Fund Rationale: Dimensional Global Core Fixed Income Fund

Dimensional Global Core Fixed Income Fund
SGD Institutional Class Accumulation Shares (ISIN: IE00BG85LQ14)
Fund Manager Page

Introductory information
The Dimensional Global Core Fixed Income Fund (the :Fund”) aims to maximise total returns in Singapore Dollar terms over the longer term by investing in debt issued mainly by governments, other public bodies, and companies from developed countries. Dimensional deploy a systematic strategy with a view to capture expected credit premiums and expected term premiums. The term “expected credit premium” means the expected incremental return on investment for holding obligations considered to have greater credit risk than direct obligations of high-quality government issuers, and “expected term premium” means the expected relative return on investment for holding securities having longer-term maturities as compared to shorter-term maturities. The Fund is suitable for investors who have a long-term investment horizon, globally diversified exposure and more stable returns. The Fund is benchmarked against the Bloomberg Barclays Global Aggregate Bond Index (hedged to SGD).

The inception date of the oldest share class of the Fund is 11 December 2008, while the SGD Institutional Accumulation Shares were incepted on 11 December 2018. As of September 2020, the Fund managed a total asset of SGD 368.1m.

 

Characteristics
The Fund has exposure to fixed or floating rate fixed income instruments including bonds and other debt instruments issued or guaranteed by governmental, quasi-governmental, agency and instrumentality, supranational agency and corporate issuers predominantly in developed countries. The Fund will primarily invest in and normally maintains an average portfolio duration of more than three years and less than ten years. The Fund will increase or decrease exposure to intermediate-term securities depending on the expected term premium and increase or decrease exposure to lower-rated debt securities depending on the expected credit premium. As of June 2020, the Fund has 431 holdings in a diversified portfolio with an average yield to maturity of 1.69%. The average maturity is 8.29 years and the average duration is 7.20 years. The average credit rating is A and the Fund’s largest allocation geographically is 56.40% in the US, followed by 11.68% in the UK, 5.48% in France, 5.36% in the United Kingdom, and 4.44% in Australia.

 

Background information and cost
The Fund has an underlying fund management fee of 24bps per annum (0.24% p.a.) and a total expense ratio of 28bps per annum (0.28% p.a.) as of 30 June 2020. As the Fund scales, Dimensional and Endowus will continue to reduce the fees paid by the client for the underlying fund. Endowus do not charge an upfront sales charge or any other fees, other than the all-in Access Fee.

Dimensional Fund Advisors are a global investment firm guided by deep convictions about the power of capital markets. They are a leader in applying advanced financial science to equity and fixed income investment strategies. By employing a rigorous and systematic investment approach, Dimensional seek to capture what the market offers in all its dimensions. For more than 30 years, Dimensional have translated research into real-world investment solutions for clients. Their clients include financial advisors, pension funds, retirement plans, college savings plans, insurance companies, endowments and foundations, and sovereign wealth funds. Dimensional manage USD USD 514bn firm-wide as of June 30, 2020.

 

Selection criteria for Endowus
Endowus have selected the Dimensional Global Core Fixed Income Fund for its systematic risk exposures in a broadly diversified global portfolio of high credit quality debt, and its ability to generate enhanced yet stable and low-risk returns. Research by academics has shown that there are systemic factors in fixed income that are pervasive and proven factors that add statistically significant positive returns above the market at an efficient cost. These are term and credit premiums.

Dimensional use information in spreads to gain additional smart excess returns that are systematically harvested over the long-term in a disciplined and well-researched investment process. The global diversification adds to the opportunity set to harvest these returns. This is implemented through an integrated fixed income portfolio management and trading that pursues higher expected returns with cost-effective execution. We are using Dimensional’s institutional clean share class with no loaded fees. It is an Irish domiciled UCITS fund which is more tax efficient and it is denominated in Singapore dollars to make it an FX efficient portfolio for Singapore based investors matching your assets with your future liabilities and thereby removing unnecessary FX risk and cost.

Updated by Endowus: 24 Sept 2020

** Disclaimer
Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.

The prospectus, profile statement, product highlight sheet, fund factsheet or other offer or product documents may contain references about the expected risk tolerance of their target investors. These are in no way indicative of how we at Endowus have assessed your risk tolerance based on your stated objectives and financial situation. Endowus accepts no responsibility for investment decisions made in response to the expected risk tolerance levels mentioned in the product or offer documents.