How to get exposure to the Singapore and Asian bonds market
A 5-part series from Great Eastern and Lion Global Investors to help you get your wealth in the best of health
A bond is an instrument whereby an investor provides a loan to a borrower (bond issuer) who has agreed to pay interest and return the principal on a specific date in the future. Usually, entities like corporates and government agencies borrow to finance their respective projects. Investors, who lent their monies to these entities, would typically receive a fixed amount as interest payment. Hence, this is why a bond is also known as a “fixed-income” instrument. Bonds tend to perform differently relative to general equity markets, and they help diversify risks and act as ballast in an investor's investment portfolio. We will introduce the Singapore and Asian bond markets and explain how investors can access them.
Singapore Bonds
Historically, during periods of market volatility, Singapore bonds typically yielded stable returns. One can attribute that the Singapore Government has an AAA credit rating from international credit rating agencies, helped by her creditworthiness and stable political environment. It makes Singapore Government Securities (SGS) and Singapore statutory boards such as Housing Development Board (HDB), one of the investments with a low probability of default for an investor.
The Singapore corporate bond market is dominated by investment graded issuers such as Temasek-linked companies. There are also international issuers that top the Singapore bond market.
Interested investors looking to capture the potential opportunities locally can consider LGI's managed funds within the Singapore equity space. One of their funds, LionGlobal Singapore Trust Fund^, was awarded Best Fund over 3 & 5 Years at the Refinitiv Lipper Fund Awards 2021.
Singapore REITS
As Singapore progresses towards normalisation, we see positive signs across different Singapore REIT properties. Industrial REITs are experiencing positive rent revisions, which often indicates firming fundamentals. There are early signs of recovery in the office REITs segment with a pick-up in leasing activities. However, we expect retail REITs to continue to face challenging times in the shorter term, but we could well see the bottom with the gradual relaxation of Covid-19 restrictions.
Investors who want exposure to the Singapore Bonds market can consider bond funds by Lion Global Investors Limited (“LGI”). They may want to look out for a Singapore-Centric bond fund where Singapore forms of the highest country allocation. Also, it will be prudent to consider a fixed-income fund that invests in high quality bonds (investment grade) and one that is less susceptible to a rising interest rate environment (short duration).
Asian Bonds
Since September 2021, markets saw a flight to quality following investors’ concerns on the contagion effects from the China Evergrande Group saga. China high-yield property bonds were the worst hit as investors flocked to investment grade and developed market assets. Lion Global Investors Limited (LGI) are cautious in bonds that have been directly affected by China regulations in the education, technology and property sectors. However, attractive yields are emerging after the sell-off, and LGI see opportunities to start investing into the Asian bond space, specifically via its managed bond funds.
Bond Funds by Lion Global Investors
Lion Global Investors, an award-winning and trusted name in fund management, provides unit trust funds that can help investors gain exposure to bonds. Most recently, LGI added these awards to its long list of accolades^:
- LionGlobal Asia Bond Fund - Best Fund over 10 Years – 2022 Refinitiv Lipper Fund Awards
- Best Digital Wealth Management – Singapore in 2021 & 2022 by Asia Asset Management Best of the Best Awards
- Best Institutional House from 2018 to 2022 by Asia Asset Management Best of the Best Award
- Insurance Fund House of the Year - Singapore in 2022 by Institutional Asset Management Awards (IAMA)
- Asia bonds (10 Years) in 2021 by Professional Investments Awards (Insights & Mandate)
- Asset Management Company of the Year Singapore in 2021 by Global Banking & Finance Awards®
- Best Fund House in ASEAN in 2021 by Professional Investments Awards (Insights & Mandate)
^Source: Lion Global Investors Limited. Past performance of the fund and the manager is not necessarily indicative of its future performance.
As aforementioned, bonds have a role in an investor’s investment portfolio due to their ability to provide diversification. These managed bond funds are available in the following two investment-linked plans (ILPs) offered by Great Eastern Life.
A. GREAT Wealth Advantage, a regular premium ILP that comes with additional features such as Welcome Bonus and Loyalty Bonus that boost your investments. It also offers death, total and permanent disability and terminal illness benefits. Premiums must be paid in cash.
B. GREAT Invest Advantage, a single premium ILP whereby the premiums can be paid with cash or funds through the CPF Investment Scheme (CPFIS) or Supplementary Retirement Scheme (SRS), with no penalties for partial or full surrenders. It also offers death and terminal illness benefits.
Please reach out to the Great Eastern financial representatives for more information and an in-depth discussion.
Besides gaining access to these professionally managed funds, policyholders also get more value from the ability to customise their investment portfolios in ILPs offered by Great Eastern Life. Customisation is desirable as each individual’s circumstances vary in risk appetite, investment horizon, wealth goals and life stages. Some examples of individuals at different life stages:
1. Young couples saving for the all-important housing deposit
2. Young parents accumulating an education fund
3. Retirees looking for low-risk investments.
On top of that, policyholders can perform free-of-charge fund switches# as they continue to optimize their investment portfolios through different life stages.
Disclaimers:
#Great Eastern may impose a fee at its discretion for fund switching in the future.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
The information provided may contain projections or other forward looking statements regarding future events or future financial performance of countries, markets or companies, and such prediction or forecast is not necessarily indicative of the future or likely performance of the Fund(s).
Investments in these plans are subject to investment risks including the possible loss of the principal amount invested. Please refer to Fund Details and Product Highlights Sheet for the specific risks of the Fund(s). Past performance is not necessarily indicative of future performance.
A product summary and a Product Highlights Sheet in relation to the Fund(s) may be obtained through Great Eastern Life Assurance Co Ltd or its financial representatives. Potential investors should read the Product Summary and the Product Highlights Sheet before deciding whether to invest in the Fund(s). Returns on the units of the Fund(s) are not guaranteed. The value of the units in the Fund(s) and the income accruing to the units, if any, may fall or rise.
The information presented is for general information only, and does not have regard to the specific investment objectives, financial situation or particular needs of any particular person, and should not be construed as an advice or recommendation to invest in the Funds.
As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid.
Protected up to specified limits by SDIC.
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