BONDS, ETFS: WHAT INVESTORS NEED TO KNOW NOW?

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Dear readers, like it or not, the Singapore stocks markets are currently sluggish; this backdrop, together with an environment where interest rates are poised to rise, has made other investment alternatives attractive to investors, especially bonds. In recent months, Singapore investors are spoilt for choice where it comes to the choice of bonds. To recall:
1) the high profile Singapore Saving Bonds which offer investors interest of around 2.5% per annum over 10years;

2) Temasek Astria IV bonds which offer interest rate of around 4.25% and then the

3) Nikko AM Bond ETF which offers a yield of 3.22% (as I have posted in this article )

All the above bond-related investment mechanisms have the backing of major government monetary bodies like Temasek Holdings. Although the above numbering is in terms of chronological order of issue commencing from earliest, the above ranking could also be seen in terms of risk profile.

Investments in Singapore Saving Bonds is capital-guaranteed. Thereafter for Temasek Astria IV bonds, these bonds are traded on the SGX thus subjecting the bonds to PAR value fluctuations as well; but rightfully the 4.25% interest rate of the bonds should remain largely applicable. And for the Nikko AM Bond ETF which is now having an initial offering via distributors, this Bond Reit itself is actually not a bond per se but an ETF which tracks bonds.

I believe as investors seek to grow their monies in an increasing interest environment, they ought to be prudent and not jump into each and every opportunity. For example, in an environment of rising inflation, bond prices are likely not to do so well and hence one should consider carefully whether one would like to park so much investments in bond-related instruments or alternatively, make use of the low valuation of equities to buy good stocks at good value. Join the emailing list to receive regular Financial and Singapore stocks newsletters too! Like" me on Singapore Stocks Investing Facebook page to receive all posts on your Facebook as well as read more articles. Follow me on Twitter too.

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