Fund Rationale: LionGlobal SGD Enhanced Liquidity Fund

LionGlobal SGD Enhanced Liquidity Fund
SGD Class I Accumulation Shares (ISIN: SG9999019301)

Fund Manager Page

Introductory information
The LionGlobal SGD Enhanced Liquidity Fund (the "Fund”) aims to preserve capital, enhance income and provide a high level of liquidity by investing in a broadly diversified portfolio of high quality debt instruments. The Fund is benchmarked against 3 month MAS Bills. The Fund is suitable for investors who wish to preserve capital and enhance income; and are comfortable with the volatility and risks of investing in debt instruments.

The SGD Class I Accumulation Shares are the oldest share class of the Fund, which was incepted on 30 November 2018. As of July 2020, the Fund managed a total asset of SGD 150.4m.

The Fund’s approach to enhancing income while providing liquidity is to invest in a high-quality portfolio of debt instruments diversified across varying issuers and tenures while maintaining a weighted average portfolio credit rating of A- and a weighted average duration of around 12 months. The portfolio’s base currency is SGD and foreign currency-denominated securities will be fully hedged back to SGD except for a 5% frictional currency limit (to account for possible deviations from a 100% hedge). The Fund may invest in a range of debt instruments including bonds, notes, bills, deposits, and other debt securities that the Fund Manager deems appropriate. The obligors of these instruments include but are not limited to corporates, sovereigns, supra-nationals, government agencies, and financial institutions.

As of July 2020, the Fund has a weighted credit rating of A,  weighted duration of 0.81 years and weighted yield to maturity of 1.99%. The Fund allocated 50.3% in Singapore, 35.1% in China, and others including Malaysia, India, South Korea, Hong Kong, and UAE. Its top 5 sector exposure includes real estate (28.4%), industrial (22.2%), sovereign (20.9%), Financial (15.6%), and basic materials (6.6%).

Background information and cost
Endowus accesses the institutional share class of the Enhanced Liquidity Fund, which has an underlying fund management fee of 0.25% p.a. and a total expense ratio ("TER") of 0.39% p.a. (inclusive of fund management fee). Endowus have arranged for Lion Global Investors to rebate the trailer fees of 0.125%, which Endowus will refund 100% back to the client to achieve this lower net expense ratio of 0.265% p.a. For comparison, the retail share class has a TER of 0.74%, which is meaningfully higher. Endowus do not charge a preliminary sales charge or any other fees, other than the Endowus all-in Access Fee.

Lion Global Investors, member of the Oversea-Chinese Banking Corporation Limited (OCBC) Group, are one of the largest asset management companies in Southeast Asia, with group assets under management of S$57.8 billion (USD 40.6bn) as at 31 March 2020.

Selection criteria for Endowus
Endowus has selected the LionGlobal SGD Enhanced Liquidity Fund for its diverse exposure to money market instruments, short-duration and high quality fixed income exposure. It is the best-in-class capital preservation and yield enhancement product in Singapore. Due to the short weighted average maturity of the fund, it amortises the yield of the underlying securities, which are all held to maturity. This means the fund does not need to market to market certain securities and so the likelihood of a drawdown is extremely rare. This allows for stable NAV growth over time and accumulation of yield to provide a strong foundation for enhanced interest returns.

Updated by Endowus: 25 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.