(Post 79/week 61)Learning investing/trading together part 13:A35(ABF SINGAPORE BOND INDEX FUND)

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Learning trading/investing together part 12: A35(ABF SINGAPORE BOND INDEX FUND/ETF)

I am currently writing a guide on how to purchase POSB invest saver due to the numerous PM that I have received on Facebook. But before that, I need to explain a little bit about A35. I am sure everyone is pretty familiar with STI ETF(ES3 and G3B). You can refer to this link here if you need more information about the STI ETF. 
But, what about ABF Singapore bond fund index? Without further ado, let’s get straight to it!

Image result for abf singapore bond etf

Overview of the A35

  • It is the first exchange-traded (“ETF”) bond fund in Singapore, 
  • The Fund seeks to track the total return of the iBoxx ABF Singapore Bond Index
  • iBoxx ABF Singapore Bond Index tracks a basket of high-quality bonds issued primarily by the Singapore government and quasi-Singapore government entities.
What does iBoxx ABF Singapore Bond Index comprise off?
  • It comprised of Singapore dollar bonds issued by the Singapore Government or Singapore Government-linked entities  such as e.g Singapore government bond, Housing Development Board, Temasek, and Land Transport Authority, SP Power
  • It also comprised of Singapore dollar bonds issued or guaranteed by other Asian government, a quasi-government or supranational financial institution (e.g.Danga capital Berhad, Export-Import Bank of Korea, Korea Development Bank)
  • In short, It contains bond from Singapore, Malaysia and Korea
  • The pictures below from the annual show what does the iBoxx ABF Singapore Bond Index comprise off

  • You can download the annual report of A35 here, it contains the portfolio of the iBoxx ABF Singapore Bond Index
Reasons to invest in A35(ABF SINGAPORE BOND INDEX FUND)

Diversification
  • Investors achieve diversification in one single transaction with minimum investment versus having to build a similar portfolio by purchasing individual stock, bonds or commodities which could require a huge investment outlay

Cost-effectiveness

  • The cost of investing in ETFs are generally lower than actively managed funds(for example, Units Trusts) in the same markets of assets
Accessibility

  • ETFs offer access to a variety of local and global markets, as well as asset classes, both broad and specific, which may be inaccessible to individual investors
Did you know?

  • You can invest in A35 using CPF SRS(supplementary retirement scheme)?
  • Read more about using SRS to invest in A35 here
Fund performance of A35

  • 1yr performance=2.01%
  • 3yr performance=2.85%
  • 5 yr performance=2.55%
  • I will be honest here, the fund performance return is not very impressive considering that the above performance is taken into account after reinvesting the dividend.
  • However, if you look below the chart in yahoo finance, it is pretty stable being that its min is at 1.00(red line) and its max is at 1.30(black line)
Dividend of A35(One of the most exciting parts of investing is the dividend!)

  • Dividend yield for 2017:1.89%
  • Dividend yield for 2018:2.31%
  • Dividend yield for 2019:2.31%
  • There is some mistake in the dividend yield for 2019, hence I have edited and replace it with the actual percentage of the dividend that I have received:2.31%
  • For more information about the dividend that I have received for 2019, do read more about it at my updates for POSB invest saver Jan 2019 here


Conclusion
  • I am pretty surprised that this index contains HDB and LTA, truly AAA rated!
  • History has shown that housing market has collapsed before(yes, I am referring to 2008 financial crisis), but Singapore housing market price is controlled by the government hence it is “rather” safe(take note of the word rather)
  • The fund performance may not be very impressive but it provides a better interest rate than most saving bank account or Singapore government bond.
  • Moreover, it provides the liquidity of selling away anytime should you need the money.
  • Ultimately, the decision to invest or not lies with you, remember to dyodd(do your own due diligence!)
The next post on learning investing/trading together will be on how to purchase from POSB invest saver, do look out for it!

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