As you would have heard by now.
In the recent 6-month T-Bills auction on 24 Apr 2025, yields fell to 2.38% per annum.
Because of that, I’ve been getting a lot of questions on alternative places to park cash, for a higher yield.
United SGD Fund is an option for Singapore investors to consider.
It is one of the more popular bond funds in Singapore ($2.2 billion AUM as of 31 March 2025), so you may already have heard of it.
It has a 4.21% per annum yield to maturity (in SGD terms, as of 31 March 2025), with a 1.68 years effective holding duration.
It generally invests in investment grade credit and has a low-risk profile.
This makes the United SGD Fund a useful option for investors who are comfortable to take on some risk and duration, in exchange for a potentially higher yield on cash.
Disclosure: This post is sponsored by UOB Asset Management. All views and opinions expressed in this post are from Financial Horse. This advertisement has not been reviewed by the Monetary Authority of Singapore. This does not constitute as financial advice and you should seek advice from a financial adviser, or consider whether the portfolio is suitable for you.
Basics: What is the United SGD Fund?
To understand the fund better, I extracted some key FAQs below (emphasis mine):
About United SGD Fund
The United SGD Fund (the “Fund”) aims to deliver stable and regular returns^, with a fund size of over S$2.2 billion as of 31 March 2025. It has a strong track record of over 25 years and is one of the most popular fixed income funds in Singapore with its low-risk profile offering stable returns to investors.
^Distributions (in SGD) are not guaranteed. Distributions may be made out of income, capital gains and/or capital. This relates to the disclosed distribution policy as set out in the Fund’s prospectus.
Investment Objective
To invest substantially all 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.
Enhanced returns over Singapore dollar deposits
In spite of changing market conditions, the Fund aims to achieve yield enhancement over Singapore dollar deposits with a long-term view to preserve capital by mainly buying into investment-grade bonds. The Fund targets a weighted average yield-to-maturity of 4.21% p.a. (in SGD terms, as of 31 March 2025).
Focuses on a short duration
The Fund is a global short duration investment-grade bond fund focusing on investments in Asia. Price stability is maintained by the Fund’s focus on short duration. As such, the effective holding duration is 1.68 years (as of 31 March 2025).
United SGD Fund – Short duration, SGD Bond fund?
To sum up.
United SGD Fund (the “Fund”) generally invests in a basket of investment-grade bonds in Asia, with a goal to achieve a higher yield than SGD deposits.
Effective holding duration is 1.68 years (as of 31 March 2025), which is longer than a typical 6 – 12 month T-Bills, yet not as long as something like other bond funds which may have a 4 year duration.
Base currency is SGD (there is also a USD share class).
What is the target yield of United SGD Fund?
The target yield for the Class A SGD Dist share class is up to 4.0%:
Class A SGD Dist
The current distribution policy is to make monthly distributions of up to 4.0% p.a.*
Class A USD Dist (Hedged) and Class S (Dist)
The current distribution policy is to make monthly distributions of up to 5.0% p.a.*
*Distributions (in SGD) are not guaranteed. Distributions may be made out of income, capital gains and/or capital. This relates to the disclosed distribution policy as set out in the Fund’s prospectus.
What are the underlying assets for United SGD Fund?
One of the key concerns most investors will have is the risk profile.
How much risk are investors taking on?
I’ve extracted the Sector Allocation for United SGD Fund below:
Top 5 Sector Allocations (%):
- Financials – 38.46%
- Real Estate – 10.89%
- Consumer Discretionary – 9.72%
- Industrials – 8.91%
- Government – 8.53%
Top 5 Country Allocations (%):
- Singapore – 16.58%
- Hong Kong – 13.42%
- South Korea – 11.17%
- China – 11.16%
- Australia – 7.66%
Average credit rating is A-.
Source: United SGD Fund Fact Sheet, retrieved on 2 May 2025
The Fund looks very diversified as the Top 5 holdings each only make up no more than 2% of the fund.
You can see the kind of bonds they hold above.
It’s a very broad mix diversified across multiple sectors and countries, and average credit rating is investment grade.
As a Singapore bond fund – it makes sense that Singapore is the largest country allocation at 16.58%.
However the universe of Singapore bonds generally isn’t big enough, so for them to go overseas does make sense as well.
What happens when the bonds in the bond funds mature?
I always get the question on what happens when the bonds in a bond fund mature.
If you buy a 5 year bond and hold it yourself – on maturity you get the principal back.
With a bond fund, because the bonds are held by the fund.
What happens on maturity is that the fund manager will use the maturing proceeds – to reinvest in new bonds.
There’s a diagram below that illustrates this.
Effectively, the maturing proceeds will be reinvested into new bonds at the market price.
There is some discretion on the part of the fund manager in what type of bonds to buy.
In a rising interest rate environment, the fund manager will try to pick shorter dated bonds (to benefit from higher yields on maturity).
In a falling interest rate environment, the fund manager will try to pick longer dated bonds (to lock in the high yields).
Source: UOBAM Website, https://www.uobam.com.sg/our-funds/highlights/united-sgd-fund/index.page#whyinvest
What are the risks / historical drawdowns for United SGD Fund?
As you would know – the market price of a bond trades inversely to interest rates.
So when interest rates go up, bond funds typically see mark to market losses (and vice versa – mark to market gains when interest rates go down).
However, because United SGD Fund has an average duration of 1.68 years (as of 31 March 2025), generally speaking this risk would not be as pronounced as a bond fund with a higher duration.
This is known as bond convexity – in that the longer the duration of the bonds, the more sensitive it is to interest rate changes.
1.68 years is on the shorter end of the range, which should help reduce the risk somewhat.
You can see historical returns below.
In 2022 when interest rates were soaring and the Feds were hiking 75 bps each meeting.
The total loss for United SGD Fund that year was only -2.31%.
2 Source: UOBAM, as of 31 December 2024. Benchmark used from 19 June 1998 to 2 May 2021 refers to the 6-month Singapore Interbank Bid (SIBID) Rate. Benchmark used from 3 May 2023 to 7 April 2022 refers to 12M Bank Deposit Rate. Benchmark used from 8 April 2022 to present refers to the 6M Compounded Singapore Overnight Rate Average (SORA). Please refer here for more information.
3 The table is for illustration purposes only. It is calculated based on the assumption of S$100,000 invested in the Fund at a net asset value of S$1 per unit in the Fund on the inception date on 19 June 1998 and staying invested till 31 December 2024, with dividends and distributions reinvested, if any. Past performance is not indicative of future performance.
This is illustrated below.
You can see how because of the short duration and generally investment grade bonds used.
The drawdowns are much lower as compared to other peer asset classes:
What are the returns for United SGD Fund?
Returns post 2022 average about 4%+ yield to maturity.
This is generally in line with the target distribution yield of the fund.
My views on United SGD Fund?
It is important to note that that United SGD Fund is not risk free.
This is NOT a T-Bill or SDIC insured fixed deposit with zero risk. Even though United SGD Fund may be low risk, there is still a chance of principal loss / mark to market losses, for example if the underlying bonds default.
United SGD Income Fund sits in an interesting spot in that it is longer duration and higher risk than a 6-month T-Bill, and not as long duration or high risk as other longer duration bond funds.
This is a useful sweet spot that can cater to many investors’ needs.
The way I see it, United SGD Fund is:
- One of the more popular bond funds in Singapore ($2.2 billion AUM as of 31 March 2025, with strong track record of over 25 years)
- Generally invests in investment grade credit and has a low-risk profile.
- 4.21% yield to maturity (in SGD terms, as of 31 March 2025)
- 1.68 years effective duration.
As one of the most popular fixed income funds in Singapore with its low-risk profile offering stable returns to investors, United SGD Fund is definitely worth considering.
United SGD Fund is also available for those looking to use CPF and SRS funds – more details on how to subscribe below!
More information on United SGD Fund
Retail investors may subscribe to the Class A (Dist) SGD or S SGD Dis share class, which has an annual management fee of 0.63%.
This is generally in line with the fees for other actively managed bond funds.
Minimum subscription amount is $1,000, and then in $500 increments after that.
You can use CPF and SRS to buy United SGD Fund
Note that you can use Cash, CPF-OA, CPF-SA and SRS to subscribe for the SGD classes of United SGD Fund.
How to subscribe for United SGD Fund?
If you’re interested in the United SGD Fund, you can subscribe via the following brokers.
If you’d like to find out more about United SGD Fund, click here.
The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment. Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor. This advertisement has not been reviewed by the Monetary Authority of Singapore.
Hi FH,
Annual management fee of 0.63%pa is on a high side. I personally prefer LionGlobal Short Duration Bond Fund Class A, whose management fee is only 0.5%pa. Average credit rating, duration and YTM are almost similar for both funds, managed from a SGD perspective.
Thanks for the heads up – will have a look as well!
Is this a paid recommendation?
Yes this is a sponsored post. But all views are mine.
What are your thoughts on BIL and SHV ? Though they are in USD and estate taxes might apply.
And what about the common MMFs ?
If a recession does arrive, leading to a market crash will SHV, BIL or MMFs be affected badly as well ?
Thanks
It goes back to the credit rating + duration. The more risky the underlying, and the longer the duration, the more it would be impacted in a market crash / liquidity event.
Is the return of 4% net after deducting the management fee of 0.63%