Win a car in the Phillip-Macquarie Warrant Challenge!

Regular readers know that I won a car many years ago. Quite lucky, that. I always say that luck plays a part in the grand scheme of things. This is true in our efforts as investors too.

Now, there is a chance that you could win a car and unlike lucky draws at NTUC Fairprice, Harvey Norman or Courts, for examples, I suspect that there will be less participants in this lucky draw and your chances of winning are higher! Why?

This car is the grand prize in the Phillip-Macquarie Warrant Challenge and I don't think this is something that will have a big following of "shoppers". So, chances of winning are higher, I surmised.

You know what is the best thing about this Challenge? You don't have to use any real money!

If you have some experience trading warrants before, you possibly have an advantage over the rest. However, if you have no experience at all, you won't lose any real money anyway.

Like they say:

"It’s the perfect way to get started if you’ve never traded warrants before but always wanted to, and you stand to win your share of the $30,000 in cash prizes. Overall prize winners will also be entered into Phillip Capital’s Grand Lucky Draw to win a Mazda 6 worth S$90,000*"
*Terms and conditions apply.

To learn more or to take part now, go to:
Phillip-Macquarie Warrant Challenge!

Have fun and good luck! Hope one of my readers win! Huat ah!

Saizen REIT and Croesus Retail Trust: Much ado about Yen.

A reader sent me an email and expressed worry that the JPY might weaken further against the S$. With exposure to Saizen REIT and Croesus Retail Trust, he is worried.

For sure, the JPY has weakened dramatically in the last 2 years (and a few months) against the S$. By now, it has weakened some 25% or so. It might weaken further or it might not. I am sure there are arguments made in favour of both cases.

I think, as investors, we have to know clearly what is our motivation for investing in Saizen REIT and Croesus Retail Trust. If we are investing for income and if we have not overpaid in either case, I feel that we have little to worry about.

Luz Shinsaibashi, Osaka.

Both Saizen REIT and Croesus Retail Trust hedge exchange rate risk. So, even if the JPY were to weaken another 10% in the next six months, their next income distribution in S$ will barely be affected. Similarly, if the JPY were to appreciate significantly in the next six months, don't expect any big gain in DPU, everything else remaining equal.

Of course, the income distribution after the next could be hedged at an even lower exchange rate if the JPY is weaker by then. Yikes! Yes, this is one of the risks that comes with investing in anything that receives income in a foreign currency.

With Saizen REIT trading at 88c a unit and giving a DPU of about 6.5c, we are looking at a yield of 7.38%. Croesus Retail Trust is trading at about 89c and will offer an annualised DPU of about 9.3c, by my estimate, or a distribution yield of 10.44%, after its recent acquisitions. Double digit yield, anybody?

Of course, we have to remember that Saizen REIT has a much stronger balance sheet compared to Croesus Retail Trust and that they own different types of properties.

In the event that the JPY weakens another 5 or 10%, what would the impact be on the distributable income in S$ terms? Yield falls to 6.64% for Saizen REIT and to 9.45% for Croesus Retail Trust? Is that so unpalatable? Is that a catastrophe?

Photo of the Great Buddha in Kamakura I took on a trip in December 2011 when JPY was at its highest against the S$.

Investing for income is supposed to give us some measure of equanimity even if the equity market sails through a storm. If the slightest hint of choppy waters scares us to bits, we might want to look at our motivation for being invested again and also check to make sure that we have not invested with money we might need in the next few years.

There must be a reason for our fear. Find it.

Related posts:
1. Saizen REIT: Is the DPU sustainable?
2. Croesus Retail Trust: Recent acquisitions.
3. Motivations and methods in investing.
4. Be comfortable with being invested.