What Investors Should Know About Singapore-Focused Bond ETFs On SGX

Amid an increasing interest rate environment, bonds are back in favour among investors.

For example, the November 2022 tranche of the Singapore Savings Bonds (SSBs) was 2.4 times subscribed. Treasury bills (T-bills) have likewise seen a spike in demand, with people also looking to invest their CPF savings in these T-Bills.

Read Also: Why Every Singaporean Should Apply To Invest Their OA Funds In T-Bill

Other than investing in Singapore government bonds, investors can also choose to buy Bond ETFs through the Singapore Exchange (SGX) to diversify their portfolios.

Here’s a brief look at four Singapore Bond ETFs that investors can explore in this latest edition of 4 Stocks This Week.

ABF Singapore Bond Index Fund (SGX: A35)

The oldest bond ETF in Singapore is the ABF Singapore Bond Index Fund (SGX: A35). The ETF, listed in August 2005, tracks the iBoxx ABF Singapore Bond Index.

The index contains high-quality bonds issued by the Singapore government and government-linked entities such as the Housing & Development Board (HDB) and the Land Transport Authority (LTA).

Since the ETF contains top-notch bonds (as seen below), it is AAA-rated.

The top 10 holdings of the ABF Singapore Bond Index Fund consist of bonds from the Singapore government. In fact, the Government of Singapore bonds take up 83.8% of the ETF, with HDB, LTA and Temasek Financial taking up 8.2%, 5.0% and 2.2% respectively.

Here are some essential details about the ABF Singapore Bond Index Fund as reported in its October 2022 Factsheet.

	ABF Singapore Bond Index Fund
Ticker Symbol	A35
Dividend Distribution Frequency	Semi-annually
Weighted Average Duration	7.65
Yield to Maturity	3.48%
Total Expense Ratio	0.24% p.a.
Assets Under Management	S$938.56 million

Nikko AM SGD Investment Grade Corporate Bond ETF (SGX: MBH)

The Nikko AM SGD Investment Grade Corporate Bond ETF (SGX: MBH) gives investors exposure to a diversified portfolio of quasi-sovereign, Singapore and foreign corporate bonds.

The ETF aims to replicate the performance of the iBoxx SGD Non-Sovereign Large Cap Investment Grade Index.

Here’s a snapshot of the top 10 holdings of the Nikko AM SGD Investment Grade Corporate Bond ETF as reported in its October 2022 Factsheet.

As you can see, the ETF contains investment-grade securities such as that issued by DBS Group (SGX: D05), HSBC, Temasek, United Overseas Bank (SGX: U11), and Changi Airport.

	Nikko AM SGD Investment Grade Corporate Bond ETF
Ticker Symbol	MBH
Dividend Distribution Frequency	Semi-annually
Yield to Maturity	4.71%
Weighted Average Duration	6.08
Total Expense Ratio	0.26% p.a.
Assets Under Management	S$550 million

Phillip SGD Money Market ETF (SGX: MMS/MMT)

Another choice that investors have is the Phillip SGD Money Market ETF (SGX: MMS/MMT) which was launched in October 2020 and is available in both Singapore and US dollars.

Phillip SGD Money Market ETF invests in high-quality debt and money market instruments, and deposits with eligible financial institutions. Such instruments may include government and corporate bonds, commercial bills and deposits with financial institutions.

The ETF seeks to provide investment results that closely correspond to the performance of the FTSE SGD 3-month Swap Offered Rate (SOR) Index or any replacement index which references the Singapore Overnight Rate Average (SORA), and provides for the same or substantially similar exposure as the FTSE SGD 3-month SOR Index.

The FTSE SGD 3-Month SOR index measures the performance of the three-month SOR, offering investors a measure of short-term Singapore dollar money markets. The FTSE SGD 3-month SOR Index is expected to be discontinued as a result of the expected discontinuation of the US dollar London Inter-Bank Offered Rate (LIBOR).

In that case, the ETF manager will look for a replacement index that references the SORA and provides for the same or substantially similar exposure as the FTSE SGD 3-month SOR Index.

Here’s a snapshot of the top 10 holdings of the Phillip SGD Money Market ETF as reported in its October 2022 Factsheet.

	Phillip SGD Money Market ETF
Ticker Symbol	MMS (SGD), MMT (USD)
Dividend Distribution	Nil; returns are accrued to net asset value (NAV).
Yield to Maturity	1.85% (monthly yield, annualised)
Total Expense Ratio	0.32% p.a.
Assets Under Management	S$139 million

Xtrackers II Singapore Government Bond UCITS ETF (SGX: KV4)

The Xtrackers II Singapore Government Bond UCITS ETF (SGX: KV4) offers direct investment in Singapore government bonds across the yield curve. This ETF is AAA-rated as well.

The Xtrackers II Singapore Government Bond UCITS ETF tracks the FTSE Singapore Government Bond Index, which in turn mimics the performance of Singapore-denominated bonds issued by the Singapore government.

Here’s a look at the top 10 holdings of the Singapore Government Bond UCITS ETF, which are diversified across different bond durations:

Both the Xtrackers II Singapore Government Bond UCITS ETF’s and the ABF Singapore Bond Index Fund’s top 10 holdings are similar.

But the Singapore Government Bond UCITS ETF is less diversified since it doesn’t contain bonds from government-linked entities, unlike the ABF Singapore Bond Index Fund.

The Xtrackers II Singapore Government Bond UCITS ETF is also the smallest ETF among all the four investments featured, in terms of assets under management.

Here’s a snapshot of the top 10 holdings of the Xtrackers II Singapore Government Bond UCITS ETF as reported in its October 2022 Factsheet.

	Xtrackers II Singapore Government Bond UCITS ETF
Ticker Symbol	KV4
Yield to Maturity	3.25%
Average Duration	7.68
Total Expense Ratio	0.20% p.a
Assets Under Management	S$114 million

Participate In Bondsupermart Facebook Contest To Win S$1000 Worth Of Bonds

If you are keen to start investing in bonds, we got some great news for you!

From now till 2 December 2022, Bondsupermart is giving away S$1,000 worth of Singapore retail bonds to 3 lucky winners.

To take part, simply head over to their Facebook Page and participate in this Facebook contest. You just need to 1) like & follow the Bondsupermart Facebook Page and 2) leave a comment on the post on which Singapore retail bond you wish to buy and the reason why. 

Beginner’s Guide To The Different Types Of Bond Investments In Singapore

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