$1.647 mil Daedalus Income Portfolio Update – December 2025 – Investment Moats

Here is the update for my Daedalus portfolio for December 2025. If work is not too busy, I will try to provide an update where possible.

I explained how I constructed this portfolio in Deconstructing Daedalus Income Portfolio and Why I Currently Invest in These Funds for Daedalus. You might not understand what I wrote below if you haven’t read this post.

All my personal planning notes such as income planning, insurance planning, investment & portfolio construction will be under my personal notes section of this blog. You can also find the past updates similar to this in the personal planning notes section.

Portfolio Change Since Last Update

The portfolio was valued at $1.6420 million at the end of November and is at $1.646 million at the end of December.

We reported a portfolio change of $4,000 for December 2025.

The portfolio is valued in SGD because that is the currency that I would most likely be spending on.

As of 2nd December 2025, the portfolio is valued at $1.647 million.

Full Year Returns

Since this is the last month of year, I will report the full year portfolio performance.

• Portfolio Starting Value: $1,481,000
• Portfolio Ending Value: $1,646,000
• Capital Injection: $15,000 SRS Money
• Capital Withdrawal: $0

Return based on XIRR: 10.05%.

Portfolio Attribution – Why did the portfolio do better/worse compare to last month [or a year ago if this is a December update]?

We all want to know what cause the portfolio to do better or worse. If you have just one fund that covers the MSCI World, or you have a bunch of funds, would you know if it did better or worse?

In this section, I try my best to explain the portfolio performance in my way.

Here are the primary security holding returns for the month-to-date and year-to-date for the funds that I own [the top fund table] and reference benchmark ETFs [the bottom Major Index ETF table]:

The table that shows the fund holdings denotes the month-to-date and year-to-date performance of the funds that I own, against Major Index ETFs. The Major Index ETFs is present to compare the performance. Just to be clear, I do not own the major index ETFs and you should see the top table (Fund) as what I own. The bottom table (Major Index ETFs) are benchmark ETFs to provide performance reflections.

The returns of all funds are in USD. This includes the performance of the Dimensional funds, which I use the returns of the USD share class so that the returns are comparable. I have also listed the major index ETF performance for comparison.

I added the WSML, ticker for the MSCI World Small Cap UCITS ETF so that we can reference the Avantis Global Small Cap Value and Dimensional Global Targeted Value better.

Just like that, one more year has passed.

I review last year December’s update and this year, almost all the funds did better than 2024. Yet the compounded annualized return is LOWER than last year.

One of the main culprit is the difference in SGD against the USD.

• 2024: SGD weakened 3.39% against the USD
• 2025: SGD strengthened 6.18% against the USD

A tale of two different short currency regimes.

What I gain in 2024 in currency, I gave back in 2025 and more. This will inevitably bring up whether you should hedge the currency and emotionally you would feel that you should but hedging also comes with a cost. Secondly, we also cannot discount that a weaker currency (be it USD or SGD) may help volumes of services and goods for one side, resulting in some higher profit margins and relatively higher EPS growth. How do you separate these things out?

You can’t.

I shared with enough folks you need to think about WHY you invest in these regions, these sectors, as oppose to doing it in Singapore in predominately SGD revenue earning investments. If you can’t find strong enough reasons then why don’t you shift all of them all the way back into Singapore? You would have some reasons and this question challenges your clarity about your portfolio.

a. General Equity Performance

Equities generally end the month of December doing better with fixed income not moving much. We didn’t have the Santa Claus rally.

Emerging markets (EIMI) did better than Developed markets (IWDA) this month. This explains the better performance of ACWD (Developed + Emerging Markets).

Emerging markets did 32% this year versus 21% developed markets. US large caps (CSPX) did 17.5% this year, mid caps (SPY4) did 7.7% and small caps (USML) did 6.6% this year. The Russell 2000 did 12% for the year. What is not shown here is developed ex US did 32% in the year.

The theme for 2025 can be said as dispersion.

It kind of shows that you can have good returns not just in the US, and that should give investors confidence about putting their money. If you have a value lens, momentum lens, profitability lens, then you would have greater ideas.

Daedalus was hit harder if we compare to large cap develop and emerging market equity because:

1. 32% of Daedalus is in US/Global Small Caps which is generally weaker (probably 16% vs 22%)
2. 13% of Daedalus is in intermediate duration global fixed income (4.7%)

In a way Daedalus is more of a 87% equity 13% fixed income portfolio.

b. Developed Equity Performance

There were a few multifactor funds targeting the developed equities region in Daedalus:

1. JPGL
2. GGRA
3. AVGC
4. IFSW

AVGC and IFSW did better than IWDA while JPGL and GGRA lagged. GGRA is a quality dividend growth systematic strategy, which tends to give you companies that grow their dividends at a high clip. Or higher quality companies. Quality in some segments have not done well this year and you are going to get years like this. But quality is a rather broad term because if you ask me and another more sophisticated friend, the quality we lean closer to might be different.

AVGC and IFSW are multifactor strategy and they each have their own way of considering quality. AVGC partly will consider based on higher operating cash flow, adjusting for accrual, relative to book value, while IFSW, consider accrual, investment asset growth, gross profitability, earnings momentum. I guess this year, it favors AVGC and IFSW but we got to see longer term.

JPGL is a quality, value, momentum strategy but it tends to be more equal weighted across sectors so you are going to get JPGL doing better if consumer staples, utilities, energy, materials do better because the market cap index currently weigh less to them.

I been creating these notes publicly for about 1.5 years and generally fully deployed for 2.5 years or so and this is a short time to review these things. For all you know, info tech won’t do well in the next 10 years for some reasons, despite our high confidence. And you will see things like GGRA and JPGL do better.

While I am not invested in Dimensional Global Core equity, I noted its underperformance but more uniquely how Avantis Global equity was doing better. We kept saying both Dimensional and Avantis performance ended up similar but then over 1 year one ends up above and one ends up under the MSCI World. I would still consider this performance to be pretty close. There are going to be years where Dimensional strategy will do better than years where Avantis is going to do better.

c. Developed + Emerging Markets Equity Performance

I am invested in Dimensional World Equity, which is a systematic active strategy, in my SRS account. The difference between World Equity and Global Core are two things:

1. World includes emerging market equities.
2. There are 2 level of tilt to value, profitability and size. World tilts more and Global tilt less

Which you choose is a matter of how you design your portfolio, the degree of granular control you need and how tilted you are. (sorry if this comes off a bit weird haha)

The World Equity have not done well for 2 years. I was checking with our portfolio manager and head of investments just in case I observe the wrong thing. I think I was mislead that value was doing better than growth in developed markets but that isn’t the case. Value was doing slightly worse than growth in both developed and emerging markets.

Where value is doing well is in developed ex-US markets. The MSCI World ex USA Value did 37.5% up to November while MSCI World ex USA did 28.9%.

I have this impression the Dimensional World Equity should do better this year and was surprised it didn’t. Factor and region performance make a difference but implementation in a way do as well. How far can a strategy steer away from its parent index’s regional and sectoral weighting?

I don’t wish to change my SRS implementation it is what it is.

d. Emerging Markets Equity Performance

Emerging markets did well.

When USD weaken, international and emerging markets do well based on how things look historically.

The EIMI did 32% this year. If we compare MSCI Emerging Markets Value with blended Emerging Markets performance was not too different. EMSD, which is the emerging small cap that I own did only 20%.

Given this, the first year of AVEM is pretty darn good at 36% because if it is not value, nor small cap, then what caused the outperformance?

I suspect it is who has how much in Hynix and miners lol.

e. Small Cap Equity Performance.

This is where the performance has been dragged down because I have a larger allocation to small caps than relative more people (unless you run an individual stock portfolio).

The problem wasn’t just small caps. If you look at the S&P 500 equal-weight (11%), Mid-cap (7.7%). Small cap profitable (6.6%), small cap non-profitable (12%), everything is lagging.

They been lagging for 3.5 years as their earnings per share growth have stalled. This lends to the probable theory that ex the AI-beneficiary, most of the market is like in a recession already.

Given that, it is pretty ok performance.

In contrast the MSCI World Small Cap , which is developed small cap did 20%. International small cap did 31% (up to Nov not full year).

The more non-profitable small cap in the US did better than the profitable ones because there is a bunch of 200% movers like Sandisk, AI, Quantum computing, don’t-know-what miners.

Given all this, I should be pretty satisfied that USSC which is MSCI USA value-weighted did so well against the Russell or S&P 600.

Avantis Global Small Cap Value also did well but in a way… their performance seems to track the world small cap and we can’t see the value premium.

But I think what we are seeing is small cap value not doing well in the US, and small cap value doing very well in ex-US. AVGS can be seen as 2/3 US and 1/3 International, and you can view the performance of Avantis’ US incorporated USA and International Small Cap value ETF AVUV and AVDV respectively.

AVUV was a disappointing 7.5% (actually still better than the S&P 600) but AVDV is almost 50%. So the 1/3/ international small cap value did a lot of the heavy lifting to pull up AVGS’s 20% annual performance.

In a way, viewing AVDV performance, and in a way how EMSD can rebound hard, more than the US give me quiet confidence that given some catalyst we can expect some crazy magnitude of good performance. It is just a matter of when. It makes me uneasy if I ever have the feeling of shifting away.

f. Global Aggregate Bond Performance

12.7% of the portfolio is in iShares Core Global Aggregate Bond UCITS ETF (AGGU).

Morningstar will say the performance is 4.7% in USD. The Global Aggregate Bond ETF have broken even from its plunge near Dec 2020. That is probably 4.8 years to breakeven .

Since AGGU is a constant duration fixed income strategy with an effective duration of 6.2, its good news that it has broken earlier than 6 years. Unfortunately, I think some bond investors will be disappointed because if you look at the cumulative 5 years return, its 0.8% and that is in USD!

Given the depreciation of 6% in USD this year, technically the 12.7% fixed income portion has been a drag on Daedalus. I have to be kind of clear the role of the fixed income in Daedalus and not keep thinking this is a drag on performance.

Anything that is not equity-like will result in a difference in performance and we got to be clearer why its there in the first place. Having a cash war-chest is also a non-equity like performance.

The average coupon is 2.96% and in a year’s time the portfolio will earn roughly that return from the coupon itself.

Its performance will look better and better.

Role of Portfolio

The goal of the portfolio is to generate steady, inflation-adjusted income to cover my essential living expenses. It’s built using a conservative initial withdrawal rate of 2.0–2.5%, which is designed to hold up even under extremely tough market conditions — including scenarios like the Great Depression, prolonged periods of high inflation (averaging 5.5–6% over 30 years), or major global conflicts. In other words, it’s stress-tested to withstand some of the worst financial environments in history.

The income needs to last: from today (age 45) for the rest of your life — potentially forever.

I am currently not drawing down the portfolio.

For further reading on:

1. My notes regarding my essential spending.
2. My notes regarding my basic spending.
3. My elaboration of the Safe Withdrawal Rate: Article | YouTube Video

Based on current portfolio value, the amount of monthly passive income that can be conservatively generated from the portfolio is

The lower the SWR, the more capital is needed, but the more resilient the income stream is.

Nature of the Income I Planned for

Generally, different income strategies produce different types of income streams. They can vary by:

• Consistency: Some provide steady income, others fluctuate over time
• Inflation Protection: Some adjust with inflation, others remain fixed
• Duration: Some last for a set number of years, others are designed to last indefinitely (perpetual)

An income stream based on the Safe Withdrawal Rate framework is consistent and inflation-adjusted, and if we use a low initial Safe Withdrawal Rate of 2.0-2.5%, the income stream leans towards a long duration to perpetual.

Here is a visual illustration of how the income stream will be based on the current portfolio value:

The income for the initial year is based on a 2% Safe Withdrawal Rate. The income for subsequent years is based on the inflation rate in the prior year (refer to the bottom pane of inflation in the previous year). If the inflation is high, the income scales up and if there is deflation, the income is reduced.

Amount of Cash Flow/Income Withdrawn/Extracted from Daedalus Income Portfolio

I wish to be fully transparent about the schedule of withdrawals from the portfolio because if the goal of the portfolio is eventually or currently provide income for spending, you would be interested to know how much is taken out from the portfolio.

There have not been any withdrawals or cash flow extraction for spending since the publication of the portfolio. I will update as and when it happens.

Investment Strategy & Philosophy

After trying my best to learn how to invest for a while, the portfolio expresses my thoughts about investing at this point.

The portfolio is run in a

1. Strategic: allocation doesn’t change by short-term events.
2. Systematic: rules/decision-tree-based implemented either myself or an external manager.
3. Low-cost: investment implementation cost is kept reasonably low both on the fund level and also on the custodian level.
4. Passive: I spend relatively little effort mentally considering investments and also action-wise.

You can read more in this note article: Deconstructing Daedalus My Passive Income Investment Portfolio for My Essential & Basic Spending.

Portfolio Change Since Last Update (Usually Last Month)

There are some portfolio movements in the month.

I have explain some of the developed markets re-allocation in this blog post here: Why I re-allocate Part of My Developed World Equity Allocation to iShares STOXX World Equity Multifactor UCITS ETF (IFSW)

The other move is to gradually shift from US small cap value weighted to more global small cap value weighted.

This reduce the pure US allocation to 18%.

The nice thing about systematic-active strategies is that I do not have to worry so much about expensive valuation. Value is part of my investment philosophy and it can be a bit hairy considering that the international small cap value has gone up 50%, whether it is a shift from cheap to expensive. But since this is a strategy that constantly reallocates from relatively dear to relatively cheaper, the international value part still remains 10 times PE.

The apprehension is more that I ate a period of poor US broad market performance and if I shift to more international and US broad market do well, I missed out on that performance. The impact based on portfolio allocation is probably 1%.

The same for the developed equity. IFSW and AVGC is about 15.5 times PE and 16 times PE respectively. GGRA and JPGL is 19 times PE and 15.8 times PE. I actually went more value in a way by the shift.

Current Holdings – By Dollar Value and Percentages

The following table is grouped based on general strategy, whether they are:

1. Fixed Income / Cash to reduce volatility.
2. Systematic Passive, which tries to capture the market risk in a systematic manner.
3. Systematic Active, which tries to capture various proven risk premiums such as value, momentum, quality, high profitability, and size in a systematic manner.
4. Long-term sectorial positions.

Portfolio by Account Source Location

Portfolio by Region Exposure of Securities

Portfolio by Fund, Cash or Individual Security

Portfolio by Strategy.

What Systematic Active Means: Funds that help me execute passively very specific, repeatable underlying securities selection on an ongoing basis. Here are some examples of the systematic active strategies in my portfolio:

1. Global Multifactor: From a basket of 1,600 developed market large and mid-cap stocks, rank the stocks by their value, by their 12-month momentum, by their degree of ROE and debt to asset, and then own the top 300. Do this every half-yearly or quarterly. You end up with a strategy that consistently owns 300 companies that are cheaper, quality and have greater momentum relative to a market cap weighted index.
2. Small Cap Value: From a basket of 3,000 developed market small cap stocks, rank the stocks based on price-to-book value (include intangibles in the book value). Also rank the stocks by operating earnings minus interest divide by book value. Eliminate the companies with low profitability. What we end up is two group of small cap stocks: The more profitable small caps but not too expensive, and the small caps stocks that are at least profitable but are very cheap. Own the top 30-35% of this cohort consistently. Have a manager that consistently helps me execute this.

The Main Custodians for the Securities in this Portfolio

The current custodians are:

1. Cash: Interactive Brokers LLC (not SG)
2. SRS: Philips FAME

If you want to trade these stocks I mentioned, you can open an account with Interactive Brokers. Interactive Brokers is the leading low-cost and efficient broker I use and trust to invest & trade my holdings in Singapore, the United States, London Stock Exchange and Hong Kong Stock Exchange. They allow you to trade stocks, ETFs, options, futures, forex, bonds and funds worldwide from a single integrated account.

You can read more about my thoughts about Interactive Brokers in this Interactive Brokers Deep Dive Series, starting with how to create & fund your Interactive Brokers account easily.

Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.

Readers also follow Kyith to learn how to plan well for Financial Security and Financial Independence.

Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.

You can view Kyith’s current portfolio here, which uses his Free Google Stock Portfolio Tracker.

His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.

You can read more about Kyith here.