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United SGD Fund: Stability and income in uncertain times
Renewed hostilities in the Middle East and a global sell-off in artificial intelligence (AI) and semiconductor stocks have injected fresh volatility into equity markets, reminding investors how quickly sentiment can shift.
Adding to the uncertainty, the US Federal Reserve kept interest rates unchanged at its July meeting but provided few clues on the future direction of monetary policy, leaving markets with little visibility on the path ahead for interest rates.
In periods of market stress, it is important for investors to maintain a long-term perspective and avoid making emotional investment decisions. While such episodes can feel unsettling, they also serve as a timely reminder of the importance of building resilient portfolios.
One way to achieve this is through an allocation to high-quality bonds. Beyond providing diversification benefits, they can help cushion portfolio volatility while generating a reliable stream of income.
For more than 27 years, the United SGD Fund (the "Fund") has served as a trusted solution for investors seeking stability and income. By investing in high-quality, short-duration bonds, the Fund aims to enhance portfolio resilience through steady returns, dependable income and lower volatility across market cycles.
What’s behind the Fund’s stability?
Despite a more challenging macroeconomic backdrop in recent months, the United SGD Fund continues to offer potentially attractive yields while maintaining a relatively lower risk profile.
As at 30 June 2026, the Fund's yield to maturity was 3.09 percent, meaningfully above prevailing SGD fixed deposit rates and short-term Singapore government bond yields.
Fig 1: Yield enhancement over SGD deposits
Source: Various financial institution websites for SGD fixed deposit and cash management rates, MAS for 6-month T-bill yields, and UOBAM for United SGD Fund, as of 30 June 2026.
Yield for the United SGD Fund is computed based on the weighted average yield-to-maturity of the Fund’s holdings and are not guaranteed. The Fund yield provided is for indicative purposes only.
At the same time, the Fund also maintains significantly lower volatility than peer fixed income strategies. Its three-year volatility, measured by standard deviation, was just 0.79 percent as at 30 June 2026, well below the Morningstar SGD Bond peer group average of 2.41 percent over the same period1. For investors, this translates into a smoother investment journey, with less pronounced fluctuations in portfolio value even during periods of market uncertainty.
This defensive profile is underpinned by three key pillars: a short-duration focus, disciplined credit selection, and a commitment to maintaining high credit quality.
1. Short duration focus
In bond investing, interest rate movements are a major source of risk. When rates rise, bond prices generally fall, and vice versa.
By focusing on shorter-maturity bonds, the Fund reduces its exposure to interest rate risk. This is because short-duration bonds tend to experience smaller price movements when interest rates fluctuate, providing a more stable return profile.
With an effective duration of 1.68 years2, the Fund is less sensitive to interest rate movements than traditional bond strategies that invest further along the yield curve. This shorter duration profile helps cushion the impact of rate volatility and allows the Fund to maintain greater stability across different market environments.
2. Disciplined credit selection
The Fund adopts a disciplined credit selection process focused on issuers with resilient business models, strong balance sheets and stable cash flows.
The portfolio is well diversified across sectors and geographies, with a preference for bonds issued by financial institutions, which typically benefit from strong capital positions, robust regulatory oversight and diversified funding sources. It also has meaningful exposure to defensive sectors such as utilities, insurance, telecommunications, consumer goods and government-linked entities, where issuers tend to enjoy more resilient earnings and stronger credit profiles.
As a result, the Fund's returns are driven not by taking excessive credit risk, but by selectively investing in issuers that combine attractive yields with strong underlying credit fundamentals. This disciplined approach has been a key contributor to the Fund's ability to deliver consistent performance while maintaining lower volatility over time.
Fig 2: Lower drawdowns during uncertainty
Source: Morningstar, as of 30 June 2026, SGD terms. Performance is based on United SGD Fund Class A SGD Acc portfolio, on a NAV basis, with dividends reinvested if any. Past performance is not necessarily indicative of future performance.
3. A focus on investment-grade quality
A third pillar of the Fund's defensive profile is its consistent emphasis on investment grade bonds. Investment grade issuers are typically companies with stronger financial positions, healthier balance sheets and a lower probability of default compared with lower-rated borrowers. By maintaining a portfolio built around investment grade bonds, the Fund seeks to minimise credit risk while providing investors with a dependable source of income.
A strong and steady track record
Ultimately, this combination of high credit quality, disciplined bond selection and short duration has enabled the United SGD Fund to remain resilient through multiple periods of market stress.
Since its inception in 1998, the Fund has experienced only two negative calendar years, in 2008 and 2022. In both instances, it subsequently recovered strongly, more than offsetting the prior year's decline. This consistency across different market environments highlights the Fund's ability to preserve capital while continuing to generate attractive risk-adjusted returns over the long term.
Fig 3: United SGD Fund calendar year returns (%) since inception
Source: Morningstar, UOBAM, as of 30 June 2026. Performance is based on United SGD Fund Class A (Acc) SGD, in SGD terms, on a NAV basis, with dividends and distributions reinvested, if any. Past performance is not necessarily indicative of future performance.
The power of a laddered strategy
A key differentiator of the Fund is its laddered investment approach, which is designed to navigate changing interest rate environments while maintaining portfolio stability and income generation.
The Fund invests primarily in bonds with maturities of one, two and three years, creating a laddered portfolio structure that balances income generation with flexibility. This ensures that a portion of the portfolio matures regularly and can be reinvested as market conditions evolve.
When interest rates rise, proceeds from maturing bonds can be redeployed into newer bonds offering higher yields, allowing the portfolio's overall income potential to gradually increase. Conversely, when interest rates fall, the Fund can continue to benefit from bonds purchased earlier at higher yields, helping to support portfolio income.
In essence, rather than trying to predict the next move in rates, the laddered strategy allows the Fund to remain adaptable across a range of market scenarios.
Building resilience for the road ahead
Recent market volatility serves as a reminder that risks can emerge from many directions, whether geopolitical developments, shifts in investor sentiment, or changes in the interest rate outlook. While investors cannot control these events, they can control how their portfolios are positioned to navigate them.
For more than 27 years, the Fund has played an important role as a core fixed income allocation within investors' portfolios. As markets continue to evolve, it remains well positioned to provide stability and potential income, helping investors pursue their long-term financial goals with greater confidence and peace of mind.
1Source: Morningstar, as of 30 June 2026
2Source: Morningstar, UOBAM, as of 30 June 2026
