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

Last updated on February 27th, 2019 at 03:37 pm

 

UOB Asset Management launched 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.

If you are looking to invest short term investment, prioritise protecting your capital. It is to help you avoid paper losses in the first place.

 

Some key points from the latest updates from UOBAM on the fund Jan2019

United SGD Plus Fund

The Fund returned +2.31% in the month of January 2019.

 

Month in Review – January 2019

–       Credit markets started the year on a bullish run where risk sentiments were a stark reversal of December 2019.

–       Technical and fundamental considerations were at play with the 2019 credit correction and lower expectations of further hikes into 2019.

–       FOMC delivered 2 dovish surprises: (1) Forward guidance regarding “some further gradual hikes” was dropped and replaced with “ the Committee will be patient as it determines what future adjustments” and (2) “all tools are on the table – including the size and composition of the balance sheet”.

–       2 year USTs and 10 year USTs closed lower for the month at 2.46%(3 bps down) and 2.63%(5 bps down) respectively.

 

My interpretation on whether the fund suits you

If 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 the Singapore Savings Bond (SSB) which gives around a guaranteed 2%.

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 you invested, you build a $60/month passive income!

Basic details of the fund

How are the 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

If you want to know your fund manager better, you can check on their accolades. These include

• 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

Hence, this fund is in my opinion the best short term investment.

Image credits: United SGD Plus Prospectus

 

If you are keen to find out more about investing, WhatsApp Josh Tan for a free preliminary discussion at 9006 0446