Back to listing

Investment opportunities

March 2024

Maintain risk-on stance

The sharp risk-on rally since November 2023 and the choppy inflation path, point to heightened risks of short-term market volatility. Nevertheless, we believe that the larger positive tailwinds behind the bull market remain broadly intact. We maintain a risk-on stance in our asset allocation and stand ready to take advantage of any market weakness to add risk exposure.

Structured Investments

Theme: Fast Forward to the Future

Artificial Intelligence (AI) is probably one of the major themes over the next decade, like the internet and industrial revolution. Key potential areas of AI technology opportunities include hardware, internet and application/software. In the internet space, business opportunities extend beyond chatbot services. Increasingly, we are seeing more integration of generative AI models into existing products and services to enhance advertising, user experience and content creation. Leading this integration are the likes of Microsoft Corporation and Alphabet Inc.

  • Microsoft Corporation manufactures and operates as a software company. AI continued to be in the limelight of the company’s outlook as it contributed 6% growth to Azure, which is Microsoft’s public cloud computing platform.
  • Alphabet Inc is the holding company for Google. The company, with its network of subsidiaries, develops web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products. Google has rebranded Bard AI as Gemini and is releasing Gemini Advanced with a mobile app. Gemini Advanced is designed to allow users to have more detailed conversations and also has the enhanced ability to understand context from preceding prompts.

Bonds

Expectations about the trajectory of the US Federal Reserve (Fed) interest rate policy remains the primary driver of fixed income markets in 2024. Over the short-term, US Treasury yields are likely to remain volatile, as the Fed maintains a hawkish stance. Separate Trading of Registered Interest and Principal of Securities or STRIPS, which are deemed to be backed by the “full faith and credit” of the US government, are an alternative to the existing traditional US Treasury securities (UST).

United States Treasury STRIPS (USD)

This bond’s yield to maturity is 4.07% p. a. and matures on 15 August 2053.

Hopes of global central banks pivoting to monetary easing presents a favourable environment for the fixed income market. Given their higher duration (interest rate sensitivity), Developed Market Investment Grade Bonds and UST should be well positioned to achieve attractive relative returns give the anticipated decline in interest rates.

In the US, the Fed is keeping its monetary policy on hold for now, but rising recession risks may spur it to start cutting interest rates from June 2024, in our view.

Aside from being backed by the US government, the zero-coupon feature of STRIPS means that investors need less cash outlay when investing i.e., they purchase at a discount relative to similar UST that may be trading at a premium.

STRIPS are more sensitive to interest rate changes as compared to UST of similar maturity and stand to benefit from lower rates in the coming years.

Funds

JPMorgan Global Income Fund

The JPMorgan Global Income Fund is a global, multi-asset income fund that aims to provide regular income by investing primarily in a portfolio of income generating securities, globally, and through the use of derivatives. The fund seeks income opportunities from around the globe and aims to provide investors with a consistent and potentially attractive income. The fund has a historical annualised dividend yield of 6.09% p.a. (extracted from Bloomberg as of 29 February 2024).

Historical fund performance

1 Year (p.a.) 3 Years (p.a) 5 Years (p.a.) Since Inception (p.a.) ESG Rating
4.89% 0.51% 2.49% 2.59% A

Note: Fund performance figures are extracted from Morningstar as of 29 February 2024, calculated on an offer-to-bid basis with all dividends and distributions reinvested, net of all charges payable upon reinvestment, if any. Performance figures exceeding 1 year, if any, were stated on an average annual compounded basis. Past performance figures do not reflect future performance. Dividend figures are from Bloomberg, as of 29 February 2024.

Bond Funds

PIMCO GIS Income Fund

The PIMCO GIS Income Fund is designed for investors who seek steady income with a secondary goal of capital appreciation. It takes a broad-based approach to investing in income-generating bonds. The fund aims to achieve this by employing PIMCO’s best income-generating ideas across global fixed income sectors. The fund has a historical annualised dividend yield of 6.41% p.a. (extracted from Bloomberg as of 29 February 2024)

Historical Fund Performance

1 Year (p.a.) 3 Years (p.a) 5 Years (p.a.) Since Inception (p.a.) ESG Rating
5.22% -0.46% 1.59% 3.02% BBB

Note: Fund performance figures are extracted from Morningstar as of 29 February 2024, calculated on an offer-to-bid basis with all dividends and distributions reinvested, net of all charges payable upon reinvestment, if any. Performance figures exceeding 1 year, if any, were stated on an average annual compounded basis. Past performance figures do not reflect future performance. Dividend figures are from Bloomberg, as of 29 February 2024.

AB American Income Portfolio

The AB American Income Portfolio is a fund that invests in US dollar-denominated Fixed Income securities. The fund dynamically balances credit and duration through investments in high yield and emerging market sectors to enhance income and dampen interest-rate risk, and in high-quality government bonds to alleviate credit risk when markets are stressed. The fund also limits its exposure to below investment-grade rated bonds to 50% and avoids CCC-rated issuers. 

Historical Fund Performance

1 Year (p.a.) 3 Years (p.a) 5 Years (p.a.) Since Inception (p.a.) ESG Rating
3.99% -2.92% 0.35% 2.24% A

Note: Fund performance figures are extracted from Morningstar as of 29 February 2024, calculated on an offer-to-bid basis with all dividends and distributions reinvested, net of all charges payable upon reinvestment, if any. Performance figures exceeding 1 year, if any, were stated on an average annual compounded basis. Past performance figures do not reflect future performance.

Equity Funds

AB Low Volatility Equity Portfolio Fund

The AB Low Volatility Equity Portfolio fund is a global equity fund seeking capital growth through securities of companies that the fund manager believes have lower volatility. Its investment approach focuses on Quality, Stability and Price, where the fund seeks high quality stocks of companies with stable performance and predictable earnings, trading at attractive prices. The fund also has distribution share classes for investors looking for dividend income.

Historical Fund Performance

1 Year (p.a.) 3 Years (p.a) 5 Years (p.a.) Since Inception (p.a.) ESG Rating
21.24% 8.55% 7.97% 8.16% AA

Note: Fund performance figures are extracted from Morningstar as of 29 February 2024, calculated on an offer-to-bid basis with all dividends and distributions reinvested, net of all charges payable upon reinvestment, if any. Performance figures exceeding 1 year, if any, were stated on an average annual compounded basis. Past performance figures do not reflect future performance.

Currencies

Rhetoric from the US Federal Reserve (Fed) remains largely focused on patience, with no hurry to cut rates given the risk of sticky inflation and a still resilient labour market. The disinflation trend remains intact (although bumpy) as labour market tightness and economic activity are already showing signs of softening. With disinflation, the higher real rates can be overly restrictive on the economy and poses the risk of a hard landing down the road. Our view remains for the Fed to embark on a rate cut cycle around mid-year. The gradual reduction of nominal rates from high levels does not imply outright monetary accommodation, but only means a less restrictive environment. 

The US Dollar (USD) should eventually ease lower. However, the greenback is not a one-way trade. It remains a safe-haven proxy and has yield appeal. Scenarios where global and China growth momentum sputters, global risk-off takes place in the investment markets or geopolitical tension escalates - could all help the USD to find intermittent support on dips. The Fed’s dot plot in late March, a chart updated quarterly that records each Fed official's projection for the Fed funds rate, may impact the USD’s direction.

The Singapore Dollar Nominal Effective Exchange Rate (S$NEER) strength can fade at some point this year should core inflation in Singapore start to ease. Historically there is a positive correlation between the change in the S$NEER and core inflation. i.e., if core inflation does ease materially, then there is no need for the S$NEER policy to be so tight. There will be greater scrutiny of the next CPI report (on 25 March) for signs of whether inflation is indeed moderating faster than expected. Another softer print could lead to a further unwinding of the crowded long S$NEER trade.

Important Information

This advertisement has not been reviewed by the Monetary Authority of Singapore.

  1. Any opinions or views of third parties expressed in this document are those of the third parties identified, and do not represent views of Oversea-Chinese Banking Corporation Limited (“OCBC Bank”, “us”, “we” or “our”).
  2. This information is intended for general circulation and / or discussion purposes only. It does not consider the specific investment objectives, financial situation or needs of any particular person.
  3. Before you make an investment, please seek advice from your Relationship Manager regarding the suitability of any investment product taking into account your specific investment objectives, financial situation or particular needs.
  4. If you choose not to do so, you should consider if the investment product is suitable for you, and conduct your own assessments and due diligence on the investment product.
  5. We are not making an offer, solicit to buy or sell or subscribe for any security or financial instrument, enter into any transaction or participate in any trading or investment strategy with you through this document. Nothing in this document shall be deemed as an offer or solicitation to buy or sell or subscribe for any security or financial instrument or to enter into any transaction or to participate in any particular trading or investment strategy.
  6. No representation or warranty whatsoever in respect of any information provided herein is given by OCBC Bank and it should not be relied upon as such. OCBC Bank does not undertake an obligation to update the information or to correct any inaccuracy that may become apparent at a later time. All information presented is subject to change without notice.
  7. OCBC Bank shall not be responsible or liable for any loss or damage whatsoever arising directly or indirectly howsoever in connection with or as a result of any person acting on any information provided herein.
  8. Investments are subject to investment risks, including the possible loss of the principal amount invested. The information provided herein may contain projections or other forward-looking statements regarding future events or future performance of countries, assets, markets or companies. Actual events or results may differ materially. Past performance figures, predictions or projections are not necessarily indicative of future or likely performance.
  9. Any reference to a company, financial product or asset class is used for illustrative purposes and does not represent our recommendation in any way.
  10. The information in and contents of this document may not be reproduced or disseminated in whole or in part without the Bank’s written consent.
  11. OCBC Bank, its related companies, and their respective directors and/or employees (collectively “Related Persons”) may, or might have in the future, interests in the investment products or the issuers mentioned herein. Such interests include effecting transactions in such investment products, and providing broking, investment banking and other financial services to such issuers. OCBC Bank and its Related Persons may also be related to, and receive fees from, providers of such investment products.
  12. You must read the Offer Document/Indicative Term Sheet/Product Highlight Sheet before deciding whether or not to purchase the investment product, copies of which may be obtained from your relationship manager.
  13. Any hyperlink to any third party article, or other website or webpage (including any websites or webpages owned, operated and maintained by third parties) is for informational purposes only and for your convenience only and is not an endorsement or verification of any such article, website or webpage by OCBC Bank and should only be accessed at your own risk. OCBC Bank does not review the contents of any such articles, website or webpage, and shall not be liable to any person for the same.

Foreign Currency

  1. Foreign currency investments or deposits are subject to inherent exchange rate fluctuation that may provide opportunities and risks. Consequently, exchange rate fluctuations may affect the value of your foreign currency investments or deposits.
  2. Earning on foreign currency investments or deposits may change depending on the exchange rates prevalent at the time of their maturity if you choose to convert.
  3. Exchange controls may apply to certain foreign currencies from time to time.
  4. Any pre-termination costs will be taken and deducted from your deposit directly and without notice.

Dual Currency Returns

  1. By buying Dual Currency Returns, you are giving us the right to repay you at a future date in a different currency from the currency in which you made your original investment, even if you would prefer not to be paid in this currency at that time. Dual Currency Returns are affected by foreign exchange rates, which may affect how much you get back from your investment. You may receive less than you originally invested.
  2. Foreign exchange control restrictions may apply to the foreign currencies linked to your Dual Currency Returns. As a result, we may repay your investment and interest in a different currency. You may receive less than you originally invested when the amount of this different currency is converted back to the base currency (the currency you originally invested). You may be able to get information on foreign exchange control restrictions, if any, for each foreign currency offered in relation to Dual Currency Returns, from the relevant monetary, regulatory or other governmental authorities for that currency.
  3. We will not end Dual Currency Returns before the maturity date (the date they are due to end). You may, however, withdraw the amount you originally invested before the maturity date. If you do this, please remember that you will have to pay any charges that apply which are calculated based on the amount of the time remaining before maturity date, as well as current market conditions relating to strike prices, foreign exchange rates and changes in the underlying foreign exchange pair. These charges may mean that you get back much less than you originally invested. Please feel free to approach your relationship manager for details of the procedures and charges that apply if you withdraw your Dual Currency Returns investment before the maturity date.
  4. Dual Currency Returns are not insured deposits for the purposes of the Deposit Insurance and Policy Owners’ Protection Schemes Act of Singapore.

Collective Investment Schemes

  1. A copy of the prospectus of each fund is available and may be obtained from the fund manager or any of its approved distributors. Potential investors should read the prospectus for details on the relevant fund before deciding whether to subscribe for, or purchase units in the fund.
  2. The value of the units in the funds and the income accruing to the units, if any, may fall or rise. Please refer to the prospectus of the relevant fund for the name of the fund manager and the investment objectives of the fund.
  3. Investment involves risks. Past performance figures do not reflect future performance.
  4. Any reference to a company, financial product or asset class is used for illustrative purposes and does not represent our recommendation in any way.

For funds that are listed on an approved exchange, investors cannot redeem their units of those funds with the manager, or may only redeem units with the manager under certain specified conditions. The listing of the units of those funds on any approved exchange does not guarantee a liquid market for the units.

Any indicative distribution rate may not be achieved and is not an indication, forecast, or projection of the future performance of the Fund.

Cross-Border Market Disclaimers

OCBC Bank's cross border marketing disclaimers relevant for your country of residence.