Me & My Money: Crucial to have good mentors and good ideas for career growth and investments, says CIO

SINGAPORE – Having good mentors is crucial for career growth, as DBS chief investment officer Hou Wey Fook has discovered.

Mr Hou, 61, who cut his teeth at sovereign wealth fund GIC after graduating from engineering school, said: “The wealth management business is not just about dollars and cents.

“It’s very much a business about people – building trust with clients and learning to bring out the best in your own people. A good mentor can show the way, check one’s blind spots, and be a trusted sounding board.”

He recounted how wisdom shared with him by former GIC chief investment officer Ng Kok Song and late veteran banker Elizabeth Sam helped to shape his 37-year career.

“Under Mr Ng’s leadership, I saw how he navigated global financial markets through bull and bear cycles, and how he guided us, as trainee analysts then, to build long-term, resilient portfolios,” said Mr Hou, who graduated from the National University of Singapore in 1987.

Meanwhile, Mrs Sam granted him the mandate to build and offer portfolio solutions when he was at OCBC Bank, especially solutions related to fixed income, which was still nascent in the local asset management industry in the early 1990s.

“Under their wing, I gained invaluable experience and matured through multiple financial crises. This has honed my instinct and ability to be a portfolio manager capable of seizing opportunities across global asset classes,” said Mr Hou.

After leaving GIC, Mr Hou joined the institutional asset management industry and after that, the private wealth sector.

He was at the Bank of Singapore, where he held various senior management roles including CIO and head of discretionary portfolio management, before joining the consumer banking and wealth management business at DBS Bank in 2017.

Although he had always been interested in the financial markets, he decided to pursue an engineering degree as a young man for practical considerations.

“During that period, engineers were in high demand, and I noticed that many of them were able to successfully transition to finance, while the reverse was less common,” he said, noting that engineering and finance both require analytical skills and risk management.

“For example, civil engineers will need to assess risks and costs in relation to safety and functionality, in a way not dissimilar to that of a fund manager who weighs the risk-reward profile of a company before deciding to invest in its bonds or equities.”

His overarching approach when constructing an investment portfolio is to focus on two areas: assets that generate consistent income – or cash flow – and growth assets that generate capital gains.

As for growth assets, Mr Hou looks for good “ideas”: companies that are innovators, disruptors, enablers and adapters, which thrive in the digital economy.

“They include the likes of Nvidia, Amazon and Microsoft, all of which ride on the growing AI (artificial intelligence) ecosystem. This view that AI would drive real earnings growth, with stock prices reflecting this growth thereafter, has stood the test of time. Nvidia, a pure AI play, has shot up 165 per cent since June 2023,” he said.

When selecting individual stocks, he looks to best-in-class, global companies with wide economic moats – competitive advantages that enable these firms to maintain profit margins and market share in the long term.

Examples include companies with strong brand recognition, technology patents, or strong networks that make it costly for customers or suppliers to switch to a competitor. 

It is also important to have a well-diversified portfolio, he said.

“This principle also extends to bond investments... My view is that instead of holding single bonds, I would consider holding bond funds, which consist of a large pool of underlying bonds and offer similar returns without unnecessary concentration risk in the case of a default.” 

The allocation to income and growth assets depends on the current stage of one’s life, added Mr Hou. “As one approaches retirement, a portfolio should shift to be income heavy as the runway for risk shortens.”

He and his wife have a daughter and three sons, aged 22 to 31. “Two of the four are married, and we are starting an exciting new chapter as we eagerly anticipate the arrival of the family’s first grandchild.”

Q: What is in your personal portfolio?

A: On my personal portfolio of liquid assets, I embrace having both income generators and growth equities – something we call the barbell strategy at the CIO office.

On the income portion of the portfolio, I hold Singapore T-bills, government bonds, Singapore Reits (real estate investment trusts), and Singapore bank stocks for their dividends, while the growth portion comprises technology stocks.

Recently, I added unit trusts in the sectors of energy and emerging markets, as I believe that the equity rally we have seen will ripple out to sectors that have very much lagged technology.

I have a measured exposure to gold ETFs (exchange-traded funds). Gold is traditionally uncorrelated to public equities and bonds, and therefore adds resilience to my overall portfolio. The increasing geopolitical uncertainties in current times will also act as a tailwind for the price of gold.

At my age, the savings in my Central Provident Fund (CPF) Special Account have been transferred to a newly opened Retirement Account, and those savings will be used to pay for CPF Life premiums that will provide me with monthly payouts during retirement. This is another handy source of income, in addition to my other income-generating assets.

Given the US Federal Reserve’s guidance for lower rates going forward, I am now looking at deploying my excess cash to short-dated, target maturity bond strategies such as the new DBS CIO Target Maturity Fund 2027.

Today, I have some 60 per cent of my portfolio in assets that will generate regular income streams for me, while the remaining is primarily in growth stocks. It is likely that, closer to my retirement, the 60 per cent weightage of my income-oriented investments will rise further.

As I am the sole breadwinner of the family, I have also undertaken life insurance policies to provide some measure of financial protection to my family.

For example, I have a universal life policy to act as a mortgage protector, so that in any unforeseen circumstances, my wife and children can continue living in the house we are in, without the heavy burden of servicing the housing loan. My wife and I have also drafted our wills, and this saves the children from unnecessary emotional stress. 

Q: What was your biggest investing mistake? Which was your best investment?

A: My biggest mistake was to be short-term oriented in my investments, and this manifested as not having the discipline to hold winners for longer.

Engaging in short-term trading exposes us to “anchoring” bias, which means that after we have sold a good holding at a certain price, there is often strong inertia to get back in at a higher price even if the fundamentals are sound. In other words, we are “anchored” or fixated on the price that we sold the stock at. Very often, this stock would turn out to be a multi-bagger investment.

A case in point is a technology ETF that I purchased in the late 2010s. I took some 30 per cent in profit after holding it for a brief period and have regretted it ever since. After selling my position, I realised that the fund had gone up by three times.

My best investment, although rightfully not really an investment as I had purchased it for the purpose of living in it, was upgrading my property to a landed home some 20 years ago.

Q: Describe your lifestyle, and how your growing-up years shaped your perspective on money.

A: I strive to maintain a balanced and active lifestyle. Regular exercise is an integral part of my routine as it helps me stay energised and focused. Golf holds a special place in my pursuits; I find it not only a great way to stay active but also an excellent opportunity to unwind. I’m also drawn to the strategic nature of it. That said, I also enjoy a good plate of char kway teow – it’s all about balance.

I live in a 999-year leasehold house in District 10, and I drive a white Tesla Model Y.

As an investor, I have been closely following Tesla’s progress for years, intrigued by its potential to disrupt the automotive industry. However, it was not until a conversation with a client at a business event that I seriously considered owning one myself.

This client, a long-time Ferrari enthusiast, shared how he had traded in his prized supercar for a Tesla and has not looked back since. His enthusiasm piqued my curiosity, prompting me to purchase a Model Y. The experience was nothing short of revelatory as its acceleration rivals that of a high-end sports car.

I grew up in a humble family in Malaysia. My late father, who was the sole breadwinner of the family, worked tirelessly as a bank clerk to support his family of three children, of which I am the youngest.

Given our family’s limited resources, studying abroad was never an option that was open to us. So, I am tremendously grateful to the Public Service Commission of Singapore for offering me an Asean scholarship to study at the pre-university level at National Junior College.

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