How to Lock in Favourable Interest Rates With Tiger Brokers x UOBAM’s United Fixed Maturity Bond Fund 1

This post was written in collaboration with Tiger Brokers Singapore. While we are financially compensated by them, we nonetheless strive to maintain our editorial integrity and review products with the same objective lens. We are committed to providing the best information in order for you to make personal financial decisions with confidence. You can view our Editorial Guidelines here.

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The topic of inflation seems to have overtaken 4D numbers as the hot topic these days. No wonder — prices of everything (yes, even the fresh veg in the supermarket and our cai png) are going through the roof, and the core inflation rate doesn’t look like it’s going to decelerate anytime soon…in fact, the Monetary Authority of Singapore says it will only slow down in the second half of 2023.

As expected, interest rates are also up, which is not great news if you need to take out a loan anytime soon.

Most of you here know by now that we need to invest to beat inflation. But with the stock market all crazy-volatile and in the red at the moment, even seasoned investors aren’t comfortable throwing their funds into a vortex where they could be stuck for ages or lead to losses in the short-term.

And analysts expect market volatility and inflation to stay that way for a sustained period.

For investors with a low risk appetite who do not want to experience heart attacks every time they check their portfolio, the ideal solution would be to find a safe way to invest while obtaining the highest yields possible.

Investors with a higher risk tolerance who’ve recently been burnt or those sitting out the bear market would be looking for a way to invest that offers decent yields.

For both groups of investors, one way to get around their respective concerns is to seek products that offer more modest returns but are much more stable. Well, to benefit from the current situation, we can look at the high interest rate environment as a good time to lock in a decent interest rate before the market swings again.

 

Tiger Brokers x UOBAM’s United Fixed Maturity Bond Fund 1

With this in mind, Tiger Brokers, in partnership with UOB Asset Management, has launched a new Fixed Maturity Product, the United Fixed Maturity Bond Fund 1.

First things first: A fixed maturity product lets you invest in a debt mutual fund. The fixed income instruments (like bonds) in which the fund invests have a fixed maturity period, which makes them highly predictable and stable. In other words, you more or less know how much you’re going to receive in dividends and for how long.

By investing in the fund, you’ll be able to diversify your portfolio with yield-enhancing investments. Because the fund invests in a basket of assets, you’ll be able to diversify your own portfolio without having to painstakingly invest in separate assets one by one.

The fund pays out dividends twice a year, which enables you to earn stable returns on a regular basis, while limiting exposure to interest rate risks.

The Initial Offer Period (IOP) for the fund runs from 14 to 28 Nov 2022.

To subscribe to the fund, you need to be a Tiger Brokers user. Download the Tiger Trade app to sign up for a Tiger Brokers account.

In these times of soaring inflation, this could be exactly the kind of product we might need to help us cope. Here are some reasons to invest in Tiger Brokers’ new fixed maturity product:

 

1. Higher returns than most at ~3.5% p.a.

The fund has an indicative weighted average yield-to-maturity of up to 4.95%¹, and pays regular dividends twice a year at a rate of 3.5%² a year.

Local banks in Singapore have recently started to increase their fixed deposit rates in the wake of a surge in demand for safe returns. Bank fixed deposit rates are now in the 3.0% to 3.5% range, but lock in your money throughout the term.

Tiger Brokers’ fixed maturity product lets you secure a higher interest rate than the above options, while at the same time enjoying the benefit of stability. This lets you move your money’s growth rate closer to the inflation rate in a prudent manner.

 

2. Stable and low risk

Tiger Brokers’ new fixed maturity product is a low-risk, investment-grade product.

According to a 2021 study by S&P Global Ratings, the historical default rate of investment-grade bonds tends to be less than 1%³, providing a viable alternative for an investor seeking higher interest in a safe manner.

First of all, it is offered in partnership with UOBAM’s award-winning fixed income team, who give you the benefit of their expert investment management skills.

The fund is managed by the UOBAM Asia & Singapore Fixed Income Team, 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.

The fund manages a diversified basket of fixed income instruments, picked to offer stability, manage risk and enjoy decent returns.

More specifically, it invests in short duration high quality bond instruments. Bonds are considered reliable and predictable as they pay out a regular income until maturity.

The fund is SGD-hedged, so you don’t have to worry about FX risk in the event of the Singapore dollar fluctuating vis a vis other currencies.

Price stability is maintained by the fund’s focus on short duration with a primary investment strategy of holding onto the bonds until maturity to minimise mark-to-market risks.

This allows us to reap the benefits of stable returns and to lower our exposure to interest rate risks.

 

3. No management fee

Beware of management fees, as they can eat into your precious gains!

Tiger Brokers’ new fixed maturity product is probably the only fund in Singapore that doesn’t charge any management fees. In a time when we’re trying all ways and means to beat inflation, every little bit counts!

Tiger Brokers’ trading platform is already known for its zero or low commissions, and now the company is extending this value-for-money to the fixed maturity product.

“Together with UOBAM, we also wanted to give maximum benefit to users during these turbulent times,” says Henry Toh, Chief Financial Officer at Tiger Brokers (Singapore).

 

4. Remove reinvestment risk

What is reinvestment risk? This simply refers to the chance that an investor will have to reinvest money from an investment at a rate lower than its current rate, thus resulting in lower returns. With Tiger Brokers’ United Fixed Maturity Bond Fund 1, the reinvestment risk that arises from using shorter-term investment instruments is removed.

With interest rates nearing the tail end of their cycle, analysts expect them to peak in the first quarter of 2023⁴, which would make it prudent to lock in returns now to minimise reinvestment risks before the rates start to fall.

As mentioned above, the Tiger Brokers fixed maturity fund invests in fixed income instruments like bonds that are highly predictable and stable. The fund also invests in a basket of assets for greater portfolio diversification, and pays out dividends twice a year, which enables you to earn stable returns on a regular basis, while limiting exposure to interest rate risks.

 

5. Subscribe from as low as S$1,000

The minimum initial subscription is S$1,000, and you can also make subsequent subscriptions of S$1,000.

This is a pretty low barrier to entry and enables more people to enter and lock in their favourable yields now.

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 S$250,000.

But you need to be fast as there’s a limited tranche available.

Here’s how to sign up for Tiger Brokers’ fixed maturity product:

Method 1: Find the Fund within the Fund Sub-section

 

1. Access the Fund via the “Fund” sub-section of the “Quotes” tab.
2. Click on the “Subscribe” button and enter your subscription amount. (Minimum investment of SGD 1,000)

Method 2: Find the Fund Using the “Search” Function

1. Use the “Search” icon at the top right corner of your app interface.
2. Type in the Fund name, “United Fixed Maturity Bond Fund 1”, or the ISIN number: SGXZ80611742
3. Click on the “Subscribe” button and enter your subscription amount. (Minimum investment of SGD 1,000)

Want to find out more? You can catch a replay of their webinar to learn more about the United Fixed Maturity Bond Fund 1.

Inflation’s not going away, so you’ll need to beat it with a product like the Tiger Brokers United Fixed Maturity Bond Fund 1.

Lock in favourable interest rates now by placing money in the United Fixed Maturity Bond Fund 1 for a 3-year period at a rate that is higher than what’s currently available on the market, with all the benefits of stability, low risk, and assurance that a strong team is managing the fund.

Find out more and start hedging against inflation today.

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

⁴ https://www.bloomberg.com/news/articles/2022-11-15/fed-seen-sticking-with-higher-peak-rate-despite-cooler-inflation

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, are 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 of the date of this document, all of which are subject to change at any time without notice. In preparing this document, TBSPL and UOBAM has 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 makes no representation or warranty whether express or implied, and accepts 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 the while the Fund is like a conventional unit trust, investors can only redeem his Units directly with TBSPL and UOBAM and can only do so if his 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.