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Beating inflation: How to make cash work harder for consistent returns

The United Fixed Maturity Bond Fund 1, jointly launched by Tiger Brokers and UOB Asset Management, helps investors lock-in the enhanced yields to combat inflation

The United Fixed Maturity Bond Fund 1 aims to help investors navigate this volatile period and boost returns on idle cash. PHOTO: GETTY IMAGES

Inflation is at a 14-year high and showing no signs of slowing down. The staggering inflation figures, coupled with rising interest rates on home and car mortgages, has left many wringing their hands. A recent study by UOB found that nearly 70 per cent of Singaporeans were concerned about higher household expenses.

A one time-tested approach to beating inflation is to invest your money in products that have the potential to grow it over time – at a rate higher than that of rising prices of goods and services – rather than let it lose value in a savings account.

Tiger Brokers and UOB Asset Management’s (​​UOBAM) new Fixed Maturity Product (FMP) aims to do just that, helping investors to navigate this volatile period and boost returns on idle cash.

Low risk, enhanced yields and accessibility

The United Fixed Maturity Bond Fund 1 has a three-year target maturity and invests in a diversified basket of Asia investment-grade bonds, selected to offer consistent income at a relatively low risk.

It aims to capitalise on the current high interest rate environment to lock in the enhanced yields, by adopting a buy-and-hold strategy with bonds that closely match the tenure of the fund.

The fund has an indicative weighted average yield-to-maturity of up to 4.951 per cent, and pays regular dividends twice a year at a rate of 3.52 per cent a year, offering a steady income stream.

According to a 2021 study by S&P Global Ratings, the historical default rate of investment-grade bonds tends to be less than 13 per cent, providing a viable alternative for an investor seeking higher interest in a safe manner.

The fund does not charge management fees, thus enabling investors to maximise their gains. For an added layer of security, the fund is SGD hedged to offset currency risk.

For investors needing to access their funds, the fund allows for a weekly redemption subject to a 2 per cent redemption charge, with the sum collected being channelled back into the fund.

The minimum subscription amount is just $1,000, with incremental subsequent subscription amounts of $1,000. This puts it within reach of investors of all levels, as opposed to direct investment in bond securities, which tend to be offered in denominations of $250,000.

The fund is positioned to help investors to take advantage of the current interest rate environment to secure higher regular income in a safe manner, and with a lower starting capital.

Expert fund management by UOB Asset Management

The United Fixed Maturity Bond Fund 1 is managed by UOBAM’s Asia & Singapore Fixed Income team, whose extensive experience and accolades can help investors navigate the challenging market environment.

UOBAM’s Asia & Singapore Fixed Income team is headed by Ms Joyce Tan, who has over 24 years of investment experience and received multiple industry awards including Outstanding Manager Award in the Manager of the Year (Asia Fixed Income) category at the 2021 Benchmark Fund of the Year Awards. 

Getting started 

During the initial offering period (IOP) from Nov 14 to 28, 2022, investors can subscribe to the fund by first opening a Tiger Brokers account.

As a registered user, log in to the Tiger Trade app and find the fund under the “Bond Fund” category of the “Fund” section, which can be accessed under the “Quotes” tab of the app.

The United Fixed Maturity Bond Fund 1 secures peaking interest rates for longer compared with shorter-term income instruments. SCREEN IMAGE: TIGER BROKERS, PHOTO: GETTY IMAGES

For more information, visit this website or contact Tiger Brokers’ client support for assistance via phone (+65 6950 0591) or email (service@tigerbrokers.com.sg).

Footnotes:

1 Based on 4.95% p.a. indicative returns, as of 3 Nov 2022, actual amount could vary.

2 Distributions may be made out of income, net capital gains, or (if income or net capital gains are insufficient) capital. This relates to the disclosed distribution policy as set out in the Fund's prospectus

3 S&P Global Ratings – 2021 Annual Global Corporate Default And Rating Transition Study, April 2022

This document is for general information only. It does not constitute an offer or solicitation to deal in units ("Units") in the United Fixed Maturity Bond Fund 1 (the "Fund") or investment advice or recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. The information contained in this document, including any data, projections and underlying assumptions, is based upon certain assumptions, management forecasts and analysis of information available and reflects prevailing conditions and the views of Tiger Brokers (Singapore) Pte Ltd ("TBSPL") and UOB Asset Management Ltd ("UOBAM") as at the date of this document, all of which are subject to change at any time without notice. In preparing this document, TBSPL and UOBAM have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by TBSPL and UOBAM. While the information provided herein is believed to be reliable, TBSPL and UOBAM make no representation or warranty whether express or implied, and accept no responsibility or liability for its completeness or accuracy. Nothing in this document shall, under any circumstances constitute a continuing representation or give rise to any implication that there has not been or there will not be any change affecting the Fund. No representation or promise as to the performance of the Fund or the return on your investment is made. Past performance of the Fund or TBSPL and UOBAM and any past performance or prediction, projection or forecast of the economic trends or securities market are not necessarily indicative of the future or likely performance of the Fund or TBSPL and UOBAM. The value of Units and the income from them, if any, may fall as well as rise, and is likely to have high volatility due to the investment policies and/or portfolio management techniques employed by the Fund. Investments in Units involve risks, including the possible loss of the principal amount invested, and are not obligations of, deposits in, or guaranteed or insured by TBSPL, United Overseas Bank Limited ("UOB"), UOBAM, or any of their subsidiary, associate or affiliate ("UOB Group") or distributors of the Fund. The Fund may use or invest in financial derivative instruments and you should be aware of the risks associated with investments in financial derivative instruments which are described in the Fund's prospectus. The UOB Group may have interests in the Units and may also perform or seek to perform brokering and other investment or securities-related services for the Fund. Investors should note that while the Fund is like a conventional unit trust, investors can redeem their Units only directly with TBSPL and UOBAM and can do so only if the redemption amount satisfies a prescribed minimum that will be comparatively larger than that required for redemptions of units in a conventional unit trust. An investment in unit trusts is subject to investment risks and foreign exchange risks, including the possible loss of the principal amount invested. Investors should read the Fund's prospectus, which is available and may be obtained from TBSPL and UOBAM, before deciding whether to subscribe for or purchase any Units. You may wish to seek advice from a financial adviser before making a commitment to invest in any Units, and in the event that you choose not to do so, you should consider carefully whether the Fund is suitable for you. This advertisement has not been reviewed by the Monetary Authority of Singapore.

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