NIKKO AM SGD INVESTMENT GRADE CORPORATE BOND ETF INITIAL OFFERING: FIRST BOND FOR RETAIL INVESTORS TO ACCESS CORPORATE BOND NOW OPEN

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Nikko AM Corporate Bond ETF
Dear readers, Nikko AM Corporate Bond ETF is now open for subscription at an initial offer price of $1. The initial offer price application is from 23 Jul 2018 to 17 Aug 2018 and interested retail investors may contact their trading representatives since this initial offering is not open to the public. For more information on the bond ETF, please visit this link  as well as the product brochure here While the corporate bond is billed as Singapore’s first corporate bond which would be made accessible to retail investors (though I am not sure whether this “first” “accolade” should be accorded to Temasek’s Astria IV bond instead), I believe the main highlight of this bond which would attract retail investors is the comparatively high yield of 3.22% which was also mentioned in the product brochure with reference to the lower yield of Singapore Government Securities and Bank Fixed Deposit of 2.21% and 0.92%. Further, the investment of the Corporate Bond seems to be in relatively safe assets in names like bonds issued by Temasek Financial I Limited and HDB, LTA and PUBs though there is a portion of investment in local and foreign corporates too.

Returns aside, lets talk about the possible risk which are chiefly in relation to capital risk and dividends risk. Well, it must be mentioned that the yields of this corporate bond ETF are by no means guaranteed and unlike some other bonds which an investor may have in mind, Nikko AM Corporate Bond ETF will be listed on SGX on 27 Aug 2018 and hence this ETF will be subject to the vagaries of the broader stocks markets just like any other entity listed on the SGX; what this implies is that capital and dividends of this ETF are just like any other listed entity. Further, investors must know that there is no holding period of this bond ETF, simply because this bond ETF is not a BOND but an ETF which consists of Bonds.

In a rising interest-rate environment where many investors are looking at more avenues to grow their monies at higher interests, Nikko AM Corporate Bond ETF with its decent returns and investments in relatively safe assets would be attractive to some investors. But investors would also need to understand the nature of this ETF and manage their expectation in relation to capital and yield accordingly; i.e. simply whatt investing in an ETF entails. 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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