Back to listingInvestment opportunities
April 2024
Stay invested
Although inflation remains some way from policy targets, major central banks across developed markets have either started to trim rates or signalled that lowering rates would be appropriate this year.
Dovish signals and still robust fundamentals like corporate and household balance sheets suggest that risk assets will continue to perform. This underpins our Overweight position in equities, and we believe that near-term pullbacks constitute opportunities for investors to add exposures.
We also maintain an Overweight position in Developed Markets Investment Grade bonds to position for gains when interest rates move lower.
Positive implications from liftoff in Japanese rates
The Bank of Japan (BOJ) ended its negative interest rate policy at its March monetary policy meeting. Given that the BOJ said that accommodative financial conditions will be maintained for the time being, we believe this dovish outlook will provide some assurance to the Japanese equity market.
Investors who invest in Japanese equities on an unhedged basis can benefit from potential currency gains as well if the Yen (JPY) appreciates in time. This is in addition to potential capital upside on stocks that deliver positive returns. As the US Federal Reserve commences its rate cuts later this year, this should help to boost the global economy and potentially benefit Japan’s global trade, which should also helps to offset the impact of a stronger JPY on the Japanese economy.
Structured Investments
Theme: Getting real on returns
Companies with higher exposure to domestic demand are expected to perform better as they can capitalise on the positive consumer sentiment. As such, domestic-oriented companies with US Dollar cost bases stand to benefit from stronger wage growth and potential JPY appreciation. Sectors including retail, food and beverage and real estate, are relative beneficiaries of potential JPY strength. Key examples of companies are Asahi Group Holdings Ltd and Meiji Holdings Company Ltd.
-
Asahi Group Holdings is a leading brewer in Japan with an estimated 36.5% market share by volume in Japan’s beer and beer-like market. Its premiumisation strategy (targeting opportunities in the premium beer category) which leverages on the global premiumisation trend (rising consumer need for high-quality brands) has not been undermined by inflation in the Western markets. There is ample room for Asahi to cross-sell premium beer brands, including Super Dry and European names, by leveraging existing distribution channels in Asia, Europe and Australia.
-
Meiji Holdings Company is one of Japan’s largest dairy and confectionary companies. It is a market leader in drinking milk, chocolate and yoghurt products. Meiji has a proven track record of rolling out distinct products and functional foods. Such functional foods generally provide benefits beyond the provision of nutrients and have a positive impact on general well-being. They have been formulated so that they contain substances or live microorganisms that have a possible health-enhancing or disease-preventing value. The global health trend will also benefit Meiji’s endeavours to develop overseas markets especially China, which presents enormous opportunities considering its rapidly aging population and increasingly health-conscious urban consumers.
Bonds
Those looking for less risky sovereign bonds with a long duration can consider long-dated Australian Government bonds.
Australian Government (AUD)
This bond’s pays a coupon 1.75% p.a and matures on 21 June 2051.
After a strong recovery from the pandemic, we see Australia’s real GDP growth slowing down to 1.5% in 2023 and 1.3% in 2024. The economy has been showing signs of cooling off. While public investment should remain elevated, owing to various government-sponsored infrastructure projects, higher interest rates are weighing on both household consumption and private investment.
We see the government potentially achieving a balanced budget this year - in line with its budget projections.
Consumer Price Inflation (CPI) reached a 34-year high and peaked at 7.8% in 4Q22 and has been easing since January last year. Ongoing disinflation has been attributed to goods prices, as consumer demand has normalised and supply chain bottlenecks have eased, post-pandemic. The forecast is CPI will anchor within the Reserve Bank of Australia’s target band of 2- 3% only from 2025.
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 5.98% p.a. (extracted from Bloomberg as of 31 March 2024).
Historical fund performance
| 1 Year (p.a.) | 3 Years (p.a) | 5 Years (p.a.) | Since Inception (p.a.) | ESG Rating |
|---|---|---|---|---|
| 6.70% | 0.47% | 2.61% | 2.87% | A |
Note: Fund performance figures are extracted from Morningstar as of 31 March 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 31 March 2024.
Bond Funds
M&G (Lux) Optimal Income Fund
The fund aims to provide a total return (capital growth and income) to deliver a return based on exposure to optimal income streams in investment markets, while applying ESG criteria. It invests into a broad range of fixed income securities of any credit quality and from any country, including emerging markets, and denominated in any currency. The fund may also hold up to 20% of the portfolio in equities.
Enjoy a promotional 0% sales charge until 26 April 2024 or once subscription quota is met. There is a realisation charge on 2.5% of the redemption proceeds within 2.5 years from inception date of 29 April 2024.
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 6.36% p.a. (extracted from Bloomberg as of 31 March 2024).
Historical Fund Performance
| 1 Year (p.a.) | 3 Years (p.a) | 5 Years (p.a.) | Since Inception (p.a.) | ESG Rating |
|---|---|---|---|---|
| 5.12% | -0.07% | 1.67% | 3.10% | A |
Note: Fund performance figures are extracted from Morningstar as of 31 March 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 31 March 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 |
|---|---|---|---|---|
| 3.74% | -2.38% | 0.24% | 2.29% | A |
Note: Fund performance figures are extracted from Morningstar as of 31 March 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 |
|---|---|---|---|---|
| 20.28% | 7.61% | 8.12% | 8.29% | AA |
Note: Fund performance figures are extracted from Morningstar as of 31 March 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
Near term, the US Dollar (USD) still offers a relative yield advantage versus most other major currencies, and the US Federal Reserve (Fed) has communicated that it in no hurry to cut interest rates. The USD may continue to stay supported until US data starts to show more signs of softening. Overall, we remain biased towards a moderate softening of the USD in the medium term as the Fed is done tightening and should embark on a rate cut cycle in due course. A more entrenched disinflation trend and further easing of labour market tightness, along with softness in other activity data in the US, would be required for the USD to trade on a backfoot. This, however, requires patience.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
- 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”).
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- Any reference to a company, financial product or asset class is used for illustrative purposes and does not represent our recommendation in any way.
- 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.
- 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.
- 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.
- 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
- 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.
- 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.
- Exchange controls may apply to certain foreign currencies from time to time.
- Any pre-termination costs will be taken and deducted from your deposit directly and without notice.
Dual Currency Returns
- 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.
- 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.
- 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.
- 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
- 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.
- 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.
- Investment involves risks. Past performance figures do not reflect future performance.
- 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.
