FSM's The Members' Portfolio Challenge

After clearing all exam, finally I have time to blog again. About a month ago, I submitted my recommended portfolio for FSM's The Members' Portfolio Challenge and my portfolio was featured. Before the submission, there was not instruction to give the suggested funds for the particular sector which we recommended, so I just submitted the allocation. Therefore, I take take this opportunity to post my recommended funds here for those who is interested to know based on my recommended portfolio. Below is the portfolio posted on FSM - http://www.fundsupermart.com/main/research/viewHTML.tpl?articleNo=5737 : 

PORTFOLIO 4

Asia ex-Japan - 25% allocation will be split into 3 funds: namely:

1. FTIF-TEMPLETON ASIAN GRTH A(ACC) SGD - Focus On Energy 

2. FIRST STATE ASIAN GROWTH FUND -  Focus On Financial

3. HGIF ASIA EX-JAP EQ SM COS SGD AD - Focus On Small - Mid Cap 

Global Emerging Markets - 15% allocation will be split into 2 funds: namely:

1. FIRST STATE GEM LEADERS - Well Diversified In Terms Of Industries

2. ABERDEEN GLOBAL EMERGING MARKETS - Good Exposure To Financials And Energy Sectors

China & Hong Kong - Total 10%

1. ABERDEEN CHINA OPPORTUNITIES - 73% Allocation On Hong Kong Stocks

2. FIDELITY CHINA FOCUS-SGD - 92% Allocation On China Stocks

High Yield Bonds - 15%

1. PRU MTHLY INCOME PLAN CL A - Mainly Invest On Us High Yield Bonds And Asian Bonds

Emerging Market Bonds - 15%

1. FIDELITY EMERMKTDEBT A-SGD - Over 50% On Government Debt

Asian Bonds - 20%,  allocation will be split into 2 funds: namely: 

1. FIDELITY ASIAN HY AMDIST USD - Over 50% On Asian Industrial Bonds

2. LEGG MASON WA ASIAN BOND TRUST - Mainly On Asian Government Debt

PHILOSOPHY BEHIND PORTFOLIO 4

This portfolio aims to achieve mid to long term capital appreciation by investing 50% to bonds funds and 50% into equity funds. Our current view on the market is that Asia equities are generally undervalued after huge the correction from August to October 2011. At the same time, we believe that the Europe debt problem cannot be solved in the near term but do not wish to miss out on the upside opportunities on the brighter Asia market.

Based on a three year average annualised return on high yield bonds, Asian Bonds and Emerging Market bonds all have a yield above 10%. Therefore this balanced portfolio offers stable yield from high return bonds to offset volatility during tumultuous market conditions while this arrangement still has the flexibility to rebalance towards to 60-65% equity if the overall market continues to deteriorate. As we are bias toward Asia markets, we have allocated an overall 35% weight on Asia equity including single country equity in China and Hong Kong which we believe offer the highest growth po tential. Global Emerging Market's equity's three years average annualised return is about 15% (reasonable return). This is to diversify the weightage on the equity portion as to not overweighting on the Asia region as a risk control measure. Overall, this portfolio's objective is to gain 15-25% return per annual basis.