BOND$ Inve$ting

[justubes]

Exactly, so when the coupons are due, regardless, unless they have a seperate reserve which coupons can only be paid out from.

Where do they get the money, from thier ash of sell off assets which decreases the NVA and thus the value of your fund falls.

Left pocket/right pocket senario, which could well be your own, unless i am mistaken.

 

[yongsaver]

Exactly, so when the coupons are due, regardless, unless they have a seperate reserve which coupons can only be paid out from.

Where do they get the money, from thier ash of sell off assets which decreases the NVA and thus the value of your fund falls.

Left pocket/right pocket senario, which could well be your own, unless i am mistaken.

?
company that issue the bond pays coupons.
bond fund buy the bonds and receive coupons,
bond fund distribute coupons to unitholders who subscribe to the bond fund.
me unsure what left and right pocket u refer to...

 

[justubes]

Assume that if the fund manager screws up.

Where do inflows from the fund come from to pay coupons. if insufficient,, fixed coupons and/or payouts from existing cash assets instead for that month or period.

When the Net value of funds decreases, it impacts the fund price accordingly (i.e your capital).

Coupons can be part of your capital, you receive the coupons and at the same time, your total fund value declines at that point.

 

[Cardax11]

bond coupons are fixed throughout the tenor (unless default)
that is why it is called fixed income

if one of the few hundred bonds default, your coupon payment will be slightly lesser
if one of the bonds mature, the fund manager will replace with a new bond with similar coupon rate
i dont think there will be a situation where the fund manager will have to sell off the bonds, just to pay you the coupon as they are not obligated to payout the X amount

it is different from equity dividends where it can fluctuate

 

[Shiny Things]

i dont think there will be a situation where the fund manager will have to sell off the bonds, just to pay you the coupon as they are not obligated to payout the X amount

You'd be surprised. Some unit trusts will absolutely do this—they'll sell their holdings to maintain the dividend, because the unit-trust investors bought it for the dividend: they don't care about the value of the assets, they just care about that phat dividend.

And the fund managers get paid based on the amount of assets in the fund. So it's in their best interests to keep the unit-trust's investors happy by keeping up that dividend: if they cut the dividend, the investors will go elsewhere and the fund managers will lose their cushy stream of fees.

This doesn't happen with bond ETFs, though. Bond ETFs always just pay out the coupons, because ETF investors tend to be smarter; they pay attention to the price of the fund as well as its yield.

 

[BBCWatcher]

Some corporate CEOs, too. There are many companies paying dividends (and/or buying back their shares) that absolutely shouldn't be. They should be investing in growing or at least preserving their businesses.

 

[justubes]

If you hold bond funds, I do and got me thinking.

Given the recent Evergrande, loans and coupons were not paid and bond unit price took a downward hit.

Obviously coupon were short including wrote-offs.

WWhere else can the coupons being paid come from in this situation, assuming cash held was still Insufficient to make the coupons.

So I can imagine a sell off just to make the coupons. Directly affecting the asset value and unit prices.

I feel all investors of funds are subject to the mercy of cowboy antics of the fund are managers and trickery involved to some extend.

 

[Cardax11]

You'd be surprised. Some unit trusts will absolutely do this—they'll sell their holdings to maintain the dividend, because the unit-trust investors bought it for the dividend: they don't care about the value of the assets, they just care about that phat dividend.

And the fund managers get paid based on the amount of assets in the fund. So it's in their best interests to keep the unit-trust's investors happy by keeping up that dividend: if they cut the dividend, the investors will go elsewhere and the fund managers will lose their cushy stream of fees.

This doesn't happen with bond ETFs, though. Bond ETFs always just pay out the coupons, because ETF investors tend to be smarter; they pay attention to the price of the fund as well as its yield.

Fund managers get paid based on the amount of assets in the fund
so logically it will not make sense for them to sell off and reduce the AUM for the purpose to maintain the yield

likewise, as you mentioned, they also have to keep investors happy by maintaining the yield so investors dont pull out the full investments

I guess we wont know exactly what happens behind the scenes and we can only rely on the fund provider/ manager reputation and track record?

 

[0218crawford]

Primary reason for the NAV Crush of HY Bond Funds: China Real Estate BONDs.
Some of these were trading above PAR $100 one time. Now lelong market.

 

[dappermen]

Em really?

https://www.businesstimes.com.sg/ba...nners-for-2021-all-came-from-emerging-markets

 

[sohguanh]

Does it occur to anyone bond price don't move as much? I understand it is a different asset class and it is for passive dividend income etc but to me say you put X dollars for 5 years. Yes you get your coupon paid but the price rise so little.

In contrast if you put the same X dollars in equities fund 5 years and you manage to pick the correct fund the price would have move much more.

I guess I saw many say balanced approach is best like 70% equities 30% bonds and other variations depending on each investor needs.

 

[0218crawford]

Lai lo. New METRO Bond on FSM Bond Express platform. YTM closer to 3.25% after platform fees.

 

[0218crawford]

new issue today:
HDB 7 year wholesale senior bond 250K each
coupon 1.971%


I suppose those less than 7 years before 55 better off putting the money in CPF.

 

[BBCWatcher]

new issue today:
HDB 7 year wholesale senior bond 250K each
coupon 1.971%

That seems like a very fair offer. The Singapore Government Security with a little less than 10 years to run is yielding about 1.82%. So about 15 basis points better yield with a statutory board bond and a little shorter term...reasonable. Great for grandmothers/grandfathers who would otherwise have S$3 million in fixed deposits.

As it happens that yield is currently a negative real yield. Singapore dollar inflation is currently running hotter. But it's all relative. Some people find negative real yield bonds like that one attractive, and Singapore dollar inflation is unlikely to run quite so hot over this bond term.

I suppose those less than 7 years before 55 better off putting the money in CPF.

I'm trying to deposit S$250K into CPF, but for some reason I'm not allowed to do that.

 

[dappermen]

see the impact

 

[dappermen]

Cant beat CPF???


Fixed Income:
Top 10 Performing Sectors
Sector 2021 Total Return*
USD High Yield Bond 4.5%
Global Inflation-Linked Bond 4.0
Global High Yield Bond 3.7
China Bond 2.1
USD Diversified Bond - Short Term 0.6
USD Flexible Bond 0.3
EUR High Yield Bond 0.1
https://sg.uobkayhian.com/lite/research/pdf/SF-IP-SG-20220203.pdf
Fixed Income:
Top 10 Performing Funds Fund Sector 2021 Total Return
BNY Mellon Global High Yield Bond Fund Global High Yield Bond 12.6
Franklin Floating Rate II Fund Other Bond 9.8
Templeton Global High Yield Fund Global High Yield Bond 7.6
JPMorgan Global High Yield Bond Fund USD High Yield Bond 7.5
UTI Indian Fixed Income Fund Other Bond 7.4
Franklin Floating Rate Fund Other Bond 6.8
Eastspring China Bond Fund China Bond 6.6
Franklin Gulf Wealth Bond Fund Other Bond 6.0
Fidelity US High Yield Fund USD High Yield Bond 5.8
JPMorgan US High Yield Plus Bond Fund USD High Yield Bond 5.4

 

[0218crawford]

Cant beat CPF???


Fixed Income:
Top 10 Performing Sectors
Sector 2021 Total Return*
USD High Yield Bond 4.5%
Global Inflation-Linked Bond 4.0
Global High Yield Bond 3.7
China Bond 2.1
USD Diversified Bond - Short Term 0.6
USD Flexible Bond 0.3
EUR High Yield Bond 0.1
https://sg.uobkayhian.com/lite/research/pdf/SF-IP-SG-20220203.pdf
Fixed Income:
Top 10 Performing Funds Fund Sector 2021 Total Return
BNY Mellon Global High Yield Bond Fund Global High Yield Bond 12.6
Franklin Floating Rate II Fund Other Bond 9.8
Templeton Global High Yield Fund Global High Yield Bond 7.6
JPMorgan Global High Yield Bond Fund USD High Yield Bond 7.5
UTI Indian Fixed Income Fund Other Bond 7.4
Franklin Floating Rate Fund Other Bond 6.8
Eastspring China Bond Fund China Bond 6.6
Franklin Gulf Wealth Bond Fund Other Bond 6.0
Fidelity US High Yield Fund USD High Yield Bond 5.8
JPMorgan US High Yield Plus Bond Fund USD High Yield Bond 5.4

But if you conisder which gives you a better quality of sleep. i think CPF beats all of them hands down la.

 

[dappermen]

which gives you a better quality of sleep

i trust the ans is CPF?

 

[Nofear40]

Stupid question - can use CPF to buy IPO? Including bonds IPO

 

[CaptainWu]

If you are using Bond Express you must have the accredite invester declared so as to have the option to input a smaller capital? Just tried and there is no option to choose anything less than 250k.