United SGD Plus Fund Review (Possibly best short term investment)

Last updated on March 31st, 2018 at 06:08 pm

 

UOB Asset Management is launching a new bond fund that is set to be delivering at least 3% p.a in returns while being stable and low in volatility. I’ve previously written on United SGD Fund being a fantastic short term investment, click here to read more, and this fund seeks to be an upgrade to it. As mentioned before, a short term investment should prioritize protecting your capital. If paper losses are made, there is little time to recover.

Well done UOBAM for not resting on their laurels!

My interpretation on whether the fund suits you

If it you like the above listed features, you can use it to build returns for your savings or grow excess funds before you invest in like a second property. This is an option that stands well against popular dividend saving accounts from OCBC, UOB, SCB, BOC.

If you are looking for passive income, you are going to love having the option of receiving monthly dividends that work out to be around 0.3%/m. That means for every $20,000 invested, a $60/month passive income!

Basic details of the fund

How are returns delivered to you?

At launch, 70% goes towards United SGD fund (Average yield to maturity of 2.74%) and 30% towards United Asian High Yield fund (Average yield to maturity of 5.54%). These 2 funds have low correlation to start with and are best of its breed. Subsequently, the fund manager will add individual bonds into the portfolio.  This flexibility in mandate is really useful because some opportunities involve bonds that are unrated or have a maturity that is outside of the mandate of the United SGD Fund’s short duration focus. Fund can acquire up to 20% on individual bond opportunities. With a small fund size now, any great bond picks here will drive up performance.

Average duration no is estimated to be 2.7years. Fund is defensive against interest rate risk.

UOBAM has a credible fixed income team

The team had been showered with accolates such as

  • Best Fixed Income Fund House – Morningstar Awards 2017
  • Best of the Best Performance Awards − Asian Bonds (10 years performance) – Asia Asset Management 2017 and 2014 Best of the Best Awards
  • Platinum Award for United Asian High Yield Bond Fund in the High Yield category – Fund Selector Asia 2017

 

Image credits: United SGD Plus Prospectus

 

Josh Tan Jian Liang (CHFC) Principal Author

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