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Building a retirement nest egg - with value investing
GLOBAL stock markets may be reeling from "Brexit" but Britain leaving the European Union should not put a dent in your retirement savings and investments, says Aggregate Asset Management fund manager and executive director Eric Kong.
"What is important is that such dislocations in the market present the true investor the opportunity to pick up bargains in the stock market at his own terms," Mr Kong says.
"Asia's valuations have not been so compellingly low since the crisis in 2008 and it's a good time to stock up. If investing is not about buying low and selling high, we don't know what is. When there is blood in the streets, do you run and cower and lament later? Or do you take action and pick up the bargains?"
Mr Kong will expand on how investors can use value investing to build a retirement nest egg at "The Business Times - Aggregate Asset Management Retirement 2016" seminar, which looks at the theme of Retirement Made Simple.
The event will be held on Saturday, July 30, at Raffles City Convention Centre and is slated to be one of The Business Times' biggest, with more than 800 people expected to attend.
Vikram Khanna, associate editor of BT, says: "With our population ageing, plus given prolonged low interest rates and volatile financial markets, planning for retirement is becoming increasingly challenging.
"We at BT are pleased to team up with Aggregate Asset Management to bring you a seminar on how you can navigate these challenges to plan prudently for your silver years."
Mr Khanna, who will deliver the opening address, will also be moderator of the panel discussion.
The event features former Singapore diplomat Kishore Mahbubani, currently Dean and Professor in the Practice of Public Policy at the Lee Kuan Yew School of Public Policy in the National University of Singapore. He will kick off discussions with a talk on the Asian Century, particularly on whether it will happen - or if Asia will stumble.
Speakers from Aggregate Asset Management will follow, including Mr Kong and former BT journalist Teh Hooi Ling, who is now head of research and executive director of Aggregate Asset Management. Ms Teh will be speaking on how volatility is the key to value investing's outperformance.
Ms Teh says: "In Aggregate, we believe that valuation is the only factor that matters over the long term. In other words, the only way to make money in the markets is to pay for an asset or a stock at a price that's cheap relative to its economic worth or value."
Volatility is a friend of value investing, she adds. "For companies and economies in general, the process of value creation is gradual and incremental," she explains. "If the market is super efficient and prices assets correctly all the time, investors would only be looking at say, a boring 3 to 4 per cent of return a year."
"It is the myopia of investors and markets that causes large swings in market prices. And it is this volatility that will allow value investing to outperform the market by being able to pick up stocks and assets on the cheap. So to a value investor, volatility is a friend, rather than a foe!"
Since its inception at the end of 2012, Aggregate's flagship fund Aggregate Value Fund (AVF) has returned a compounded 8.5 per cent a year net of all fees. It has outperformed the MSCI Asia Pacific All Countries All Caps Index by 6.1 percentage points a year.
In three-and-a-half years, AVF has managed to grow its fund size to more than S$300 million.
Mr Kong adds: "Retirement saving and investing is made too complicated out there by the experts. Not only is it made complicated, but they just don't plain work. They don't work because of the investor's own temperament, the high costs associated with such services/products and the agency problem."
"Aggregate has simplified the entire process in a logical, systematic and understandable way. All you need is to know the few key concepts of value investing, portfolio construction, stock selection, diversification and withdrawal rates. Once you embrace these concepts, and with a bit of discipline, courage and hard work, it should bring you to retirement bliss."
The event will also have a panel discussion comprising Teng Ngiek Lian, founder and chief investment officer of Target Asset Management; Wong Seak Eng, fund manager and executive director of Aggregate Asset Management; as well as Ms Teh and Mr Kong.