Take some money off the table

Government of Singapore Investment Corporation (GIC) sold off 4.5 per cent stake in Citigroup shares to reap profit of US$1.6 billion. This exercise reduced GIC stake in Citigroup to 4.9 per cent, down about half its original holding.


This is a prudent move by GIC. Significant profit is realised by the sale and the investment exposure in Citigroup is now halved and hence the risk is reduced as a result.


I too reviewed my financial portfolio last week. Some of my unit trusts have improved since the dark time in first quarter of this year. These unit trusts were bought in the early part of 2008 or earlier and had suffered paper losses in value when the world is gripped by the financial crisis. As the equity markets improved, the unit trusts have also risen in tandem.


I redeemed fully one equity-linked unit trust and sold off half in another to take some money off the table. This is done to pare down my exposure in moderately to highly risky unit trusts. The volatility of these risky unit trusts is driven by economic crisis. The value of these unit trusts can easily be reduced by half. In worse case situation, permanent diminution in value is likely should companies invested in by the unit trust filed for bankruptcy. This would mean that you cannot recover even your cost of investment. On that note, it is advisable to review your unit trusts and other investments and make a decision to hold or sell your existing investments. Some action is necessary instead of  no action.


Written on 9/23/2009 11:49 AM


Copyright © 2009, the author known as LKT in Singapore.


The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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