When To Buy And Sell?

Upon the forming of a portfolio, another important aspect apart from rebalancing one’s portfolio from time to time, is knowing when to buy and sell the various assets. In this section, we share some factors which an investor may keep track of so as to have a better idea of when to buy and sell an asset!

Valuations

As value investors, we at Fundsupermart believe in buying when an asset is undervalued and selling when an asset is overvalued. Typically, a market is said to be undervalued if the benchmark equity index of the market has price-to-earnings (PE) ratios and/or price-to-book (PB) ratios that are below their fair PE respectively and historical average PB ratio respectively. On the other hand, a market is said to be overvalued should it’s PE and PB ratios be above their fair and historical average respectively. Market updates, which encompass updating readers on the markets’ valuations, are published on the platform frequently, as often as weekly, monthly and quarterly to share with investors our point of view as to which are the markets that are currently under or overvalued and by what magnitude.

Star Ratings

At Fundsupermart, the Research Team rates the attractiveness of each of the markets under our coverage by assigning them a certain number of stars, up to a maximum of 5.0 Stars, according to their respective attractiveness. A general guideline of what our Star Ratings mean for markets is as follows:

Our star rating methodology involves considering key valuation metrics such as PE and PB ratios, expected earnings growth, excess earnings yield as well as the long-term economic outlook and prospects of the markets we cover. A hybrid of both top-down and bottom-up forecasts and qualitative adjustments, where necessary, are used to achieve reasonable estimates of target upside for each market under our coverage over a 3-year horizon. As long-term investors, we typically place greater emphasis on forecasts 1-2 years down the road, rather than forecast numbers relating to the current year of our assessment. While the star ratings for markets are updated quarterly, we remain vigilant to market events and would update the markets’ star ratings accordingly should there be a time we feel any one of the markets’ outlook has significantly changed.
Investors may refer to the Star Ratings of each of our markets which are constantly displayed on our platform to understand Fundsupermart’s view of the attractiveness of the respective markets at any one point in time as a guide for their buying and selling decisions.

Recommended Funds

In conjunction with market updates which would update investors on market valuations and our Star Ratings which would provide investors with our view on the attractiveness of each of the markets we cover, investors may refer to Fundsupermart’s Recommended Funds list! The list, which typically includes our favoured funds from each broad category, may be used as a guide to narrow down on funds in markets or sectors which an investor is specifically interested in or when considering additions to the core and supplementary portions of his portfolio. Recommended Funds list screens funds in each broad category based on several criterions such as a fund’s past performance (magnitude and consistency over different time periods), longevity of the team of professionals managing the fund, expense ratios, risk-adjusted returns and adherence of fund managers to the fund’s objective, to name a few. Based on these critical criterions, we have narrowed down the wide array of funds in each category to a select few!

 

We suggest that investors keep an eye on valuations, Star Ratings and the Recommended Funds List, as they serve as good guidelines for an investor’s investment decisions. Due to the availability of intraday pricing for ETFs, investors may want to adopt tactical strategies to potentially maximise their profitability when investing via ETFs. Take for instance, an investor who is already certain he would like to buy or sell and ETF may further increase his profits by buying at the time of the day when he suspects the ETF’s price has reached its day’s low and selling at the time of the day when he suspects the ETF’s price has reached its day’s high!