Building upon our exploration of low-risk investments in the previous post, ‘How to Invest Money in 2024 (Low Risk). If you haven’t had the chance to read it yet, to do so before delving into this post. Now, let’s move to mid-risk investment strategies for 2024.
Unit Trusts / Mutual Funds
Unit trusts, commonly referred to as mutual funds, serve as professionally managed investment funds that bring together the financial contributions of individuals and corporations. These pooled funds are strategically invested in various securities, ranging from low to high-risk options, based on a specific investment mandate. Professionals handle the allocation of these funds into Fixed Income Funds, Balanced Funds, or Equity Funds. This approach provides investors with a simplified means of achieving diversification, spreading their investments across a range of assets for reduced risk.
- Fixed Income Funds: Like a steady savings account, these invest in stable bonds for lower risk.
- Balanced Funds: A mix of stocks and bonds for both safety and growth.
- Equity Funds: Focus on stocks for potentially higher returns but with more risk.
However, it’s essential to be mindful of management fees associated with professional oversight. While these fees support the expertise and efforts of fund managers, investors should factor them into their overall investment strategy as they can impact overall returns.
Exchange-Traded Funds (ETFs)
Exchange-Traded Funds (ETFs) are investment funds traded on stock exchanges, mirroring the performance of a specific index, commodity, bond, or a basket of assets. Take, for instance, The Straits Times Index (STI), a market capitalization-weighted ETF tracking Singapore’s top 30 companies listed on SGX.
The advantage of ETFs lies in their ability to provide instantaneous diversification, aligning with a chosen index or asset class and effectively dispersing risk across multiple securities. Unlike traditional mutual funds, ETFs trade on stock exchanges similarly to individual stocks, translating to lower expense ratios. This cost-effectiveness positions ETFs as a strategic and accessible investment option, offering investors a dynamic tool to optimize your portfolios.
Types of ETFs:
- Equity ETFs: These track stock market indices, providing exposure to a broad market, specific sectors, or even individual industries.
- Bond ETFs: Bond ETFs invest in a portfolio of fixed-income securities, offering diversification within the bond market.
- Commodity ETFs: These track the performance of commodities such as gold, silver, or oil, allowing investors to gain exposure to the commodities market without physically owning the assets.
- Sector ETFs: Focused on specific sectors like technology, healthcare, or energy, these ETFs provide targeted exposure to industries.
Blue-Chip Stocks on the Singapore Exchange (SGX)
Blue-chip stocks refer to shares of well-established, financially stable, and reputable companies with a history of reliable performance. These companies are typically leaders in their respective industries and have a proven track record of delivering consistent earnings, even during economic downturns. Blue-chip stocks are considered reliable, often paying dividends to shareholders.
STI as of 3 January 2022 are:
- Ascendas Real Estate Investment Trust (A17U)
- CapitaLand Integrated Commercial Trust (C38U)
- CapitaLand Investment (9CI)
- City Developments Limited (C09)
- ComfortDelGro Corporation (C52)
- Dairy Farm International Holdings (D01)
- DBS Group Holdings (D05)
- Frasers Logistics & Commercial Trust (BUOU)
- Genting Singapore PLC (G13)
- Hongkong Land Holdings (H78)
- Jardine Cycle & Carriage (C07)
- Jardine Matheson Holdings Limited (J36)
- Keppel Corporation (BN4)
- Keppel DC Reit (AJBU)
- Mapletree Commercial Trust (N2IU)
- Mapletree Industrial Trust (ME8U)
- Mapletree Logistics Trust (M44U)
- Oversea-Chinese Banking Corp (O39)
- SATS (S58)
- Sembcorp Industries (U96)
- Singapore Airlines (C6L)
- Singapore Exchange (S68)
- Singapore Technologies Engineering (S63)
- Singtel (Z74)
- Thai Beverages (Y92)
- United Overseas Bank (U11)
- UOL Group (U14)
- Venture Corporation (V03)
- Wilmar International (F34)
- Yangzijiang Shipbuilding Holdings (BS6)
Blue-chip stocks offer stability with lower volatility compared to smaller firms, reducing portfolio risks amid market fluctuations. Investors in these stocks often enjoy regular dividends, providing a reliable income source for capital appreciation. Highly liquid, blue-chip stocks allow easy trading without major price impact, granting flexibility in portfolio management.
While they may not yield rapid growth like riskier stocks, blue-chip investments provide steady, sustainable long-term growth—ideal for those with a more conservative risk appetite.
Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts (REITs) are investment vehicles that own, operate, or finance income-generating from real estate. They pool funds from multiple investors to invest in various types of real estate assets, such as commercial properties (office buildings, malls), residential properties (apartments), industrial properties (warehouses), and infrastructure assets (such as hotels and resorts).
REITs offer a way for individual investors to gain exposure to a diversified portfolio of real estate assets without directly owning the properties. They are required by law to distribute a significant portion of their income (usually at least 90%) to shareholders in the form of dividends. This characteristic makes REITs an attractive option for income-seeking investors.
For those lacking the financial means to purchase entire properties, REITs offer a chance to enter real estate markets with a more modest investment. Managed by seasoned professionals overseeing property selection, acquisition, and management, REITs suit investors seeking a hands-off approach to real estate. As regulated entities, REITs adhere to regular financial disclosures, providing transparency that empowers investors to make well-informed decisions based on the REIT’s performance.
Type of REITS
Office REITs
- Elite Commercial REIT
- IREIT Global
- Keppel Pacific Oak US REIT
- Keppel REIT
- Manulife US REIT
- Prime US REIT
Industrial REITs
- AIMS APAC REIT
- CapitaLand Ascendas REIT
- Daiwa House Logistics Trust
- EC World REIT
- ESR-LOGOS REIT
- Mapletree Industrial Trust
- Mapletree Logistics Trust
- Sabana Industrial REIT
Retail REITs
- BHG Retail REIT
- Dasin Retail Trust
- Frasers Centrepoint Trust
- Lippo Malls Indonesia Retail Trust
- Paragon REIT
- Sasseur REIT
- Starhill Global REIT
- United Hampshire US REIT
Healthcare REITs
- First REIT
- Parkway Life REIT
Hospitality REITs
- ARA US Hospitality Trust
- CapitaLand Ascott Trust
- CDL Hospitality Trust
- Eagle Hospitality Trust
- Far East Hospitality Trust
- Frasers Hospitality Trust
Data Centre REITs
- Digital Core REIT
- Keppel DC REIT
Diversified REITs (made up of both office and retail properties)
- CapitaLand China Trust
- CapitaLand India Trust
- CapitaLand Integrated Commercial Trust
- Cromwell European REIT
- Lendlease Global Commercial REIT
- Mapletree Commercial Trust
- OUE Commercial REIT
- Suntec REIT
However, it’s crucial for you to recognize that, like any investment, there are inherent risks. Market dynamics, economic fluctuations, and unforeseen events can impact the performance of these investments. Diligence and careful consideration of the associated risks are paramount, as even with the promising attributes of these REITs, the investment landscape remains subject to uncertainties. Investors should conduct thorough research and, if necessary, seek professional advice to make informed decisions aligned with their risk tolerance and financial goals.