Creating low-cost access to Singapore Dollar-denominated,
investment grade corporate bonds
Nikko Asset Management Asia today announces the launch of the Nikko AM SGD Investment Grade Corporate Bond ETF (the "Fund"). This is the first time a Singapore Dollar-denominated corporate bond ETF is being made available to investors, and at low-cost with a management fee of 0.15 per cent.
The Nikko AM SGD Investment Grade Corporate Bond ETF aims to replicate the performance of the iBoxx SGD Non-Sovereigns Large Cap Investment Grade Index, providing investors with the opportunity to diversify their portfolios.
Said Eleanor Seet, President, Nikko AM Asia, "With this Fund, we expand our repertoire of ETFs, but more importantly, we widen the asset options and tools available to investors. Diversification is an important part of investing and what we bring to investors with this ETF are diversification and accessibility at a relatively low cost. A diversified portfolio of SGD-denominated investment grade corporate bonds is a high quality asset class that has not always been easy to access especially for retail investors."
The initial offer period (IOP) is from 23 July 2018 to 17 August 2018. In lot sizes of 100 and priced at S$1.00 per unit during the IOP, the Fund gives investors affordable and easy access to corporate bonds from investment grade issuers. Listing on the Singapore Exchange1 will take place on 27 August.
Tracking the index closely, the Fund will comprise statutory board and investment grade corporate bonds across various sectors such as Housing Development Board, Temasek Financial, Land Transport Authority, Development Bank of Singapore (DBS), United Overseas Bank (UOB) to name a few.
The iBoxx SGD Non-Sovereigns Large Cap Investment Grade Index returned approximately 3.75% per annum over the last five years to June 2018. Over the same period, the iBoxx ABF Singapore Government Total Return Index and FTSE Straits Times Index STI Total Return returned 1.95% and 4.25% per annum respectively. 2
"We believe that a well-developed domestic bond market will benefit both institutional and retail investors in Singapore and the region. Building on the ABF Singapore Bond Index Fund launched in 2005, this ETF creates greater and ease of access to SGD-denominated bonds and encourages participation in the Singapore bond market," added Seet.
Nikko AM's current ETF offerings in Singapore include the NikkoAM-StraitsTrading Asia ex Japan REIT ETF, ABF Singapore Bond Index Fund and Nikko AM Singapore STI ETF. The firm will continue to innovate and build a diversified and robust portfolio of investment products that provides clients with a broad range of opportunities.
Ms Jacqueline Loh, Deputy Managing Director, MAS said, "MAS welcomes the launch of the Nikko AM SGD Investment Grade Corporate Bond ETF. While the SGD corporate bond market has seen steady growth over the years, it has been challenging for retail investors to gain exposure to a diversified portfolio of SGD corporate bonds. The launch of the ETF is a step toward filling the gap. This complements MAS' efforts to improve retail access to simple, low-cost investment products, such as the Singapore Savings Bonds. As with all investment decisions, investors should carefully consider if the ETF is suitable for your investment needs and risk appetite."
1Subject to SGX's post Eligibility To List (ETL) requirements
||iBoxx SGD Non-Sovereigns Large Cap Investment Grade Index
|Initial Offer Period
||23 July 2018 to 17 August 2018
Available through DBS Vickers Securities, iFAST/Fundsupermart, Phillip Capital and UOB Kay Hian
||From 27 August 2018 on the Singapore Exchange, subject to SGX's post Eligibility To List (ETL) requirements
||Open-ended Listed Unit Trust, with Exchange Traded Fund feature
||100 units per lot
|Dividend Distribution Frequency
||Nikko Asset Management Asia Limited / DBS Trustee Limited
|Designated Market Makers
||Flow Traders Asia Pte. Ltd. and Phillip Securities Pte. Ltd.
2Source: Bloomberg and Nikko AM, as of 20 July 2018
*Distributions are not guaranteed and are at the absolute discretion of the Manager. Distributions could be derived from interest income or capital gain, and where distributions are made from capital, prior-approval by the Fund's trustee is required. Distributions paid out of capital of the Fund will decrease its Net Asset Value.
Please refer to the Fund's prospectus and Product Highlight Sheet for further details.
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