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Understanding bond investing with Wellington and Endowus

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Amid concerns over higher inflation and rising rates, credit investing remains a viable option. In this article, Wellington partnered with Endowus to guide investors through the finer points of credit investing. Investors can learn how investing in credit differs from equity investing, and understand what the yield on different bonds represents. They can also find out how they should look at credit investing in a rising-rate environment, and learn why investing responsibly through fixed income can be done without sacrificing a reliable income stream.

F.I.R.E. up your fixed income core portfolio to fortify against inflationary and geopolitical pressures with a robust yet flexible approach.
Flexible allocation Seeks to deliver a higher-yielding credit blend, capitalising on the multi-sector credit expertise from our portfolio managers
Income Oriented Focus on higher-yielding assets to target an attractive level of income, which is managed to minimise dividend fluctuation
Research-driven approach Investment process leverages the breadth of Wellington’s fixed income platform to integrate specialist insights into the portfolio
Enhance return potential Diversified sources of return from strategic allocation to higher-yielding sectors and opportunistic positions in niche sectors
*Distribution payouts and its frequency are determined by the manager, and can be made out of income, capital or both. Investor should note that the payment of dividends directly out of capital may result in an immediate reduction of the net asset value per share of the Fund. Distributions are not guaranteed and may fluctuate. Past distribution are not necessarily indicative of future trends, which may be lower.

Get started with the Wellington Credit Income Fund on Endowus Fund Smart.

Save over 50% on fees when you invest on Endowus Fund Smart: only 0.3% p.a.* for best-in-class unit trusts

  • Quality advice with greater flexibility. Build your own portfolio with funds curated by the Endowus Investment Office
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*Only applicable to single fund purchases.

Why Wellington Credit Income Fund

Endowus has selected the Wellington Credit Income Fund for its robust portfolio that allocates into fixed income instruments from various sectors such as government, corporate credit, and securitised (e.g. asset-backed or mortgage-backed securities), with the aim to maximise total returns. While this can translate into a key portion of the portfolio being invested into higher-yielding sectors such as Global High Yield and even Emerging Market (EM) debt to provide yield pickup, the underlying issues are primarily denominated in USD, and the final portfolio maintains an overall investment grade quality.

Wellington’s unique investment model is often described as a “community of boutiques”, where the firm is composed of multiple different teams that have the liberty to make their own investment decisions without being subject to a single “house view” on the market. This approach is what enables the Fund to be managed a dynamic sector rotation strategy, where the three Co-PMs, Campe Goodman, Rob Burn, and Joe Marvan, collectively specialise in the formulation of top-down views to decide which sectors to invest into, and constantly tweak the portfolio to make sure that it is capturing what they believe is the best prevailing opportunity in the market in terms of duration and yield-curve decisions. Bottom-up considerations also contribute to the composition of the Fund, and the PMs also work closely with Wellington’s sector analysts to select the instruments in a given sector.

The typical final portfolio will include around 500 instruments with the highest allocations to high yield, followed by EM debt and structured instruments, and investment grade and developed government debt to provide a balanced, high-returning exposure. The portfolio’s duration tends to skew on the longer end, spanning anywhere between 2 to 6 years.

The three PMs have an average experience of more than 25 years, and have a decade of experience in managing the Fund’s strategy since 2012 through a US mutual fund vehicle, which was incepted in 2007. Although the UCITS version of the strategy (named Wellington Credit Income) was only launched in 2021, we take confidence in the proven track record of the older version of the strategy, and from the fact that the same PM team and investment approach are being used in managing the UCITS version as well. 

Historically, the US vehicle has consistently placed itself on the top of its peer group in terms of performance, and has generated a fairly consistent level of payouts that has been derived primarily from natural income, rather than tapping into capital. However, with that being said, the Fund has tended to underperform during periods of credit market weakness. Additionally, due to the Fund’s focus of generating high income, its risk metrics such as volatility also tends to be on the higher side, and therefore, we recommend the Fund to investors who are seeking higher returns, while being prepared to embrace the higher risks that accompany such focus.

The Wellington Credit Income Fund is available on Endowus Fund Smart.

About Wellington Management

With USD 1T+ in assets under management, Wellington Management is one of the largest independent investment management firms in the world — covering equity, fixed income, alternative, and multi-asset investments. As a private firm whose sole business is investment management, Wellington serves as investment adviser to over 2,400 clients in more than 60 countries.

*All figures as of 31 December 2021


Investment involves risk. Past performance is not necessarily a guide to future performance or returns. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund.

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endow.us Pte. Ltd (“Endowus”) and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus Pte. Ltd., its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider (i) whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.

Investment into collective investment schemes: Please refer to respective funds’ prospectuses for details of the funds, their related fees, charges and risk factors, The listing of units of the fund on a stock exchange does not guarantee a liquid market for the units. Before making an investment decision, you are reminded to refer to the relevant prospectus for specific risk considerations.

For Cash Smart Secure, Cash Smart Enhanced, Cash Smart Ultra: It is not a bank deposit and not capital guaranteed, and is subject to investment risks, including the possible loss of the principal amount invested. Investment products are not insured products under the provisions of the Deposit Insurance and Policy Owners Protection Schemes Act 2011 of Singapore and are not eligible for deposit insurance coverage under the Deposit Insurance Scheme. Interest rates are indicative and subject to change at any time.

Product Risk Rating: Please note that any product risk rating (the “PRR”) provided by us is an internal rating assigned based on our product risk assessment model, and is for your reference only. The PRR is subject to change from time to time. The PRR does not take into account your individual circumstances, objectives or needs and should not be regarded as advice or recommendation to purchase, hold or sell the any fund or make any other investment decisions. Accordingly, you should not solely rely on the PRR in making your investment decision in the relevant Fund.

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