Domestic Bond - Safe

[rayzzzz82]

hi guys,

I am thinking of investing in domestic bonds as it is less volatile and it is relatively safe. I am looking at a return of above 3%, and is looking to invest at around 100k into it. Is there any domestic bond in the market which fit this profile. Appreciate any advice.

 

[icyboiz]

would like to know too

 

[alocacoc]

Wing tai , perennial etc are some asset rich domestic company which fulfilled your expected returns. UOB bonds too.
But unfortunately, the minimum lot is at least 250k before spread.
In your case, there could be a way if you have already some investment which can act as collateral. Thus allow you to leverage another 150k+- to make up the difference.
Bear in mind that leverage cost might outweigh your returns as its sibor dependent,especially with return being quite Low at 3% it's quite dangerous.

 

[wondrdoggie]

hi guys,

I am thinking of investing in domestic bonds as it is less volatile and it is relatively safe. I am looking at a return of above 3%, and is looking to invest at around 100k into it. Is there any domestic bond in the market which fit this profile. Appreciate any advice.

A lot of local bonds are unrated, meaning they are junk bonds. In any case, even so called IG grade bonds can default. So if you have 100k, I really wouldn't put it all into one bond or any single liner. I suggest a bond fund or etf. You may get a little less yield but at least you know you wouldn't lose all of it. Or look at fixed income type of funds which will include dividend stocks, international bonds and other debt instruments.

I am speaking from experience of having gone through volatile bonds like Olam, Swiber and Trikomsel. As you know, trikomsel is now in default and I have waved $250k bye bye.

 

[Shiny Things]

A lot of local bonds are unrated, meaning they are junk bonds. In any case, even so called IG grade bonds can default. So if you have 100k, I really wouldn't put it all into one bond or any single liner. I suggest a bond fund or etf. You may get a little less yield but at least you know you wouldn't lose all of it. Or look at fixed income type of funds which will include dividend stocks, international bonds and other debt instruments.

Wondrdoggie is absolutely right. You don't want to plow all your money into one single bond, because you're going to get clobbered if the issuer defaults. At the $100k mark (or even the $250k mark), you're better off investing in a bond ETF, which will spread your money across a range of different issuers; you'll get slightly lower return, but you'll minimise the pain if one of those issuers goes bust.

 

[wahkao3]

y go for low risk low return? you will never huat

you should go for low risk high return

 

[unhinged_loon]

Wondrdoggie is absolutely right. You don't want to plow all your money into one single bond, because you're going to get clobbered if the issuer defaults. At the $100k mark (or even the $250k mark), you're better off investing in a bond ETF, which will spread your money across a range of different issuers; you'll get slightly lower return, but you'll minimise the pain if one of those issuers goes bust.

That only leaves A35 for SGD denominated investments? The yield looks similar to the SSB if the SSB is held to maturity.

 

[rayzzzz82]

how about those available in the open exchange? for eg capital asia mall bonds at 3.8%. Is it good?

 

[wondrdoggie]

how about those available in the open exchange? for eg capital asia mall bonds at 3.8%. Is it good?

Retail bonds are also single issuers so the default risk is the same. However, if you are chasing higher yields beyond etf, you can always structure your 100k to be say 60k in etf and 40k in a few retail bonds. Just be aware that there is issuer risks involved.

 

[wondrdoggie]

That only leaves A35 for SGD denominated investments? The yield looks similar to the SSB if the SSB is held to maturity.

That is why I look beyond ETFs to get more yield. Funds have a higher fee structure but you get access to so many more markets and I have found that though I pay more fees, I get better yields and participation in markets beyond our small island state. It's a way to diversify geographical risk too.

Many funds that hold international portfolio offer SGD denominated trenches too so you don't have to take fx risk. Or rather, the cost of hedging is included.

Eg of bond or fixed income funds I hold include:

Fullerton income fund
JP Morgan fixed income fund
Pimco global IG fund

 

[Bedokian]

Even for bonds, one has to diversify across. For my case, I have the bond etf as well as some corporate bonds.

 

[rayzzzz82]

which bond etf or corporate was relatively safe and give a return of higher than 3%?

 

[Asphodeli]

which bond etf or corporate was relatively safe and give a return of higher than 3%?

No such product exists on the sgx...can only take individual securities...but at a higher risk...

Sent from Sony E6533 using GAGT

 

[Maeda_Toshiie]

which bond etf or corporate was relatively safe and give a return of higher than 3%?

Paging for Wahk-

 

[rayzzzz82]

for those domestic bonds which are available for trading on our exchange, are they relatively safe? I am looking at Fraser Centrepoint Limited 3.65% pa bond and CapitaMalls Asia Treasury 3.80% pa bond. Their price does not fluctuate by much. will it be a good choice if I hang on to it and getting the coupon every semi annual?

 

[blueG77]

I think nobody can guarantee you whether it is relatively safe anot (All investments carry a risk)

Boring government bonds or A35 (bond etf) are considered the least risky, they yield around 2%.

Capitamall, Frasers do carry higher risk. But they compensate you with higher interest.

Up to you to decide whether the company is reliable etc cheers

 

[homer123]

I have been holding these 2 retail bonds for a while.. They have been relatively stable even during very volatile period in the financial markets for the last few years. The good thing you can buy in smaller lot compare to those 250K lot.

for those domestic bonds which are available for trading on our exchange, are they relatively safe? I am looking at Fraser Centrepoint Limited 3.65% pa bond and CapitaMalls Asia Treasury 3.80% pa bond. Their price does not fluctuate by much. will it be a good choice if I hang on to it and getting the coupon every semi annual?

 

[homer123]

That is why I look beyond ETFs to get more yield. Funds have a higher fee structure but you get access to so many more markets and I have found that though I pay more fees, I get better yields and participation in markets beyond our small island state. It's a way to diversify geographical risk too.

Many funds that hold international portfolio offer SGD denominated trenches too so you don't have to take fx risk. Or rather, the cost of hedging is included.

Eg of bond or fixed income funds I hold include:

Fullerton income fund
JP Morgan fixed income fund
Pimco global IG fund

Where did u buy these bond fund?

 

[wondrdoggie]

Where did u buy these bond fund?

From private banks, not sure what's the min bitesize for them but there any many bond funds out there that take 1k/5k participation.