Seeks to generate returns by investing in Singapore dollar denominated fixed income securities issued by Singapore Government, statutory boards, and corporates.
The Singapore Bonds strategy is a key strategy managed by our Asian Fixed Income team at Nikko AM. It seeks to generate returns by investing in Singapore dollar denominated fixed income securities issued by Singapore Government, statutory boards, and corporates. This includes non-rated debt securities issued by Singapore-incorporated entities and Singapore statutory boards. Driven by a proprietary Fundamental Valuation Technical (FVT) Credit Strategy Framework that utilises an Internal Credit Rating (ICR) system, it aims to bring together a high conviction portfolio of the investment team's best ideas in Singapore bonds.
Our investment process seeks to deliver returns through multiple sources of alpha, utilising both top-down and bottom-up strategies. The research approach utilises our proprietary Fundamental, Valuation and Technical (FVT) framework to distil the top-down and bottom-up perspectives from a multitude of macro-economic factors and issuer- and issue-specific characteristics, to add value within the defined levels of risks and constraints, using both qualitative and quantitative techniques. Most important in our fundamental analysis is our Internal Credit Rating (ICR) model, which has been time and stress tested for its robustness since inception in 2006. Our ICR assesses quantitative and qualitative aspects of each issuer independently of external credit rating agencies. Environmental, Social and Governance (ESG) factors also form an important aspect of the credit analysis. Our proprietary Internal Credit Rating (ICR) model, conceptualised and developed by our Asia Credit team, is the first pillar in our credit research process.
The investment philosophy and strategy of the Asian Fixed Income team is well-tested over time and remains stable. For more details on our investment philosophy, Research and ESG framework and investment team, please visit the Asian Fixed Income Strategy page.
Singapore is recognised globally as being one of the strongest economies, built on a foundation of political stability, robust monetary and fiscal policies and a sound judicial system1. Singapore is one of few countries in the world with a AAA ranking from the 3 major ratings agencies (based on Fitch, Moody's and S&P Rating, 31 March 2022)2.
Even during periods of market uncertainty, Singapore government bonds enjoy a safe haven status. Over the years, the Singapore dollar fixed income market has seen steady growth. The market comprises active issuances from issuers that include the Singapore government (bills and bonds), statutory boards and local and foreign corporates. The market stood at SGD 625 billion3, as of end-March 2022. The Singapore Dollar Fixed Income market offers investors a range of instruments with different risk-return profiles, ranging from government to quasi-sovereign to corporate bonds.
With a diverse and growing investment universe in Asian bonds, our highly experienced Fixed Income team manages a wide range of active Asian fixed income portfolios. They are present on the ground and understand the idiosyncratic risks of individual countries, sectors and issuers within Asia. An Asia-focused manager is able to provide alpha both from a top-down and bottom-up perspective given their specialisation and a deep understanding of the local markets and the underlying issuers. This enhances their ability to generate investment ideas.
Under the Singapore Fixed Income spectrum managed by our team, other than the actively managed strategies, we also have available passive strategies such as exchange traded funds (ETFs) like the ABF Singapore Bond Index Fund and the Nikko AM SGD Investment Grade Corporate Bond ETF .We launched Singapore’s first bond ETF that covers the Singapore fixed income market in 2005 with the ABF Singapore Bond Index Fund. In 2018, we launched the Nikko AM SGD Investment Grade Corporate Bond, the first investment grade local currency corporate bond ETF in Singapore.
1Source:https://www.edb.gov.sg/en/why-singapore/an-economic-powerhouse.html
2Source: Bloomberg, Nikko AM Asia, 31 March 2022
3Source: ADB Asian Bonds Online, March 2022. Includes bonds and short-ter.
The funds mentioned are Singapore registered funds approved for sale or purchase in Singapore. By proceeding, you are representing and warranting that you are either resident in Singapore or the applicable laws and regulations of your jurisdiction allow you to access the information.
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This website is purely for informational purposes only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. It should not be relied upon as financial advice. The mention of individual securities, sectors, regions or countries within this website are for illustration purposes only and does not imply a recommendation to buy or sell. You should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. Investments in funds are not deposits in, obligations of, or guaranteed or insured by Nikko AM Asia.
Past performance or any prediction, projection or forecast is not indicative of future performance. The Funds or any underlying funds may use or invest in financial derivative instruments. The value of units and income from them may fall or rise. Investments in the Funds are subject to investment risks, including the possible loss of principal amount invested. You should read the relevant prospectus (including the risk warnings) and product highlights sheet of the Funds, which are available and may be obtained from appointed distributors of Nikko AM Asia or our website (www.nikkoam.com.sg) before deciding whether to invest in the Funds.
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