SREITs vs S&P 500: A Small Chart, A Big Reminder About Diversification
Good day everyone!
Today, as I was sipping my kopi and casually checking out the global markets and Singapore REITs (SREITs), a few interesting thoughts came to mind that I wanted to share with you.
If you’ve been following me for a while, you’ll know that I proudly embrace a slow, steady, and somewhat “boring” investment style. After numerous painful lessons since my investing journey began in 2008, I’ve fully accepted that trading is simply not my strength. Truthfully, I’m an expert at buying high and selling low!
Over time, I’ve come to appreciate the wisdom of long-term investing. It allows the power of compounding to quietly work its magic in the background, provided we remain patient. Of course, the journey isn’t always smooth sailing. Take SREITs, for instance, they haven’t exactly dazzled investors in recent years. Yet, even amidst broader downturns, there are always hidden gems waiting to be found.
Personally, I’ve developed a particular fondness for suburban malls, such as Frasers Centrepoint Trust (FCT) and CapitaLand Integrated Commercial Trust (CICT). After all, groceries and comfort food are necessities in any economy, rain or shine, recession or boom. These prudently managed SREITs usually remain resilient while delivering dividends, even during gloomy market sentiments. This dividend income is truly the highlight of this approach. It allows me to remain calm and composed, sipping my kopi while patiently riding out the inevitable market ups and downs.
That said, leaning into one sector isn’t something I’d feel entirely at ease with. I’ve learned, sometimes the hard way, that spreading things out a bit can make the ride smoother. That old saying about eggs and baskets still sticks with me.
I was looking at the above chart and something stood out: while the S&P 500 (red) has been retreating quite a bit this year, the iEdge S-REIT Index only dipped slightly. It’s not always like this of course as we know there were times when SREITs underperformed too. But this time, the contrast really struck me.
If I only have S&P 500 in my investment portfolio:
For someone like me, who holds both, it is a small but comforting reminder of why I still believe in diversification. The steady flow from my REITs didn’t erase the drop in US equities but it did help soften the blow. It gave me breathing space. That matters more to me than chasing the highest return.
Of course, having variety doesn’t mean grabbing everything that glitters. I’ve made peace with being slow to move. I’m not walking through a pasar malam filling my basket with every shiny thing. These days, I try my best to look for assets I understand and can trust to hold up when times get rough.
I guess what I’m trying to say is investing, for me, isn’t about chasing excitement anymore. I’m not out to beat the market or become some guru. I just want something stable enough to enjoy my kopi, look after my family, and not stress every time prices shift.
What is your preferred way to invest?
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