Food: Taro-puff and barbequed pork buns
Tucking in while still available. The local dim sum dishes just taste very different from those elsewhere, even though the chefs originate from the same place.
The taro puffs are served hot. They are also petite, taking no more than two or three bites to finish. In some other countries I had been to, the puffs are typically the size of an avocado, and served at best lukewarm from a push cart.
The barbequed pork bun is similarly sized. The difference with those found elsewhere is typically in the dough. Locally, these are relatively thin and moist; elsewhere the dough can get dry and thick.
Love: Groceries shopping and budget
I previously wrote about the developmental milestones for an 18-year-old. Amongst this is earning and managing money. I started my daughter on managing money this weekend. I gave her $50 and tasked her with shopping for the ingredients for one meal.
I walked her to the supermarket, pointing out key landmarks along the way. I intended to stay outside the supermarket while she did her shopping, but was dragged in as she could not reach the beef on the upper shelf. She went to the till after picking up the tomatoes and potatoes. The bill came to just under $50.
I told her she could keep the balance, and use it to pick a non-sugary item from the mini-mart on the way home. We went through all the shelves of the mini-mart, and she realized that there wasn’t a single item that sold for less than that. When we reached home, I wrote that balance on a card, and told her she could keep adding the balance for subsequent weeks, and use the total when she finds something appropriate.
It was a great trip, and it helped that she carried the shopping bag all the way back home without complaint.
Growth: Mindsets
During the week I came across two articles about two entirely different personalities. The first was about the Japanese philanthropist, entrepreneur and the founder of Kyocera and KDDI, Kazuo Inamori. The second was about the Singaporean civil servant Philip Yeo.
My takeaway of Inamori-san’s main criteria for leaders is as such – a human being with a good heart. He emphasized “doing the right thing as a human being” and “making decisions with an altruistic mind”. He did not mention intellect, knowledge and experience, not because these were taken as pre-requisites, but because he thinks being a decent human being is paramount. More importantly, he believes people can continue to work towards becoming a better person.
In contrast, Mr. Yeo classified people into four classes: rulers, eunuchs, generals and workers. The rulers are the visionaries – they decide what needs to be done. The generals and workers get these done. The eunuchs are staffers who shuffle papers and keep the rulers distracted. Mr. Yeo’s choice of leaders are mavericks who gets things done, very much in the image he had of himself. Crucially, Mr. Yeo’s belief about people is that “people don’t change,” and he claimed a founder of Singapore held the same view.
I would love to hear from people who had worked for either men. If I were a boss, I know who I would want to be. If I were an employee, I know who I would want to work for.
In a previous post I wrote about pronoia, which Kevin Kelly espouses in his 68 Bits of Unsolicited Advice. You can now hear him on Freakonomics podcast and watch him on YouTube.
Investment: Private equity for retail?
Previously I wrote about my thoughts about the private equity industry. My view was that the PE industry would be in an even stronger position after the pandemic than now, and that increasing power will be concentrated at the hands of a decreasing few.
This week, The Economist ran two articles on the industry. The newspaper’s view was that “PE firms are better prepared for a downturn, and seem to be more welcome,” and that now is the time to turn the industry’s huge pile of dry powder into outsized returns.
The question for the man on the street is – how can an average Joe access this asset class, and would it be worth it?
Private equity funds are typically only available to accredited investors, meaning you need to have either a certain amount of assets or earn a certain level of income to be able to subscribe to a fund. Further, the entry ticket size can start at hundreds of thousand of dollars, if not millions.
Since 2015 September, however, a mutual fund company has made a proxy of the asset class available to non-accredited investors. Leland Funds offers a mutual fund that tracks the Thomson Reuters Private Equity Buyout Index. It’s a passive fund that seeks to replicate the performance of US private equity-backed company.
Market fluctuation over the past few months offers a great opportunity to look into the volatility of PE investment. In 2019, the Leland PE Buyout fund returned 34.6%, registering a 12.4% annualized return since inception. In 2020Q1 however, it recorded a 33% drop, knocking down annualized return since inception to 2.16%.
| NAV | QTD | YTD | 1Y | 3Y | 5Y | Inception |
| 2019Q4 | 8.98% | 34.63% | 34.63% | 14.67% | n.a. | 12.43% |
| 2020Q1 | -33.31% | -33.31% | -22.37% | -1.97% | n.a. | 2.16% |
What about fees? Are investors expected to pay 2-and-20? Thankfully not. However, it is still not cheap. Sales charge can knock an investor back a maximum of 5.75%, while annual management fee range from 1.8% to 2.8%. The fund manager offered some discount which will reduce this to 1.5% ~ 2.5% until 2021 Jan 31st. Compared with equities ETFs charging single digit basis points, this is definitely a luxury fund. The following is the performance of what the Class A Fund looks like after fees:
| After Fees | QTD | YTD | 1Y | 3Y | 5Y | Inception |
| 2019Q4 | 2.75% | 26.86% | 26.86% | 12.44% | n.a. | 10.89% |
| 2020Q1 | -37.13% | -37.13% | -26.86% | -3.88% | n.a. | 0.83% |
Again, the volatility is stark. Depending on the period you select, after-fee annualized performance since inception range from 0.83% to 10.89%, a difference of 10%.
Depending on the time period, fees will reduce investors returns by 1.3%~7.8%. The better the fund performance, the bigger the drag. Somehow the effect mirrors the carry of private equity general partners, though imperfectly.
| Fee impact | QTD | YTD | 1Y | 3Y | 5Y | Inception |
| 2019Q4 | -6.23% | -7.77% | -7.77% | -2.23% | n.a. | -1.54% |
| 2020Q1 | -3.82% | -3.82% | -4.49% | -1.91% | n.a. | -1.33% |
I did a comparison of the performance of the fund against that of the SPDR S&P 500 ETF, which returned 8.79% per annum before fees since inception in 1993 January and currently incurs an annual expense of 9.45 basis point (that is 0.0945%). An investor putting in $10,000 can expect the following amounts over time after fees, depending on which annualized return of the Leland TRPEI fund she assumes:
The risk-return ratio, as measured by the Upside/Downside Ratio, isn’t great. Upside is the excess return from Leland’s PE Buyout Fund over the SPDR S&P 500 ETF, assuming the optimistic after-fee annualized return since inception recorded in 2019Q4. Downside measures the same difference, but using the annualized return since inception for the Leland fund recorded in 2020Q1.
Over a 5-year period, an investor running the risk of losing $100 can expect a return of $34 should the bet run in his favour. This ratio gradually increases to 77% in Year 25. Even then, the investor would still expect to gain fewer dollars than the amount he is willing to lose.
Leland Fund’s attempt to bring the asset class to the masses is unfortunately still uneconomical for the average guy. For those fortunate enough to have direct access to the top funds, excess returns should continue to pour in. Matthew’s Effect will continue to work in their favour.
Awe: Stellar latte
Hubble telescope is approximately 550 km above the ground, orbit the Earth at over 27,360 km per hour and takes 95 minutes to complete one orbit.”
This week, it took a photo of a swirling galaxy in the Ursa Major constellation that looks like the pattern on a latte. Perhaps I should show the photo to the barista on my next coffee visit.
