LionGlobal Short Duration Bond Fund (SDBF) is designed to provide total return of capital growth and income over the medium to long term, through an actively managed portfolio of Singapore and international bonds, high quality interest rate securities and other related securities. In a low interest rate environment, our SDBF aims to help investors generate a potentially higher return than traditional fixed deposit rates1. Being a sizable Fund gives us the ability to diversify across issuers in different geographies and sectors.
KEY CHARACTERISTICS
Figure 1: Key Characteristics of LionGlobal Short Duration Bond Fund (SDBF)
1This is not to suggest that the fund is comparable to a fixed deposit in nature. It is a different investment product from a fixed deposit as it has different risk – return characteristics and offers features different from a fixed deposit such as higher liquidity, more flexibility in terms of initial and incremental investments. Unlike a passive investment in fixed deposits, it would also be of higher risk with higher volatility of returns compared to fixed deposits. Please refer to Prospectus for a full disclosure of the product risks.
2 In local currency yield terms and on unhedged FX basis. Inclusive of cash & equivalents at a yield of 0.10%.
3 Payout yield is based on the summation of the 4 latest quarterly distributions (SGD Class A Dist). Distributions are not guaranteed and may fluctuate. Past distributions are not necessarily indicative of future payments. Distribution payouts and its frequency might be changed at the Manager’s discretion and can be made out of income, capital or both. Any payment of distributions by the fund may result in an immediate reduction of the net asset value per share/unit. Please refer to LGI website for more information on the income disclosures.
4 Includes cash & equivalents @ AA, takes the worst of S&P, Moody’s or internal ratings and based on a straight-line model.
5 Average (Modified) Duration: Inclusive of cash & equivalents which are assumed to be zero duration.
PERFORMANCE CHART
Figure 2: Performance Chart of LionGlobal Short Duration Bond Fund (SDBF)
*Fund changed into a short duration strategy in 2012. AR: Annualised Returns; TR: Total Returns. Benchmark: Inception to 6 Aug 06: 1-Month S$ Interbank Bid Rate; From 7 Aug 06: 12-Month S$ Interbank Bid Rate; From 1 May 14: 12-Month S$ Interbank Offer Rate -0.25%; From 1 Jan 21: 3-month S$ Interbank Offer Rate.
Source: Lion Global Investors, Morningstar, as of 31 Jan 2023. Past performance is not necessarily indicative of future performance. Returns are based on a single pricing basis. Dividends are reinvested net of all charges payable upon reinvestment and in respective share class currency terms. ^Figures include the applicable initial charges for the respective classes. LionGlobal Short Duration Bond Fund Class A (SGD) (Dist) incepted on 22 Mar 1991.
MARKET COMMENTARY
#1
OBSERVATION
The Federal Reserve (Fed) has hiked interest rates by 4.25% since early 2022 in their efforts to bring inflation down. The fight against inflation is not over, with consensus expecting the Fed to likely have to hike more this year. That said, as a result of higher interest rates, the yield gap has narrowed with bond yields nearing stock dividend yields.
IMPLICATION
Interest rates have risen as a result with bond yields looking attractive. This gives the Fund opportunities to invest in short dated investment grade bonds at more than 5%, something which was achievable only by investing into high yield bonds 2 years ago. Funds will be drawn to allocation in fixed income markets as bond yields are attractive relative to equity markets.
#2
OBSERVATION
Spreads in certain segment of the credit market remains wide as investors have not returned fully to the bond markets on concerns about yield volatility. The Chinese government have sought to stabilise the Chinese property market by implementing with measures to provide liquidity support to high quality companies.
IMPLICATION
Opportunities exist in the Asian credit markets as investors regain confidence with returns stabilising. Furthermore, recovery in the Chinese property market will spur spread tightening in Asian credit markets once it has been fully priced in.
#3
OBSERVATION
Investors have stayed away from fixed income markets in 2022 due to the violent move in interest rates. Volatility is likely to be lower going forward as we are unlikely to see a repeat of the rapid and large spikes in interest rates experienced last year.
IMPLICATION
With bond markets stabilising, we believe that issuers and investors will return to the market this year. This provides investment opportunities for the Fund to invest in issuers that we are comfortable with at reasonable yield levels.
All data are sourced from Lion Global Investors and Bloomberg as at 1 March 2023 unless otherwise stated.
Disclaimer
This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. It is for information only, and is not a recommendation, offer or solicitation for the purchase or sale of any capital markets products or investments and does not have regard to your specific investment objectives, financial situation, tax position or needs.
You should read the prospectus and Product Highlights Sheet of the relevant fund which are available and may be obtained from Lion Global Investors Limited (“LGI”) or any of its distributors, for further details including the risk factors and consider if a fund is suitable for you and seek such advice from a financial adviser if necessary, before deciding whether to invest in the fund. Applications for units in our funds must be made on forms accompanying the prospectus.
Investments in our funds are not obligations of, deposits in, guaranteed or insured by LGI or any of its affiliates and are subject to investment risks including the possible loss of the principal amount invested. The performance of a fund is not guaranteed and the value of units in a fund and the income accruing to the units, if any, may rise or fall. Past performance, payout yields and payments as well as any predictions, projections, or forecasts are not necessarily indicative of the future or likely performance, payout yields and payments of a fund. Any extraordinary performance may be due to exceptional circumstances which may not be sustainable. Dividend distributions, which may be either out of income and/or capital, are not guaranteed and subject to LGI’s discretion. Any such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value of the fund. Any references to specific securities are for illustration purposes and are not to be considered as recommendations to buy or sell the securities. It should not be assumed that investment in such specific securities will be profitable. There can be no assurance that any of the allocations or holdings presented will remain in the fund at the time this information is presented.
Any information (which includes opinions, estimates, graphs, charts, formulae or devices) is subject to change or correction at any time without notice and is not to be relied on as advice. You are advised to conduct your own independent assessment and investigation of the relevance, accuracy, adequacy and reliability of any information or contained herein and seek professional advice on them. No warranty is given and no liability is accepted for any loss arising directly or indirectly as a result of you acting on such information. The fund may, where permitted by the prospectus, invest in financial derivative instruments for hedging purposes or for the purpose of efficient portfolio management. LGI, its related companies, their directors and/or employees may hold units of a fund and be engaged in purchasing or selling units of a fund for themselves or their clients.
This publication is issued in Singapore ©Lion Global Investors® Limited (UEN/ Registration No. 198601745D). All rights reserved. LGI is a Singapore incorporated company, and is not related to any corporation or trading entity that is domiciled in Europe or the United States (other than entities owned by its holding companies).
