Were you one of the many Singaporeans who queued up to deposit money during Li Chun last week?
Depositing cash on Li Chun, also known as the “beginning of spring” in the Chinese calendar, is believed to bring good fortune and abundant income.
However, depositing money during Li Chun is not the only way to generate extra cashflow for the year ahead. Investing in income-paying assets means the potential to collect regular payments while potentially enjoying capital upside.
Funds are an alternative
But if you do not have the time or inclination to pick the right securities to buy, funds can be a good alternative because they are:
- Professionally managed. A team of experts will do the research for you and identify attractive investment opportunities for your portfolio.
- Well-diversified. Funds usually hold hundreds of securities, therefore offering diversification across different sectors and geographies.
- Cost-efficient. Creating a portfolio using individual securities like stocks or bonds can require a higher capital outlay as compared to using a fund, which is a collective instrument.
Opportunities offered by UOBAM
UOBAM offers two solutions highly geared to income-seeking investors:
- The United SGD Fund, a high grade, short duration bond fund and
- The United Asia Pacific Real Estate Income Fund, a fund investing in Asia Pacific (APAC)-based Real Estate Investment Trusts (REITs).
Understanding the United SGD Fund
1. Who is it for?
The United SGD Fund is ideal for investors seeking stable quarterly payouts and capital preservation.
The fund invests into short-term, high-quality investment grade bonds, which tend to carry lesser interest rate risk and have a lower probability of default. Price stability is further maintained by the fund’s short duration of 1.24 years (as at 30 November 2022), which makes it less sensitive to changes in interest rates.
In the current rising interest rate environment, the fund’s laddered investment strategy offers another advantage. By investing in bonds with different maturity dates across a three-year timeframe, bonds that mature in the current year can be reinvested into higher-yielding bonds. This enhances the total return for investors.
2. Highlights
| United SGD Fund | |
| Investment objective | Achieve yield enhancement over Singapore dollar deposits by investing in money market and short-term interest bearing debt instruments and bank deposits |
| Distribution policy1 | Class A (Dist) From 31 March 2023, the annual dividend will be revised from the current 2.0% to 4.0%, paid out quarterly* *Distributions (in SGD) are not guaranteed. Distributions may be made out of income, capital gains and/or capital. This relates to the disclosed distribution policy as set out in the Fund’s prospectus. |
| Top 3 holdings | Mizuho Fin Grp Cayman 3 Company 03/24 4.6 Sumitomo Mitsui Financia 04/24 4.436 Bank Rakyat Indonesia 07/23 4.625 |
| Top 3 sector allocations | Financials Industrials Utilities |
| Management fee | Currently 0.63% p.a., maximum 1.5% p.a. |
1Distributions will be made in respect of the Distribution Classes of the Fund. Distributions are based on the NAV per unit of the relevant Distribution Class as at the last business day or quarter of the month. The making of distributions is at the absolute discretion of UOBAM and that distributions are not guaranteed. The making of any distribution shall not be taken to imply that further distributions will be made. UOBAM reserves the right to vary the frequency and/or amount of distributions. Distributions from a fund may be made out of income and/or capital gains and (if income and/or capital gains are insufficient) out of capital. Investors should also note that the declaration and/or payment of distributions (whether out of capital or otherwise) may have the effect of lowering the net asset value (NAV) of the relevant fund. Moreover, distributions out of capital may amount to a return of part of your original investment and may result in reduced future returns. Please refer to www.uobam.com.sg and the Fund’s prospectus for more information.
Understanding the United Asia Pacific Real Estate Income Fund
1. Who is it for?
The United Asia Pacific Real Estate Income Fund is ideal for investors seeking monthly dividend income and long-term capital appreciation.
The fund invests in different types of REITs across the APAC region. Retail, diversified, and industrial REITs make up slightly more than 50 percent of the fund. These sectors are poised to benefit from APAC’s post-COVID-19 economic growth, which could translate to continued dividend growth for the fund. Our analysis indicates that distribution per unit is expected to continue growing at above-trend levels over the next two years2.
Additionally, the United Asia Pacific Real Estate Income Fund can help to diversify traditional stock-bond portfolios. The fund has a relatively low correlation with major asset classes, which means it does not perform in lockstep with investments like stocks, bonds, and commodities.
2UOBAM, United Asia Pacific Real Estate Income Fund Commentary, November 2022
Note: A perfect positive correlation means that the correlation coefficient is exactly 1. This implies that as one security moves, either up or down, the other security moves in lockstep, in the same direction. A perfect negative correlation means that two assets move in opposite directions, while a zero correlation implies no linear relationship at all.
Source: UOBAM Bloomberg, as at 31 March 2022, based on the data from past 10 years.
2. Highlights
| United Asia Pacific Real Estate Income Fund | |
| Investment objective | Seek total return consisting of income and capital appreciation over the medium to long term by investing primarily in REITs listed in the Asia Pacific region |
| Distribution policy3 | Class SGD (Dist) Annual dividend of 4.5% paid out monthly* *Distributions (in SGD) are not guaranteed. Distributions may be made out of income, capital gains and/or capital. This relates to the disclosed distribution policy as set out in the Fund’s prospectus. |
| Top 3 holdings | Link REIT Sun Hung Kai Properties Ltd Mitsui Fudosan Co Ltd |
| Top 3 sector allocations | Retail REITs Diversified real estate activities Diversified REITs |
| Management fee | Currently 1.5% p.a; maximum 2% p.a. |
3Refer to footnote 1
What is UOBAM Invest Fund Direct?
Fund Direct is a feature that enables you to buy and sell selected funds through the UOBAM Invest app. Fund performance and important information and documents can all be viewed on the app for convenience.
Compared to traditional platforms, there are no platform and upfront sales charges when you use Fund Direct. This helps to lower your cost of investing in funds. You simply pay the annual fee for your selected fund, which can be found on the respective fund profiles within the UOBAM Invest app.
The United SGD Fund and United Asia Pacific Real Estate Income Fund can be accessed through Fund Direct or through distributors such as retail banks and fund platforms.
For more information, important notes and disclaimers on the above funds, please refer to the respective fund information:
United SGD Fund
United Asia Pacific Real Estate Income Fund
This document is for general information only. It does not constitute an offer or solicitation to deal in units in the Fund (“Units”) or investment advice or recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. The information is based on certain assumptions, information and conditions available as at the date of this document and may be subject to change at any time without notice. No representation or promise as to the performance of the Fund or the return on your investment is made. Past performance of the Fund or UOB Asset Management Ltd (“UOBAM”) and any past performance, prediction, projection or forecast of the economic trends or securities market are not necessarily indicative of the future or likely performance of the Fund or UOBAM. The value of Units and the income from them, if any, may fall as well as rise, and is likely to have high volatility due to the investment policies and/or portfolio management techniques employed by the Fund. Investments in Units involve risks, including the possible loss of the principal amount invested, and are not obligations of, deposits in, or guaranteed or insured by United Overseas Bank Limited (“UOB”), UOBAM, or any of their subsidiary, associate or affiliate (“UOB Group”) or distributors of the Fund. The Fund may use or invest in financial derivative instruments and you should be aware of the risks associated with investments in financial derivative instruments which are described in the Fund's prospectus. The UOB Group may have interests in the Units and may also perform or seek to perform brokering and other investment or securities-related services for the Fund. Investors should read the Fund’s prospectus, which is available and may be obtained from UOBAM or any of its appointed agents or distributors, before investing. You may wish to seek advice from a financial adviser before making a commitment to invest in any Units, and in the event that you choose not to do so, you should consider carefully whether the Fund is suitable for you. Applications for Units must be made on the application forms accompanying the Fund’s prospectus..
This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
UOB Asset Management Ltd. Company Reg. No. 198600120Z
