STE Smart Beta : Not so Smart !
It has been quite sometimes I never update the performance of my “STE Smart Beta “ since last one in Aug 2017 ( here ). You may also want to know what is “ Smart Beta “ ( here ) , for those who are not so familiar with this investment / financial " jargon".
Here is the latest update :
In last year, STE Smart Beta outperformed the market (STI ) by 5.7% as the composition including some of star performance like banks ( DBS/UOB/OCBC) and two Oil& Gas counters although SPH and StarHub lagged behind.
After the portfolio re-balancing since Aug 2017 , STE Smart Beta was under-performed by almost -6% as the new composition doesn’t have counters from banking sectors and Oil&Gas which could fit into our criteria. Besides, REITs and Business Trust ( HPH) were also not performing well due to increasing interest rate which may affect their borrowing cost.
HPH still struggling with low/decreasing revenue and increasing CAPEX where I have blog about it here (here) , it been reflected in their continuously languishing share price. Another counter which dragged down the STE Smart Beta was SPH where I have also blog about it before ( here ).
Sometimes , smart beta is not so smart if we just base on certain criteria in selecting the stocks. Lower PE may due to price decreased and not the earning growth and same apply for dividend yield. High dividend yield will not be sustainable if is not accompany by increasing company’s FCF . Ultimately, it is still the companies’ fundamental and business’s prospect that drive their price eventually.
How about you , are you following some kind of “smart beta” criteria in selecting your stocks or ETFs ?
“Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the models. Beware of geeks bearing formulas. ”