the Telecommunications Equipment. SingTel’s services include Internet access, IPTV (SingTel TV), mobile phone networks, and fixed-line message. The firm has aggressively expanded external of its marketplace, claiming ownership of several local companies, including complete control of Telco Optus of Australia and the number two-largest and 32.15 percent share of Bharti Airtel, India’s second-largest operator. With 82 percent of the direct-line sales, 47 percent of the versatile sales, and 43 percent of the broadband industry share in Singapore, Singtel has a significant share of the whole industry in Australia and Singapore. Singtel is similarly the subsequent-largest company on the Singaporean Stock Exchange market in terms of marketplace capitalization, and it is largely owned by the company Temasek Holdings, the Singapore government’s investment arm. Through its Singtel Innov8 auxiliary, Singtel is a functional financial backer in development organizations.

SATS Ltd.

SATS is glad to be a local organization, following its underlying foundations back to the absolute starting point of business aeronautics in Singapore, set apart by the debut flight from Singapore Kallang Airport in 1947. The company developed to pair with a young city-state throughout the following couple of years as Singapore changed itself into a worldwide business and flight center. Moving to Changi Airport in 1981, the company endeavored to extend the organization, fortify intensity, and develop functional capacities and industry accomplices like Singapore Airlines. Abroad joint endeavors (JVs) made ready for key new business amazing open doors while empowering us to set a good foundation for ourselves in new business sectors. Simultaneously, the company enhanced its business, venturing into new non-flight industry fragments like institutional cooking and voyage terminal administration. As a brand and a business, the company is glad to have progressed significantly, and the company could never have accomplished what it has without the enthusiasm and commitment of its employees. The company is focused on building a supportable future for our clients and networks, taking on an innovation-driven, human-driven approach as the company joins key manageability objectives into our business improvement.

Oversea-Chinese Banking Corporation Limited

The firm Oversee-Chinese Banking Corporation, Limited is a Singaporean global banking and monetary administrations organization settled in the OCBC metropolitan, Singapore. OCBC Group was conceived out of the Great Dejection over and done with the union of 3 groups in 1932 – the Chinese Commercial Bank Limited (joined in the year 1912), the Hong Bank Limited (consolidated in the year 1917), and the Oversea-Chinese Bank (fused in the year 1919). OCBC Bank owns resources of supplementary to S$521.3 billion, creating it the number two-biggest bank in Asia by resources and one of the bigger banking ventures in the whole continent of Asia-Pacific. This business is also one of the continent’s exceptionally appraised banking groups, with an excellent rating from Moody’s and an outstanding AA evaluation from standard and Poor, Rajagopal, Shan; Philip McGuinn; James Waller (2007). OCBC Bank is reliably positioned among the central 5 Safest Banks on the planet by the Global Finance Magazine. At the end of last year, this Asian Banker called OCBC Bank Singapore was awarded the most reliable bank for 2018-2019 and the fifth most grounded one in the Asia-Pacific region. The firm’s worldwide organization has developed to involve a figure exceeding 570 branches and delegated workplaces in 18 nations. These remember north of 320 divisions and workplaces for Indonesia below auxiliary Bank OCBC NISP and above 100 divisions and workplaces in Hong Kong in China and Macao under the OCBC Wing Hang Bank. The OCBC Banking group was granted the award for the Best Bank in the whole (Asia-Pacific) region in 2019 by the Finance Magazine for Global affairs.

Here is a list of the top 10 companies in the STI, with their details on Name, Symbol, last price as of Friday, May 8, 2022, Percentage change, and volume. The ten companies that were evaluated as having the most weight on the STI market are the closes replication using the Benchmarking Index Reconstruction method grounded on Russell Methodology applied in the paper. These companies were considered in the 2017 Wall Street Journal as the weights of the firms in STI have been changing over the years. The Index’s daily returns were compounded to reflect its gains and percentage change over five years, the top ten companies were also put through similar compounding arithmetic, and the relation between the two cheeked for similarity, Denney, Richard (2005). Moreover, the percentage change in each company over the period was tracked to ascertain the allocation of investment funds to each to ensure the margin of error, which was inevitably to appear, was as minute as possible. The return of each was also calculated using the formulae (Return = [(IV1 / IV0) –1]*100). Where IV1 is the last closing value of the stock on April 10, 2022, and IV0 is the initial value on the initial date, 10, April 2017.

Designated Companies and Reasons for Selection

1. Singapore Press Holdings Limited
   1. Consistent Return on Investment from the incorporation date to now means the company is in the right direction and is, therefore, more likely to be around for long
   2. Possibility for growth in the industry as Singapore opens new possibilities for the industry
   3. Underrated stock by many investors and under traded even though the company is performing well
   4. Suitable company management styles that lead to sound investment decisions, as seen in how the company handled Covid-19 in 2020
   5. Future proof as the industry is very likely to stay consistent over the long run, the company as one of the key players is therefore likely to dominate it even after a long while
2. Singapore Exchange Limited
   1. With good management of financial resources, the company has investments, yet it has remained liquid enough to pay for its expenditures consistently
   2. The company has excellent corporate ethics and a keen eye on ensuring transparency and integrity
   3. Diversified portfolio with greet investments ensuring reliable return
   4. The company also pays dividends thus has good earnings if a person owns bonds
   5. The stock of the company is currently undervalued considering future growth and company projects
3. Ascendas Real Estate Investment Trust
   1. The company has an excellent management style that is efficient and transparent
   2. The company has a Good Return on investment
   3. The company gives out dividends on its current bonds
   4. The company has a low debt to equity ratio and can therefore access more Debt to financier expansions and projects
   5. The company is not influenced by social, political, and other external factors
4. CapitaLand Integrated Commercial Trust
   1. The stock of the company is undervalued, considering its commercial industry is growing at a steady rate
   2. Diversification of company portfolio on a wide range of investments
   3. Due to the future projects being implemented in the company, there will be substantially competitive advantages to the company against its competitors
   4. Consistency of earnings in the last five years with a focus on its investments
   5. A sound risk management system that controls Debt and earnings
5. Mapletree Logistics Trust
   1. The firm has a tremendous social responsibility of reducing emissions of greenhouse gasses which is better for the planet
   2. Low Debt to equity ratio makes the company feasible to credit which is required for expansions of business
   3. The company also has access to a talent pool of potential employees that can sustain its operations
   4. Consistent market and therefore has a room for growth in sales
   5. Mastery of the logistics field in Singapore, the company, can therefore use its current model to grow by providing auxiliary services to its customers at a fee, such as delivery and post
6. Venture Corporation Limited
   1. Consistency in the last five years in profit meaning the company has high protection of sales
   2. A fully diversified investment portfolio with investments in projects that outperform market predictions
   3. Competitive advantages by the financial position of the company over its competitors
   4. Dividends are currently being given out on bonds issued by the company on the Singapore stock exchange market
   5. Good leadership style with a focus on research and development, which means doing data-driven projects

Portfolio Allocation

The allocation of the table, which is much higher and s were placed in respect of their earnings per company and the return projected from the investments considering the amount allocated from the investment, 1,000,000 was hypothetically given to the two and placed both on the passive and active portfolio above. The two were then compared since the other passive investment would have to return about 6% on the portion. The above companies were raised to give at least 10% while at the same time maintaining the same or even better risk management.

The first consideration of the division was the portfolio’s weight considering the amount of money allocated. If a company god a more significant share and had a price per share that would exceed the given amount, it was reduced to fit the budget. In this case, companies with lower share prices could gunner more shares than those with a high price tag. The second reason company received a more significant allocation of shares was its ability to generate revenue. Since all companies generate revenue, those with higher revenue over a long period were selected to ensure the portfolio generated profits and a consistent amount over a long period since this was a long-term investment. Thirdly, the companies were evaluated to ensure balance in all industries to avoid a sudden change in the portfolio direction, more so to loss if the industry faces a sudden change in trends or falls out, Elton, Edwin J; Gruber, Martin J (2010).

The allocation of the above portfolio means that the active portfolio will generate at least a 10% average annual return which is 4% more than the passive portfolio, which mirrors the STI. While the portfolio is still a safe and reliable investment, the companies each are not only the top performers in the Index but also reliable and with sound financial and investment plans. Therefore, while reliable, the active portfolio will still beat the STI passive portfolio since it taps from the best-performing firms.

Conclusion

Portfolio management requires skills in project management, accounting and finance, and the micro and macro environment with which businesses operate. Therefore, the assignment is a great starting point for the search for knowledge of financial markets and how businesses perform various financial ratios such as the Debt equity ratio, PEG ratio, and Profit margins. As a result, more information should be captured to ensure that errors in calculating projected earnings are reduced, yet investments are made with accuracy to ensure money is not lost. Although the researcher did not experience any unexpected outcome, the assignment timeline was insufficient to warrant such an outcome. More on this is covered in the recommendations below.

Recommendations

1. Longer timeline: tracking the performance of a company requires more time, and it would be beneficial if the timeline of the assignment or such task took at least a year to ensure that any unpredictable outcomes are taken into consideration, considering this was an assignment with a deadline and not a real-world case, the above would highly be advised only to be sued in the academic setting and not as a guide to investors in the real world.
2. More tools to ensure accuracy: Tools such as access to websites with informative material would be highly required to ensure the data used in the analysis is both sound and accurate and updated and relevant to the subject. That will ensure not only the use of factual and accurate data but inform the financial planner on the actual situation of the company and help them make better decisions on investments
3. Another recommendation would be to have more funds to invest in both two accounts for a better yield. Although this is up to the investor, it is worth noting that a more considerable capital will yield more than the limited amount in the investment of 1,000,000. Another factor is the time, and more time would also allow more compounding to occur; investing generates much significant money.

As a conclusive recommendation, the researcher would prefer to take the second active portfolio because the portfolio is just as reliable as the first it has the potential of at least 4% more return on the same investment over the same period. Considering this is the worst-case scenario, it can go up to 505 in an ideal circumstance. Although the two outcomes are unlikely to occur, and an average of 20% is the most predictable outcome, it is still better in yield in both the three cases, Markowitz, H.M. (2009). Finally, the investor goals will ultimately determine where to invest. As mentioned earlier, a risk-tolerant person may opt for the active portfolio while otherwise sticking to those. However, if all factors remain constant, the active portfolio is the better option between the two.

References

Billings, Mark; Cowdell, Jane; Cowdell, Paul (2001). Investment Management. Canterbury, U.

Denney, Richard (2005). Succeeding with Use Cases: Working Smart to Deliver Quality. Boston, Mass.: Addison-Wesley. ISBN 0-321-31643-6.

Elton, Edwin J; Gruber, Martin J (2010). Investments and Portfolio Performance. World Scientific. p. 416. ISBN 978-981-4335-39-3. Archived from the original on 2010-12-08. Retrieved 2011-12-22. K.: Financial World Publishing.

Markowitz, H.M. (2009). Harry Markowitz: Selected Works. World Scientific-Nobel Laureate Series: Vol. 1. World Scientific. p. 716.

Rajagopal, Shan; Philip McGuinn; James Waller (2007). Project Portfolio Management: Leading the Corporate Vision. Basingstoke: Palgrave Macmillan.