MBH/A35 alternatives

[reddevil0728]

Yea of course. My point is that I rather hold a junk bond that is due in 3 months than a AAA SGS bond fund with a super long duration, and that should be the case for most people too.

Safety from duration risk should be considered more than credit rating.

i guess different people different perspective bah.

cause some people buy it to long. eventually the dividend will be more than cover the capital loss

 

[churnmaster]

Yea of course. My point is that I rather hold a junk bond that is due in 3 months than a AAA SGS bond fund with a super long duration, and that should be the case for most people too.

Safety from duration risk should be considered more than credit rating.

I’m OK with duration risk but not credit risk and currency risk (as far as possible) except USD. USD exposure can be hedged.

 

[CaptainWu]

I’m OK with duration risk but not credit risk and currency risk (as far as possible) except USD. USD exposure can be hedged.

Nothing is safe in this world from risk prespective but relatively this is much better comparing a Bond ETF with 4% with a single corporate bond with 4%, as once go default you have zero back relatively

 

[s0crates]

I will share more over the weekends, but recent yield curve inversion really makes a case of active management of bond funds more compelling.

You can see that the Fullerton cash fund is yielding 3.5 ish % compared to longer duration mmf/ bond funds like the lionglonal series.

I wonder how long does this last. Will short term fixed income continue to give really attractive returns as central banks curb inflation by making short term money a lot more expensive?

Not an unlikely scenario, but i think locking in some fixed deposits or tbills for those who are worried about rates change make a lot of sense. Otherwise Fullerton cash should be the go to solution.

 

[d5dude]

I will share more over the weekends, but recent yield curve inversion really makes a case of active management of bond funds more compelling.

You can see that the Fullerton cash fund is yielding 3.5 ish % compared to longer duration mmf/ bond funds like the lionglonal series.

I wonder how long does this last. Will short term fixed income continue to give really attractive returns as central banks curb inflation by making short term money a lot more expensive?

Not an unlikely scenario, but i think locking in some fixed deposits or tbills for those who are worried about rates change make a lot of sense. Otherwise Fullerton cash should be the go to solution.

Short term rates will tank again once the economy rolls over hard, 3m/10yr has been inverted for quite a while now and this indicator has a 100% success rate when it comes to forecasting recessions.

The market doesnt buy all the hawkish central bank rhetoric (hence the deep yield curve inversion), neither do I.

 

[churnmaster]

I will share more over the weekends, but recent yield curve inversion really makes a case of active management of bond funds more compelling.

You can see that the Fullerton cash fund is yielding 3.5 ish % compared to longer duration mmf/ bond funds like the lionglonal series.

I wonder how long does this last. Will short term fixed income continue to give really attractive returns as central banks curb inflation by making short term money a lot more expensive?

Not an unlikely scenario, but i think locking in some fixed deposits or tbills for those who are worried about rates change make a lot of sense. Otherwise Fullerton cash should be the go to solution.

A35 is up almost 4% over the last 3 weeks in line with drop in long term yields .... TLT also up almost 12% in the same period.

 

[Listopad]

anyone knows if we can use Fullerton cash fund for CPF OA ?

 

[BBCWatcher]

anyone knows if we can use Fullerton cash fund for CPF OA ?

There are no Fullerton funds listed.

 

[revhappy]

UOB is offering 3.85% interest rate for above 50k. It just seems fuss free way to make guaranteed return as long as I am okay to lock in.

I understand fixed depositsyou lose out if/when when you need to break the deposit in order to invest in markets if/when markets crash.

But my memory is very fresh with what happened in Mar 2020 when markets crashed and I thought I could sell MBH to rebalance into equities. But nope MBH also fell and selling MBH would have been at a loss.

So with that in mind, I think UOB Fixed deposit is not such a bad option. It is even better than T bills or SSB in terms of immediate liquidity.

 

[reddevil0728]

UOB is offering 3.85% interest rate for above 50k. It just seems fuss free way to make guaranteed return as long as I am okay to lock in.

I understand fixed depositsyou lose out if/when when you need to break the deposit in order to invest in markets if/when markets crash.

But my memory is very fresh with what happened in Mar 2020 when markets crashed and I thought I could sell MBH to rebalance into equities. But nope MBH also fell and selling MBH would have been at a loss.

So with that in mind, I think UOB Fixed deposit is not such a bad option. It is even better than T bills or SSB in terms of immediate liquidity.

Cause bond fund and bond diff thing

 

[Iamnobodyla]

Wanna ask if you guys whom have purchased bonds to form part of the portfolio. How does YTM changes with interest rate and how is it important ? I always thought bond component of a portfolio is that it doesn’t fluctuate much compared to stocks and more stability especially when one is near retirement.

 

[Listopad]

There are no Fullerton funds listed.
yes I was looking through the listing on cpf website and not listed there , looks like this can’t be an option . Otherwise it seems a good alternative for our cpf oa funds if one doesn’t want to go through the hassle of Tbills application etc

 

[revhappy]

I will share more over the weekends, but recent yield curve inversion really makes a case of active management of bond funds more compelling.

You can see that the Fullerton cash fund is yielding 3.5 ish % compared to longer duration mmf/ bond funds like the lionglonal series.

I wonder how long does this last. Will short term fixed income continue to give really attractive returns as central banks curb inflation by making short term money a lot more expensive?

Not an unlikely scenario, but i think locking in some fixed deposits or tbills for those who are worried about rates change make a lot of sense. Otherwise Fullerton cash should be the go to solution.

I know SGD is a very peculiar currency, because interest rates are not used to set monetary policy, instead exchange rate is used. The interest rate is then derived from the exchange rate. I also read, there is another dynamic, when SGD is strong the interest rate is low, when SGD is weak the interest rate is higher. The logic is you need to get paid higher interest to make up for the depreciation and vice versa.

I am trying to figure out where SGD NEER and current yields are to figure out whether this is a opportunity to keep SGD or get out.

I also understand currently there is a huge influx of people and capital into Singapore, fleeing Taiwan, Hong Kong and China. So these inflows + inflation may be causing SGD to trade much stronger than its actual trade based fundamentals warrant. Just looking at SGD v/s other currencies, this seems to be true as well, SGD is very strong. In the past I remember, especially around 2015 when Chinese Yuan was facing devaluation, SGD was also falling in lockstep. Eventually I think SGD will have to trade at 1.43 to the USD.

 

[d5dude]

Wanna ask if you guys whom have purchased bonds to form part of the portfolio. How does YTM changes with interest rate and how is it important ? I always thought bond component of a portfolio is that it doesn’t fluctuate much compared to stocks and more stability especially when one is near retirement.

In general YTM will go up (bond price go down) when IR go up, sensitivity to IR movement also depends on credit quality and duration.

Bonds are generally more stable than stocks, this year is really an outlier, mostly because central banks took rates to negative and they were buying trillions of bonds, thereby artificially depressing bond yields. All of that unwound when they got out of the market earlier this year.

 

[DevilPlate]

Wanna ask if you guys whom have purchased bonds to form part of the portfolio. How does YTM changes with interest rate and how is it important ? I always thought bond component of a portfolio is that it doesn’t fluctuate much compared to stocks and more stability especially when one is near retirement.

I am eyeing SGS 5/10yr bond.
Next upcoming 10yr SGS bond scheduled in Jan 2023.

Bear in mind it is very illiquid and so prepared to hold till maturity.

Sidenote: A35 has increased a lot past 2 weeks. MBH looks more attractive for now.

 

[Listopad]

I am eyeing SGS 5/10yr bond.
Next upcoming 10yr SGS bond scheduled in Jan 2023.

Bear in mind it is very illiquid and so prepared to hold till maturity.

Sidenote: A35 has increased a lot past 2 weeks. MBH looks more attractive for now.

What’s the yield expected ?

 

[revhappy]

I think it is better to stick to the short end of the curve as the long end has already repriced for a recession. You wont make much gains in the long end if recession really occurs, but if you stick to the short end you can reinvest in equities if/when they crash next year due to recession.

 

[Listopad]

I think it is better to stick to the short end of the curve as the long end has already repriced for a recession. You wont make much gains in the long end if recession really occurs, but if you stick to the short end you can reinvest in equities if/when they crash next year due to recession.

I am trying to find a safe instrument for cpf oa , that forms part of the bond allocation of my portfolio . This portion will not be reinvested in equities. So thinking of alternatives to lock in higher interest rates (yet not taking on too much credit risk).

 

[reddevil0728]

I am trying to find a safe instrument for cpf oa , that forms part of the bond allocation of my portfolio . This portion will not be reinvested in equities. So thinking of alternatives to lock in higher interest rates (yet not taking on too much credit risk).

just treat CPF OA itself as the bond portion. don't have to over optimise. may end up inferior

 

[Listopad]

just treat CPF OA itself as the bond portion. don't have to over optimise. may end up inferior

Yes that’s why it has not been touched all these years . But with the recent run up of interest rates, now Tbills pushing past 4% , it’s worth to review and explore options .

assuming 1m, differential of 2%, be easily 20k a year.