[Post 112]Learning investing/trading together part 25:Pre-Dividend capture strategy method(legit or not?)

*For more information on Pre-dividend capture strategy method, you can refer to/download this book

This week post we will focus on a trading method known as Pre-Dividend capture strategy method(Not exactly sure if there is another name for such strategy though)

What is "Ex-Dividend"?

• A trading term that specifies when a declared dividend is owned by the seller rather than the buyer

• For example, the ex-dividend date for the stock DBS(D05) as shown below is 2018-08-08
• This means that if you own the stock on 2018-08-08 aka Aug 8, 2018, you will be entitled to the dividend also known as cash dividend 

• Dividend or Cash dividend: A cash dividend is a money paid to stockholders, normally out of the corporation's current earnings or accumulated profits. Not all companies pay a dividend though)

• A common misconception is that you must own the stock until after the ex-dividend dates to be entitled to the dividend 

• In DBS(D05) case, most people thought that you have to hold until after the Ex-dividend date before you can sell it, which is one day after the Ex-dividend date(Aug 9, 2018)

So,what is this Pre-Dividend capture strategy method?

• The key date to remember is 10 trading days prior to the day before EX-DATE(circle in red), in this sample of STI ETF(ES3) the date would be (circle in black)
• You buy the stock 10 trading day prior to the day before the Ex-dividend date and sell it on the day on before the ex-dividend date
• Win or lose,you just follow the rules of buying 10 day prior to the day before the Ex-dividend date and sell it on the day before the ex-dividend date (Anyone that tell you that a trading strategy is a sure win, is a liar.)
• This strategy here has been historically 75 to 85% successful as the author state, which means he lose somewhere between 2 to 3 out of every 10-15 trades him make.

Let show's some historical data from STI ETF(ES3) to see if its really work as he stated,will be using the previous 10 ex dividend dates to compare 

Since each year,es3 will have two ex-dividend date(Jan and July),the data used will be from 2015-2019

All data taken from yahoo finance:credits to yahoo finance

I will be using the data of the opening price to see if this strategy really work.

• 22 Jul 2019(10 trading day prior to the day before ex dividend date:3.4300
  02 Aug 2019 (1 trading day before ex dividend):3.3500
• Result:Loss

• 21 Jan 2019(10 trading day prior to the day before ex dividend date:3.2800
  01 Feb 2019 (1 trading day before ex dividend):3.2490
• Result:Loss

• 19 Jul 2018(10 trading day prior to the day before ex dividend date:3.3030
  01 aug 2018 (day before ex dividend):3.3910
• Result:Win

• 18 jan 2018:3.60
  31 jan 2018:3.60
• Result:draw or loss (if you consider transaction fees  too)

• 14 Jul 2017(10 trading day prior to the day before ex dividend date:3.2900
• 27 Jul 2017(day before ex dividend):3.3800
• Result:Win

• Prices does not include commission or other data for simplicity sake
• 18 Jan 2017(10 trading day prior to the day before ex dividend date:3.0600
• 01 Feb 2017(day before ex dividend):3.1100
• Result:Win

• 15 Jul 2016(10 trading day prior to the day before ex dividend date:2.9700
• 28 Jul 2016(day before ex dividend):2.9900
• Result:Win

• 15 Jan 2016(10 trading day prior to the day before ex dividend date:2.7200
• 28 Jan 2016(day before ex dividend):2.6100
• Result:Loss

• 16 Jul 2015(10 trading day prior to the day before ex dividend date:3.3900
• 28 Jul 2015(day before ex dividend):3.3500
• Result:Loss

• 16 Jan 2015(10 trading day prior to the day before ex dividend date:3.3800
• 29 Jan 2015(day before ex dividend):3.4600
• Result:Win

As you can see from the result,we have

• Win:5
• loss: 4
• draw:1

So 5 out of 10 wins, about 50% chance

If we were to include commission, I would probably suggest a range from $5000-$10,000 to trade to see any decent profit

Using Jan 2015 e.g 

BUY

SELL

PROFIT

• $5.177.08- $5,082.87=$94.21

Conclusion

• Circumstance may change as we are using Singapore stock instead of US stock
• Another consideration would be applying this strategy to a normal stock instead of an ETF

Hope this article gives you an insight into trading strategies!

[Post 111] Learning investing/trading together part 24:How to purchase stock through SAXO

In this learning investing/trading post, I am going to show how to purchase stock through SAXO

Surprisingly, the signup process for SAXO was easy as it uses Singpass information(for Singaporean resident only) for signing up despite it being a Denmark bank and in about one day, I open a brokerage account with SAXO(Remember to set your account as USD  denominated!).

So, why choose SAXO as a brokerage?

Pros

• Good customer service, asked some queries on the account fee using the chat interface and was answer promptly
• Fees of $0.01 per share or min $4.00 USD 
• Able to sign up using SINGPASS
• There is a Singapore office
• Paynow transfer is near instant

Cons

• No physical bank(Well,at least not in Singapore)
• When (FAST)bank transfering money to your custodian bank account assign to you and they will update your account balance(Updating of balance in the account generally takes an hour not immediate)
• Let's say you transfer $4000 at 3 PM to your custodian account, only at 4 PM then your account balance will show that you have $4000 transfer in
• 0.12% annual fees(this mean that if you have an investment of $10000, you will have to pay an annual fee of $12)
• There is a 0.75% forex conversion fee if you are making trade in a foreign currency

Onto the step by step guide on how to purchase a stock via SAXO!

Step 1)Transfer money into your SAXO Account

How much to transfer?

• Well, it depends on how much your budget to purchase those stock and whether you have enough in your bank
• Currently, the Brokerage charges for Saxo (Singapore market):0.08%, min $10
• Hence, the minimum amount one should invest to maximize the brokerage fee of $12,500
• 0.08%/100=0.0008
• $10/0.0008=$12,500
• if your trade is bigger than $12,500,the 0.0008% is bigger than $10.Compare to other brokerages charges which are far more expensive such as DBS and Standard Chartered,FSM and SAXO are one of the cheapest brokerage in Singapore(Except for tiger brokers)
• ***Note: You can invest in any amount you like it need not be $12,500, in my personal case I use either $3000 or $5000 or $7000

But what about the US Market charges?

• Again, it depends on how much your budget to purchase those stock and whether you have enough in your bank
• Currently, the Brokerage charges for Saxo (Singapore market):$0.01/per share or min $4.00 
• Hence, the minimum share one should purchase to make it worth it is 400 share
• 4.00/0.01=400 shares
• ***Note: it is just a guide, you can purchase any amount of shares you like just as long as your profit is more than your commission for purchasing and selling the shares.

So you have decided the amount? What's next?

• Transfer the money, of course!
• Do refer to this webpage on how to fund your account

Step 2)Time to buy some stock!

After you log in click on add instrument to search your stock ticker, in my case, i am buying APPLE inc stock(AAPL)(red circle)

After clicking buy,the trade ticket will appear,key in the quantity of the stock that you would like to purchase, in my case, I will sell my shares of APPLE

The terms are explained as follows:

• Bid: how much someone is willing to pay for the share(Someone wants to buy the share at a price of 318.75)

• Ask is the price a seller is willing to sell the share(someone wants to sell his share at a price of 318.84)

• Last traded: How much was this share bought or sold for in the last/latest trade transactions

• Net changed: How much the share has increased/decreased change is the difference between the current price and the closing price of the previous day (e.g market close at 1600pm at the previous day at $316.85 per APPLE share and it is now at the current market price of $318.89 per APPLE share)

• % change: Similar to net change but in a percentage form

• Type or order type: Limit order(buying or selling a share at a specific price, Always choose Limit order!!!), market order(buying or selling a share at the current market price or also known to buy or sell the shares immediately, OR Order get filled immediately)

• Buy./Sell: Select buy if you want to buy shares and select sell if you want to sell the shares(In my case, I select sell)

• Shares: How many share you would like to purchase(In my case, I select 6)

• Price: The price you would like to buy/sell your share at(In my case, I select at 319.55)

• Duration: DAY Order(A Day order is a limit order good for that business day only. If the order is not filled by the end of the trading day, the order will expire.This is the order we are going for, for simplicity sake.)

• Cost: Shares x price(6 x 319.55=1917.3)

• Nominal value: Saxo commission charges(as mention before,it is min 4.00 USD,hence 4.00 USD)

• Cash available: How much ash you have available in your account

*As taken from here: When a market is experiencing more buying volume than selling volume, it means that there are more traders buying at the ask/buy price, which has a tendency to push the price up.

When a market is experiencing more selling volume than buying volume, it means that there are more traders selling at the bid price, which has a tendency to push the price down.

After that click place order, and click confirm and you are done!(You have made your first investment!😁)

Pretty easy right?Do watch out for my next post,thanks for reading!

[Post 110] Event and Convention: FSM Invest Expo 2020 part 2(Rise of the disruptive technology fund)

Continue from my previous post...

One interesting thing that I have noticed throughout the event was the offer of disruptive technology fund by various fund houses such as BLACKROCK, FRANKLIN TEMPLETON, and Nikko AM(P.S not sponsored by them!)

So, the big question here is "What is disruptive innovation? 

Our definition of disruptive innovation is the introduction potentially changes the way the world works. 

The Nikko AM ARK Disruptive Innovation Fund enables the investor to easily access emerging and growth companies through listed global equity market opportunities.  we have identified five major innovation platform that enables long term investment opportunities

What are the five innovation platform?

• DNA sequencing 
• Blockchain
• Robotics
• Artificial Intelligence
• Energy Storage

These five innovation platforms rely on or benefit from the development of new products or services, technological improvements, and advancements in scientific research relating to. Genomic Innovation, Industrial Innovation, Internet Innovation, and FinTech Innovation. 

Industrial innovation categories

1. Autonomous Vehicles 
2. 3D Printing 
3. Automation & Robotics 
4. Battery Technology 
5. Space Exploration 
6. Mobility-as-a-Service 
7. Innovative Materials 

Genomic Innovation categories

1. Programmable Biology 
2. Stem Cells & Immunotherapy 
3. Digital Health 
4. Biological Hardware 
5. Diagnostics 
6. Beyond Health 

Internet Innovation categories

1. Cloud Computing 
2. Big Data 
3. Neural Networks Mobile / loT 
4. Digital Media 
5. E-Commerce 

FinTech Innovation categories

1. Transaction Innovations 
2. Customer Facing Platforms 
3. Risk Transformation 
4. Frictionless Funding Platforms 
5. Bitcoin / Blockchain 
6. The New Intermediaries 

But why invest in disruptive technology? 

Despite its potential, the magnitude of disruptive innovation, and the investment opportunities it creates are often unrecognized or misunderstood by the traditional investors. Our Investment process recognizes that true disruptive, cuts across sectors and geographies, and spawns further innovation, stimulating growth over extended time horizons.

Potential Growth 

There are five primary disruptive platforms that are expected to generate more than US$50 trillion in business value and wealth creation over the next 10-15 years. Today they are in their infancy and account for less than $6 trillion in global equity market capitalization. 

Why invest in Nikko Am disruptive innovation fund?

1.Not your typical FANNG and BAT

Unlike traditional assets manager, the team at ARK devote 100%of their time researching and investing technologically enabled innovation 

The team is made up of experts in multiple areas of innovation such as biomolecular engineering, cognitive science, artificial intelligence, robotics blockchain, technology

This result in a distinctive portfolio of what the team believes to be true disruptive innovators such as CRISPR technologies,Stratasys and 2uINC beyond typical technology stocks

2. Capture early-stage disruptors

 ARK Invest's Open Research Ecosystem is designed specifically to identify disruptive innovation at an early stage, enabling the investment team to sift out and uncover unique insights, which the team believes to be true early-stage disruptors. 

3. Low correlation to traditional asset classes 

The Nikko AM ARK Disruptive Innovation Fund has little overlap with traditional indices, so it can complement traditional strategies. Thematic investing in disruptive innovation can offer low correlation to a number of core asset classes held in most investors' portfolios.

(Investor of the fund should have long term investment horizons) 

The Nikko Am ARK disruptive innovation fund seeks to capture long term capital growth by taking advantage of changing trends created by technology-enabled innovations that cut across economics sector, industries and geographic region(ARK investment management LLC(ARK), a strategic partner of the Nikko AM group, is the investment advisor for the strategy. Based in new york, ARK is an investment manager focus solely on disruptive innovation that should change the way the world works.

Fund characteristics 

Seek to capture long term growth  and capital appreciation created by disruptive innovation

• Actively managed, high conviction portfolio
• low overlap with broad market indices 
• Unique research process is driven by ARK Open research ecosystem
• investing across multiple sectors, geographies and capitalization 

Fund details:

Nikko Am Ark disruptive innovation fund
	SGD class B	USD class B
Total fund size :	USD 2,481,655 as of November 2019
Minimum investment:	USD 1,000 or equivalent in other currencies
Legal structure:	sub-fund of Luxembourg  SICAV qualifying as a UCTIS
Investment manager:	Nikko asset management America, inc
Investment advisor:	ARK investment management LLC
Management company :	Nikko asset management
Management Fee	1.50% p.a
Sales charges:	Up to 5.00%
Dealing:	Every valuation day
Base Currency:	USD
Inception date	26 July 2019	11 january 2019
ISIN code	LU1861559042	LU1861558580
Bloomberg tickers	NIKAD85 LAX	NIKADBULLX

Onto the next brochure!

The Emerging Market Appeal in a Low-Yielding world 

Global investors searching for income opportunities may find the current climate particularly challenging. With developed market fixed income yields at or near record lows, yield-seeking investors may need to look outside the at to satisfy their income requirements — the answer lies in emerging markets (EM). 

Why Emerging Markets Matter

It is difficult to dispute the long-term investment case that emerging market presents. Investing in EM provides exposure to countries with the lion's share of today's global GDP expansion, whch is estimated to be two-thirds of the world's GDP by 2024, up from one-third in 1980. 

EM equities have a stronger potential for capital growth 

EM fixed income has higher yields than developed market

Why Templeton Emerging Markets Dynamic Income Fund 

The Fund is designed to deliver on the goals of an active, multi-asset approach to tap the EM growth story, by dynamically allocating assets between equities and fixed income to capture opportunities and deliver income. 

Seeks capital appreciation and consistent income 

• Targeting consistent and sustainable income(Distribution rate resets annually, using multiple sources of inputs and expectations)

Integrated and Dynamic Investment Process(Dynamic asset allocation dials asset class exposures up or down to capture the greatest opportunities )

Three Pillars of Expertise; One Strategy (The fund draws on the expertise and experience of three investment teams in the emerging markets equity, unconstrained global macro and income investing space)

Experienced and on-the-ground management team 

-Michael Hasenstab, Ph.D. Chief Investment Officer Templeton Global Macro San Mateo, California, USA 

-Chetan Sehgal, CFA Director of Portfolio Management Franklin Templeton Emerging Markets Equity Singapore 

-Vivek Ahuja Portfolio Manager Templeton Global Macro Singapore 

Consistent, 

-Subash Pillai Regional Head of Client Investment Solutions, AP AC Franklin Templeton Multi-Asset Solutions Singapore

Consistent long-term performance 

-The Fund has delivered consistent outperformance against its peer groups

That's all for the FSM Invest Expo 2020!