SINGAPORE (Feb 19): When we put together our 10-stock portfolio in 2017, US President Donald Trump had just taken office and begun to rant about globalisation and unfair trade policies. Geopolitical risks appeared high and interest rates looked set to rise. We did not think it was a time to be particularly aggressive with our stock picks, so we selected names that would thrive through volatility.

All those fears did come to pass: Trump continued to push his America First policy and engaged in a war of words with North Korea; and the US Federal Reserve raised the federal funds rate three times. Yet, stock markets rallied strongly. From Jan 24, 2017 to Feb 9, 2018, the Straits Times Index gained 11%. Our 10-stock portfolio managed to keep up, rising 13.1% on share price performance. Assuming reinvested dividends, our portfolio returned 16.9%. That was ahead of the STI’s returns of 14.8%.

Much of our outperformance can be attributed to discounted rights issues. Buying cheaply priced shares substantially boosted the overall return from several counters. We concede that investors might not always have the cash to take up their entitlements, or even be inclined to do so, but we have calculated our returns with the assumption of full subscription.

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