Tuesday, July 31, 2018

Monthly Review – July, 2018

July saw a recovery in net worth with gains in all asset classes (apart from a small loss on commodities) with neutral currency movements. The end result was a 2.59 percent increase in net assets.

For the year to date, the portfolio is up 1.09 percent. The adjusted change from when I retired in September 2013 is a 28.19 percent increase. Hong Kong liquidity stands at 36.29 months of estimated outgoings, significantly increased from the start of the year's 26.68 months due to net asset sales. 

Here are the details:

1. my Hong Kong equities rose. I made additional purchases of HSBC (HK:5) and ND Paper (HK: 2689) at the end of the month;

2. my AU/NZ equities were were up slightly. There were no new investments;

3.my equity ETFs were up (India, Hong Kong and China) in line with the local markets;

4. my position in silver was down. I am considering selling my silver and investing the money in equities for additional income;

5. all tenants are paying on time and all properties are let. However, I had three tenants end tenancies in July. One subsequently changed their minds and signed a new lease. The other two properties were released to new tenants at slightly higher vacancies. While the combination of vacancies, agency fees and repairs hit the cash flow for the month, the damage was about as low as could be expected;

6. the AUD and NZD were flat against the USD/HKD;

7. my position in bonds remains modest. There were no additional purchases this month. Recent interest rate increases have pushed the holding values of some of my bonds to  below par - since I intend holding to maturity (other than a solitary perpetual) this is not a problem. I have a margin facility in place and my carry trade is doing its thing and generating a small amount of additional income;

8. expenses were high as I paid some of the expenses for our family's summer holiday and pre-paid an air ticket to New Zealand for later thing month;

My HK cash position fell slightly during the month. I currently hold 36.29 months of expenses in HKD cash or equivalents (up from 26.68 months on 1 January). 

Total household gearing ((debt+accruals)/assets) is 8.76% of total assets. Property prices are as at 1 January, 2018 and will not be marked-to-market until year end and I do not net off cash. With a mark-to-market of equities, bonds and FX this number will fluctuate even if the amount of debt is being slowly amortised. There is some additional netting in this month's gearing figure due to the new mortgage – this will be cleaned up in the August review.

New mortgage: the last payment on one of my mortgages was made in June. After much debate and a more-protracted-than-I-expected application process, I have taken out a new mortgage for 30% LTV (20 year HIBOR linked - currently 2.3% with a cash back payment). The proceeds have been drawn down and transferred to a securities account. Some was invested in the additional HSBC and ND Paper shares mentioned above. The rest remains to be invested. 

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