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Fund Rationale: United SGD Fund

United SGD Fund
SGD Retail Accumulation Shares (ISIN: SG9999001382)
Fund Manager Page

Introductory information
The United SGD Fund (the “Fund”) aims to invest substantially all of its assets in money market and short term interest-bearing debt instruments and bank deposits with the objective of achieving a yield enhancement over Singapore dollar deposits with a long-term view to preserve capital by mainly buying into investment-grade bonds. The Fund takes a fundamental and valuation driven, and bottom-up in approach to investing, and has a team of credit analysts for both Singapore fixed income issuers and high-grade corporate issuers in the developed markets. It is benchmarked against 6-Month Singapore Interbank Bid Rate (SIBID). 

The Fund is suitable for investors who seek to achieve a yield enhancement over Singapore dollar deposits, and are comfortable with the volatility and risks of a bond fund which invests in money market and short term interest-bearing debt instruments and bank deposits. The Fund is invested into a range of sectors, geographies, issuers and bonds which are denominated in different currencies for greater diversification. All non-SGD exposure is hedged back to the Singapore dollar to minimise foreign exchange risk. 

The Fund is an open-ended unit trust established under the umbrella structure of a Singapore-constituted fund. The inception of the Fund was in June 1998. As of May 2020, the Fund managed assets of SGD 1.23bn.

Characteristics
The Fund offers a short duration exposure to Singapore and global credits, with an objective of yield enhancement over Singapore dollar deposits. As of May 2020, the average portfolio rating of the Fund is A and the Fund has an effective duration of 1.45 years and weighted average maturity of 1.63 years. The weighted average yield to maturity is 3.5%. It has a 3 year annualised standard deviation of 1.58%. It has 34% exposure to Singapore, followed by 26% exposure to China. 

Background information and cost
The Fund has a net underlying fund management fee of 0.63% p.a. and a total expense ratio ("TER") of 0.67% p.a. (including the fund management fee). Endowus have arranged for the fund manager to rebate a specially negotiated trailer fee of 0.33% p.a. Endowus will refund 100% of the trailer fees back to the client to achieve a lower net management fee of 0.30% p.a. and a net TER of 0.34%p.a. Endowus do not charge a preliminary sales charge or any other fees, other than the all-in advice fee. The Fund is on the CPF Investment Scheme - List A Fund, and is included under the CPF Investment Scheme for Ordinary Account. It has been classified by the CPF Board under the risk classification of “Low to Medium Risk / Broadly Diversified.”

Selection criteria for Endowus
Endowus have selected the United SGD Fund for its diversified portfolio of money market and short term interest-bearing debt instruments and bank deposits, and its ability to constantly generate enhanced yet stable and lower risk returns over the long term. It acts as a buffer against market stability with lower drawdown compared to peer asset classes during market instability.  United SGD Fund has one of the longest track records among short duration fixed income funds in Singapore. Including being in the CPFIS included fund list, with a track record that spans 22 years since its launch in June 1998. The Fund has averaged over 3.5% return over the past 10 years. The Fund has outperformed its benchmark in 6 out of 9 years and has shown tremendously low volatility.

Updated by Endowus: 30 Jun 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.