Featured Fund – LionGlobal Short Duration Bond Fund

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. As at end of 31 December 2021, our SDBF has crossed S$1 billion of Assets under Management. 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)

Source: Lion Global Investors, Morningstar, as of 31 Dec 2021.

1 This 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 Weighted YTM stands for Weighted Yield-to-Maturity. In local currency yield terms and on unhedged FX basis. Inclusive of cash & equivalents at a yield of 0.10%.

3 In reference to SDBF Class A (SGD) (Dist) units, distribution payments are made quarterly in SGD currency. Distribution payments shall, at the Managers’ sole discretion, be made out of either (a) only distributed income, (b) only capital or (c) both. The distributions of the Fund are not guaranteed and are not in any way a forecast or projection of the future or likely performance of the Fund. Historical pay out yields and payments do not represent future pay out yields and payments. Any distributions made out of capital will result in an immediate reduction of the net asset value of the Fund. For further detailed income statistics, please visit www.lionglobalinvestors.com

4 Includes cash & equivalents @ AA, takes the worst of S&P, Moody’s or internal ratings and based on a straight-line model.

5 Weighted 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 Dec 2021. Past performance is not necessarily indicative of future performance. Returns are based on a single pricing basis. Return periods longer than 1 year are annualised. 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.

 

Photo Credit: iStock
 

MARKET COMMENTARY

 

#1 

OBSERVATION

The Federal Reserve has turned hawkish due to concerns on inflation. On the back of that, they have accelerated tapering and indicated at least 3 rate hikes in 2022.

IMPLICATION

Investors need to be mindful of duration risk. Duration of the Fund averages at 2.0 years, providing a defensive element to protect investors from rising interest rate risk. Our view is for interest rates to go higher for medium and long end rates, while the short end rates (i.e. less than 5 years) will remain stable. Therefore, rising rates will have limited impact on SDBF, while allowing the Fund to reinvest maturity proceeds at higher interest rates. 

 

#2

OBSERVATION

Spreads in Asian credits have widened in 2021 due to concerns of default in the Chinese property market. This has led to widening in spreads of some investment grade bonds.

IMPLICATION

We see this spread widening as an opportunity for investors to gain exposure to Asian credits. Investors are properly rewarded to take on investment grade risk. Yield of the SDBF currently stands at 2.7% p.a. as at 3 January 2022.

 

#3 

OBSERVATION

The Singapore bond market provides a shelter during periods of market volatility as observed in the recent sell-off in Asian Credits. Majority of the large Singapore bond issuances are issued by blue chip companies with investment grade credit ratings.

IMPLICATION

Being a Singapore-centric bond Fund, SDBF has a significant exposure to the Singapore corporate bond market. This provides good diversification as well as a stability element to the Fund.

 

 

 

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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. Applications for units in our funds must be made on forms accompanying the prospectus. You should read the prospectus and Product Highlights Sheet which is available and may be obtained from Lion Global Investors Limited (“LGI”) or any of its distributors, 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. 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, as well as any predictions, projections, or forecasts are not necessarily indicative of the future or likely performance 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 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 contained herein and 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 by Lion Global Investors Limited (Singapore UEN/ Registration No. 198601745D) and in Brunei, by its branch (Brunei company registration No. RFC/00000772). Lion Global Investors Limited is a Singapore incorporated company and is not related to any asset or fund management entity that is domiciled in Europe or the United States.

 

Lion Global Investors® is a registered trademark of Lion Global Investors Limited.

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Comparing the TER cost for 20 years

Here’s the difference a low cost advantage makes to cost savings

Here's how much you pay

$190,272.13
Selected TER 1.00% p.a.

$99,912.57
LionGlobal All Seasons Fund 0.5% p.a.

By investing a fund with low TER

You may save $90,359.56 over 20 years based on an initial investment of $1,000,000 compared with a TER of 0.5% p.a.

It is enough to provide for a monthly expenditure of $3,000 over the next 2 years and 6 months.

Here's how much you pay

$271,950.61
Selected TER 1.50% p.a.

$99,912.57
LionGlobal All Seasons Fund 0.5% p.a.

By investing a fund with low TER

You may save $172,038.04 over 20 years based on an initial investment of $1,000,000 compared with a TER of 0.5% p.a.

It is enough to provide for a monthly expenditure of $3,000 over the next 4 years and 9 months.

Here's how much you pay

$345,744.19
Selected TER 2.00% p.a.

$99,912.57
LionGlobal All Seasons Fund 0.5% p.a.

By investing a fund with low TER

You may save $ 245,831.62 over 20 years based on an initial investment of $1,000,000 compared with a TER of 0.5% p.a.

It is enough to provide for a monthly expenditure of $3,000 over the next 6 years and 9 months.

TER (Total Expense Ratio) is the sum of various identified operating expenses charged on an ongoing basis to the fund’s assets as a percentage of the fund’s average net asset value calculated over a 12-month period at the close of the annual and semi-annual financial statements of the fund for all the p.a. tabs (1.0%, 1.5%, 2.0%).

The above scenarios are for illustration purpose only. Past performance, as well as any prediction, projection or forecast on the economy, securities market or the economic trends of the markets are not necessarily indicative of the future or likely performance of the funds. Calculations based purely on costs with no market movement or investment returns.