MBH/A35 alternatives

[tangent314]

Why would MBH not be viable?
When interest rates are high, bond yields will be high too, therefore the YTM of bond funds will be high. Currently MBH has a weighted average YTM of 4.35%. It used to be significantly lower back when interest rates were lower.

 

[s0crates]

Hi all, new to investing here. Just wondering in the current high interest environment, is mbh still viable?

Read through the entire thread. My take is that it is a grossly overated option, but not because of current high interest environment.

The range of unit trust options available now make MBH a lot less attractive compared to 4-5 years ago.

 

[fr33d0m]

Does it even matter?

When just 0.X% of your networth can be invested monthly, and even less as you age?

Sounds like someone is keeping a warchest somewhere lol.

I hate it when market crash. I don't panic sell or lose sleep over it, but I don't kid myself with saying I can average down $2k when my $500k portfolio is down 20% lol.

Just say it as it is. It sucks when markets are down, but it should be something we are prepared for.

Market up or down is not up to you. However, you can decide how you would like to leverage on this situation, to take advantage of it or to bitch about it.

 

[DevilPlate]

Read through the entire thread. My take is that it is a grossly overated option, but not because of current high interest environment.

The range of unit trust options available now make MBH a lot less attractive compared to 4-5 years ago.

I thought unit trust has been around for many years?
more like MBH steal some market share from IG UTs

i would say SSB is more attractive than MBH but not UTs

I been looking at IG fixed income UT and have not found anything worth investing (low cost, sustainable distribution not from capital)

Currently monitoring QL3 ….Junk bond etf YTM 10%+ and payout around 7%

 

[s0crates]

I thought unit trust has been around for many years?
more like MBH steal some market share from IG UTs

i would say SSB is more attractive than MBH but not UTs

I been looking at IG fixed income UT and have not found anything worth investing (low cost, sustainable distribution not from capital)

Currently monitoring QL3 ….Junk bond etf YTM 10%+ and payout around 7%

Not at such low cost.

SSB is attractive because there is no duration risk, but it also have no upside when interest rate drops.

I believe what you are looking for will be the PIMCO income fund.

 

[DevilPlate]

Not at such low cost.

SSB is attractive because there is no duration risk, but it also have no upside when interest rate drops.

I believe what you are looking for will be the PIMCO income fund.

Someone told me about low cost funds on Endowus platform.

However, I don't really trust these new platforms and not sure where else I can transfer my funds if they fold.
FSMOne and Philips do not offer institutional class UTs.

 

[BBCWatcher]

SSB is attractive because there is no duration risk, but it also have no upside when interest rate drops.

That's right. There are a few basic shortcomings with SSBs for long-term bond holdings:

1. The principal guarantee comes with a cost, and a principal guarantee is unnecessary for long-term accumulation and long-term drawdown. (Basic rule: don't pay extra for stuff you don't need.)

2. The issuer (the Monetary Authority of Singapore) is the highest credit quality issuer of Singapore dollar denominated debt, so the market yields will lower than what other issuers need to offer. With even some diversification (but still a reasonable credit quality filter) it's prudent to obtain somewhat higher yields in long-term portfolios.

3. SSB holdings are capped at S$200,000 per person. You need some other vehicle anyway if you're trying to hold more than that.

I think SSBs are terrific, and I hold some. They're just not terrific in this particular role.

I believe what you are looking for will be the PIMCO income fund.

You've claimed this particular fund is a better choice in this role (a Singapore dollar bond fund for long-term investors), but we simply disagree. For investors that want non-Singapore dollar denominated bonds I'd get them in a lower cost fund (several choices, typically from Blackrock's London-listed funds) and then mix that fund with MBH if you want more of a Singapore dollar skew to your bond holdings. We just disagree about this.

 

[s0crates]

However, I don't really trust these new platforms and not sure where else I can transfer my funds if they fold.
FSMOne and Philips do not offer institutional class UTs.

Just sell and buy on FSMOne and Phillips? Anyway, I have the same concern holding on to their advised portfolios for cpf and some of the Amundi index funds.

Many of these are exclusive to them for reasons that might have escape me.

 

[DevilPlate]

Just sell and buy on FSMOne and Phillips? Anyway, I have the same concern holding on to their advised portfolios for cpf and some of the Amundi index funds.

Many of these are exclusive to them for reasons that might have escape me.

But being forced to sell if making a loss?
Also, FSM and others do not offer such low cost institutional class UT. Most of their fixed income UT cost 1-1.5% annual fees.

Anyway, that's just me. We just invest into something we feel comfortable

 

[reddevil0728]

But being forced to sell if making a loss?
Also, FSM and others do not offer such low cost institutional class UT. Most of their fixed income UT cost 1-1.5% annual fees.

Anyway, that's just me. We just invest into something we feel comfortable

If you are going to sell the buy. the loss is the same.

 

[DevilPlate]

If you are going to sell the buy. the loss is the same.

U missing the point, FSM and others do not offer institutional class UT.
How to buy back?

 

[reddevil0728]

U missing the point, FSM and others do not offer institutional class UT.
How to buy back?

am addressing that particular point of yours about

But being forced to sell if making a loss?

 

[s0crates]

U missing the point, FSM and others do not offer institutional class UT.
How to buy back?

Buy the retail share class, or any next best option (even MBH/a35)

 

[Kojo0403]

I thought unit trust has been around for many years?
more like MBH steal some market share from IG UTs

i would say SSB is more attractive than MBH but not UTs

I been looking at IG fixed income UT and have not found anything worth investing (low cost, sustainable distribution not from capital)

Currently monitoring QL3 ….Junk bond etf YTM 10%+ and payout around 7%

can consider QL2 as well.
YTM 6%,
quite well diversified with 75% investment grade bonds.
0.20% total expense ratio.

 

[BBCWatcher]

can consider QL2 as well.
YTM 6%,
quite well diversified with 75% investment grade bonds.
0.20% total expense ratio.

QL2 invests in U.S. dollar denominated bonds issued by sovereigns, quasi-sovereigns, and businesses in Asia that aren't really U.S. dollar oriented.

What sort of role do you have in mind for this fund?

 

[soulblader_89]

should I sell the ABF?

I have $10k worth of ABF

but is at lost now

 

[BBCWatcher]

should I sell the ABF?
I have $10k worth of ABF
but is at lost now

Well, what are you trying to accomplish with your A35 holding?

 

[soulblader_89]

Well, what are you trying to accomplish with your A35 holding?

I am expect the grow to be slower than normal stock, but at least the capital is guarantee, in the first place

Bond = safe

that why I choose bond over stock

but my bond keep dropping and dropping and nvr recover for many year, now in a loss

 

[sohguanh]

I am expect the grow to be slower than normal stock, but at least the capital is guarantee, in the first place

Bond = safe

that why I choose bond over stock

but my bond keep dropping and dropping and nvr recover for many year, now in a loss

Bond has many "pattern". Bond ETF, bond mutual fund, the bond itself (250k one pop!) etc etc. Yours is bond ETF correct? I have something similar but it is bond mutual fund. Like you I do not have fantastic returns with bond mutual fund either. Bond = safe this is read from where? Are you referring to the bond itself where if you hold to maturity you get back your capital? When you first time dabble in bond investment have you read up on it? E.g the many "pattern" it come with? Why you whack 10k on something that is new to you last time? The investment require minimum 10k to buy in?

 

[turtle2018]

The holdings of A35 are Singapore government bonds, with varying maturities. I took a look at the top 10 holdings per their Apr 2023 factsheet, bonds that mature on 2030 & later has weightage of 23.5%. S$ interest rate has been rising since around 2nd quarter of 2022, which in turn lowered the valuation of the longer dated bonds, & hence A35. When S$ interest rates start to drop (which is happening now), you would see the price of A35 start to recover/ rise.

If you do not have other alternatives to invest after selling, then perhaps you should continue to hold, & sell (for capital gain, or at least avoid capital loss) only after interest rates drop further. However, while waiting, the yield is only about 2.3% p.a. based on current price of around 1.060.