Bond Articles


Phillip Model Bond Portfolio Review – Month 2

Timothy Ang  |   26 Oct 2020  |    491 views

The Phillip Model Bond Portfolio outperformed the benchmark for the month and displayed lower volatility in returns throughout. The total portfolio return was 1.1% vs the Singapore Fixed Income index total return of 0.3% (Figure 2). In the portfolio, the FPLSP 4.25% bond showed the biggest price appreciation of 2.9%, while ARASP 4.15% bond lagged with -1.3% (Figure 4). In terms of portfolio return, 0.8% gains was from price appreciation while 0.3% was gained in yield.

Strategy Commentary

To outperform the benchmark iEdge SFI Total Return Index on a total return basis with lower volatility, the strategy considers both issuer and bonds. For issuers, we picked a range of sectors for diversification. Sectors include healthcare, real estate development, logistics and e-commerce, retail and industrial REITs, and banking. More importantly, we focused on issuers with established stakeholders to ensure price stability. As issuers grapple with cash flow concerns and bank moratorium expiries, shown by 2 bond exchange programs the past month, established stakeholders can provide financial stability during such periods of stress. Recent examples of such support include GSH Corp management buying its own bonds to refinance upcoming maturities, and Centurion Corp stakeholders participating in the bond exchange offer. In these cases, bond prices were stabilised by the support. For our bond picks, we focused on yields, relative value, and tenors. We limited yields to above 3% for the portfolio’s yield attractiveness, and performed sector relative valuations for bond value attractiveness. Our bond tenors are kept short in light of potential bear steepening, where long term interest rates rise faster than short term interest rates. The Fed only holds short term interest rates low, and the anticipated post-COVID economic recovery could push long term rates higher (Figure 3), which could lead to long-tenor bonds under-performance. We maintain the portfolio holdings.

 

 

Related Articles

Vertex Ventures Holdings Ltd: Temasek-linked Venture Capital (Bonds)

Vertex Holdings Ltd is a venture capital investment holding company wholly-owned by Temasek, focused on investing in disruptive technologies.

Phillip Credit Team  |   28 Jul 2021

ESR Cayman: Logistic Real Estate Leader (Bonds)

ESR Cayman is a logistic real estate leader benefitting from powerful growth trends in ecommerce and years of under-investment into APAC.

Timothy Ang  |   22 Jul 2021

Market outperformer: AIMS APAC REIT (bonds)

AIMS APAC REIT is riding secular demand for logistics and warehousing facilities from e-commerce.

Timothy Ang  |   12 Jul 2021

Disclaimers


These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the "Research") contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

Enquiry


Have an enquiry? Get in touch with us at (+65) 6212 1818 or message us below!
Not yet an account holder? Open an account online here