OCBC launches hybrid unit trust, combining fixed maturity with call option strategy

The Lion-OCBC Global Income 2021 Fund will invest in a diversified portfolio of global bonds with an average investment-grade rating and targeted maturity of three years.
The Lion-OCBC Global Income 2021 Fund will invest in a diversified portfolio of global bonds with an average investment-grade rating and targeted maturity of three years.PHOTO: ST FILE

SINGAPORE - OCBC Bank and Lion Global Investors have launched what they say is a first-of-its kind unit trust in Singapore for the bank's retail customers, that combines a fixed maturity product with potential capital gains though a call option strategy.

The Lion-OCBC Global Income 2021 Fund will invest in a diversified portfolio of global bonds with an average investment-grade rating and targeted maturity of three years.

It promises a pay out of at least 9 per cent, broken down into 3.5 per cent per annum in the first year, 4 per cent per annum in the second year, and a variable distribution with a minimum of 1.5 per cent per annum in the third year.

The annual management fee for the product is 1.2 per cent per annum in year one, 0.8 per cent per annum in year two and 0.4 per cent per annum in year three, with a 0.1 per cent rebate on an semi-annual basis. The one-time sales charge is up to 3 per cent at the point of sale.

Ms Tan Siew Lee, head of wealth management Singapore at OCBC Bank, said: "This fund incorporates all three desires of our customers - quarterly fixed pay outs of at least 9 per cent over three years, downside protection as long as the underlying bonds do not default, and potential capital appreciation through exposure to a multi-asset allocation across a range of bond and equity Exchange Traded Funds."