Top Fund Ideas

1st Quarter 2017

Suitable for: Balanced / Growth / Aggressive

BlackRock Global Multi-Asset Income Fund (SGD-H)
Stay invested for the long haul through a diversified approach

Going into 2017, markets will be confronted with ever more uncertainty on both the policy and political fronts. European countries such as the Netherlands, France and Germany will be heading to the polls while the Trump administration will take their shot at policy-making. Amid potential event risks ahead, headline news in 2017 may cause a great deal of anxiety for investors. But it pays to remember that politics do not drive markets. Economics do. And typically it takes some time for political outcomes to translate into tangible economic policies that may or may not have far reaching implications for financial markets. The key is to stay invested through an adequately diversified portfolio across multiple asset classes and various regional allocations. Doing so allows investors to be exposed to potential market upside whilst managing the downside risks.

Past performance
1Y
-2.22%
3Y
0.61%
5Y
N.A.
Why We Like the Fund

With political and policy uncertainty likely to inject more turbulence into markets, the fund’s focus on managing volatility whilst adopting a flexible and unconstrained approach to delivering consistent income may be particularly useful for investors. The fund provides investors access to a large variety of asset classes including non-traditional assets such as preferred stocks, listed master limited partnerships and real estate vehicles, aside from the conventional stocks and bonds. Investors are thus able to invest in a portfolio that is highly diversified across both asset classes and regional exposure. The fund offers an average pay-out of 5 to 6 per cent per annum, which is not guaranteed and may rise or fall.

About the Fund
Current NAV
S$9.26
Inception Date
31 July 2013
Fund Size
US$3,841.85 mil
Annual Management Fee
1.50% p.a.
Subscription Modes
Cash
Top 5 Holdings
%
ISH $ HY CRP BND ETF $ DIST
3.45
BGF USD HIGH YIELD BOND FD D3 USD
1.38
JPM CHASE CAPITAL XXIII 1.90567 05/15/2047
0.47
KMI MERRILL LYNCH INTERNATIONAL & CO C 13.711/10/2017
0.31
BNP PARIBAS SA 144A 7.625 12/31/2049
0.31
NAV Movement
nav movement

Source: NAV chart based on Bloomberg data as at 13 January 2017; fund information extracted from the fund’s factsheet provided by BlackRock Investment Management was as at 30 November 2016.

Asset Allocation
sector allocation

Note: Performance as at 30 November 2016, 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.

Suitable for:Balanced / Growth / Aggressive

Fidelity Global Multi-Asset Income Fund
Maintain a global bias even as the countries look inwards

Anti-globalisation forces appear to be gaining strength with the success of the Brexit and Trump campaigns, which had been won in part on protectionist platforms including enforcing limits on immigration and protecting domestic businesses from “unfair” foreign competition. The implications of anti-trade policies can be far reaching and detrimental in the longer term. Yet, investors must resist the impulse for inaction and looking inwards where investments are concerned despite the prevailing uncertainties plaguing the macro environment. Investors should continue to favour a global approach to investing, taking advantage of a wider opportunity set for portfolio construction. Regional and asset diversification should help to smooth out investment returns as markets become potentially more volatile ahead in view of the various political and policy risks in the near term.

Past performance
1Y
-0.7%
3Y
5.4%
5Y
NA
Why We Like the Fund

The fund has the ability to tap into an expanded investment opportunity set including multiple asset classes and regional allocations. It is focused on maintaining and improving the stability of the overall portfolio, hence ensuring a lower drawdown in volatile markets. The flexibility to adjust allocations actively across regional exposures and asset classes as and when opportunities arise allows the fund to navigate through choppy terrain with greater confidence and lower volatility. This investment strategy enables the fund to deliver income and moderate capital growth over the medium to longer term. In addition, the fund targets a potential monthly pay-out of about 5 per cent per annum.

About the Fund
Current NAV
S$1.10
Inception Date
27 March 2013
Fund Size
US$4251 mil
Annual Management Fee
1.25% p.a.
Subscription Modes
Cash
Top 5 Holdings
%
NB GLOBAL FLOAT RT INCM FD LTD
1.4
3I INFRASTRUCTURE PLC
1.1
JOHN LAING INFRASTRUCTURE LTD
1.1
HICL INFRASTRUCTURE CO LTD
1.0
iShares $ Corporate Bond UCITS ETF
0.7
NAV Movement
nav movement

Source: NAV chart based on Bloomberg data as at 13 January 2017; fund information extracted from the fund’s factsheet provided by FIL Investment Management was as at 31 October 2016.

Country Allocation
sector allocation

Note: Performance as at 31 October 2016, 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.

Suitable for: Balanced / Growth / Aggressive

Fullerton USD Income Fund (SGD-H)
Improve portfolio resilience with high quality bonds

Post the U.S. elections, markets rallied to record highs on the back of expectations that the Trump administration will favour a more pro-business approach to policy-making including enacting attractive tax cuts and increasing infrastructure spending. Yet market exuberance over the past number of weeks may have failed to account for much of the policy and political uncertainties that continue to hang over markets, chief among them being Trump’s anti-trade position. Given these prevailing uncertainties, we would caution investors against chasing the rally without the safeguard of an adequately diversified portfolio that could help limit any downside risks should policy and political factors sour market sentiments and adversely affect market returns. Investors should consider allocating part of their portfolio into stable high quality assets such as investment grade fixed income securities through a diversified bond fund to minimise single issuer risk.

Past performance
1Y
N.A.
3Y
N.A.
5Y
N.A.
Why We Like the Fund

The fund’s investment strategy requires at least 70 per cent of the portfolio to be invested in investment grade fixed income securities. These bonds should hold a minimum long-term credit rating of BBB- by Fitch, Baa3 by Moody's or BBB- by Standard & Poor's (or their respective equivalents). In addition, the fund manager has the flexibility to opportunistically invest up to 30 per cent of the portfolio in non-investment grade securities to enhance portfolio returns. The manager aims to invest at least 50 per cent of the fund in U.S. Dollar denominated bonds whilst also aiming to provide regular quarterly income to investors with lower volatility relative to other asset cases. With this fund, investors will be able to access a highly diversified portfolio of high quality fixed income assets that is robustly constructed and actively managed.

About the Fund
Current NAV
S$1.01
Inception Date
15 April 2016
Fund Size
S$727.86 mil
Annual Management Fee
0.80% p.a.
Subscription Modes
SRS / Cash
Top 5 Holdings
%
Capitaland Treasury Ltd 4.076% Sep 2022
1.4
Listrindo Capital Bv 4.95% Sep 2026
1.4
Saudi International Bond 4.5% Oct 2046
1.3
Bharti Airtel Internatio 5.35% May 2024
1.2
Malayan Banking Bhd 3.25% Sep 2022
1.1
NAV Movement
nav movement

Source: NAV chart based on Bloomberg data as at 13 January 2017; fund information extracted from the fund’s factsheet provided by Fullerton Fund Management was as at 31 December 2016.

Country Allocation
sector allocation

Note: Performance as at 31 December 2016, 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.

Suitable for: Balanced / Growth / Aggressive

LionGlobal Short Duration Bond Fund
As inflationary pressures mount, stay short on duration

Recent data shows inflationary pressures rising in the U.S. Core consumer price inflation has already exceeded 2 per cent while core personal consumption expenditure is inching closer to the Fed’s 2 per cent target. With average hourly earnings growing at 2.9 per cent annual rate – the highest since 2009 – there is a real risk that wage pressures would soon push inflation higher. Also, with the U.S. operating close to or at full employment, the Trump administration’s plans to pursue more expansionary fiscal policy may end up being inflationary. This would inevitably provoke the Fed to respond with a faster pace of rate hikes that would lead bond yields higher (and bond prices lower). Given the risk of a potentially more hawkish Fed, we advise investors to hold bonds with shorter tenors as such instruments tend to be less sensitive to increases in interest rates.

Past performance
1Y
-2.8%
3Y
1.5%
5Y
2.5%
Why We Like the Fund

The fund’s focus on short duration bonds means investors are less exposed to a rising interest rate environment risk. It also addresses investors’ conservative low-return dilemma by aiming to deliver payouts of around 2.5 per cent per annum. To guard against credit risk, investors are exposed to a diversified portfolio of investment grade corporate bonds, issued mainly by Asian corporates. The fund is included in the Central Provident Fund Investment Scheme, and will potentially pay investors a non-guaranteed quarterly payout as a form of regular income.

About the Fund
Current NAV
S$1.64
Inception Date
22 March 1991
Fund Size
S$305.7 million
Annual Management Fee
0.50% p.a.
Subscription Modes
CPFIS-OA/ CPFIS-SA/ Cash / SRS
Top 5 Holdings
%
DBS Capital Funding II VAR PERP (15/06/2018)
7.5
ALIBABA GROUP HOLDINGS LTD 3.6% 28/11/2024
3.7
ICBC Asia LTD EMTN (REG S) VAR 10/10/2023
2.7
ASCENDAS HOSPITALITY TRU 3.3% 07/04/2020
2.3
CAPITALAND LTD CAPL CONV 2.95% 20/06/2022
2.2
NAV Movement
nav movement

Source: NAV chart based on Bloomberg data as at 13 January 2017; fund information extracted from the fund’s factsheet provided by Lion Global Investors Limited was as at 30 November 2016.

Sector Allocation
sector allocation

Note: Performance as at 30 November 2016, 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.

Suitable for:Growth / Aggressive

Neuberger Berman U.S. Multi Cap Opportunities Fund
Making U.S. companies “great” again, one tweet at a time

From the outset, it does appear that Mr Trump’s policy priorities, including corporate tax cuts, infrastructure spending and deregulation would unambiguously benefit U.S. companies. However, his more protectionist stance makes such predictions problematic especially given the fact that a majority of companies represented in the S &P 500 index derive a large part of their earnings overseas. Politics and policies aside, the U.S. economy continues to see acceleration in economic activity as evidenced by robust Purchasing Manager Index (PMI) figures, healthy industrial production numbers and exceedingly resilient consumer sentiment indicators. On balance, the late cycle acceleration should bolster cyclical stocks, while Trump’s proclivity for protectionism should benefit domestic-based names. Inevitably, policy and economic uncertainty ahead argues for a bottom-up approach to stock-picking even while a healthy U.S. economy would likely lift all boats.

Past performance
1Y
6.36%
3Y
4.71%
5Y
N.A.
Why We Like the Fund

The fund has delivered strong performance since its inception by investing in U.S. companies across a broad range of market-capitalisation with a bias towards large cap holdings. The fund maintains a concentrated portfolio of about 30 to 40 stocks, constructed on a bottom up basis. It relies on an opportunistic approach to investing and stock-picking is based on in-depth cash flow and capital structure analysis. The fund has a cyclical tilt, with 64 per cent of the portfolio allocated to cyclical sectors such as financials, industrials, consumer discretionary, materials and IT. The fund is managed by an experienced and dedicated investment team based in New York.

About the Fund
Current NAV
S$27.27
Inception Date
28 June 2012
Fund Size
US$769.55 mil
Annual Management Fee
1.70% p.a.
Subscription Modes
Cash
Top 5 Holdings
%
Goldman Sachs Group, Inc.
5.84
JPMorgan Chase & Co.
5.48
Berkshire Hathaway Inc. Class B
4.90
Motorola Solutions, Inc.
4.90
Alphabet Inc. Class C
4.28
NAV Movement
nav movement

Source: NAV chart based on Bloomberg data as at 13 January 2017; fund information extracted from the fund’s factsheet provided by Neuberger Berman Investment Funds was as at 30 November 2016.

Sector Allocation
sector allocation

Note: Performance as at 30 November 2016, 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.

Suitable for:Balanced / Growth / Aggressive

Schroder Asian Income Fund (SGD)
Trump, China, and Fed risks stress the need for diversification

Economic progress in Asia remains solid amid sluggish growth in the developed world and China’s on-going rebalancing. The internally-driven dynamism that has been a feature of the past few years should continue to deliver growth of around 5 per cent in ASEAN. Yet prevailing concerns including President Trump’s protectionist agenda, a potentially more hawkish Fed and tighter financial market conditions remain. Ample current account surpluses, large foreign exchange reserves, floating exchange rates and improving household and corporate balance sheets should provide adequate buffers against these external pressures. However, a potential trade war between the U.S. and China would be unambiguously costly for all involved given the complexity of global supply chains. Admittedly the probability of such an event is difficult to project. As such, investors should consider an actively managed multi-asset approach to mitigate some of the risks involved when investing in Asia.

Past performance
1Y
1.4%
3Y
4.0%
5Y
7.5%
Why We Like the Fund

Through the fund, investors will be able to access a diversified, multi-asset portfolio consisting of both Asian equities and Asian fixed income investments. Investors can also benefit from the fund’s active asset allocation strategy, which seeks to maximise the yield and total return of the portfolio across different market environments. Also, the fund’s defensive position with a focus on capital preservation is particularly useful amid prevailing political uncertainties hanging over markets, especially in Europe and the U.S. At the same time, investors can gain from attractive potential payouts on a monthly basis of about 5 per cent per annum.

About the Fund
Current NAV
S$1.14
Inception Date
21 October 2011
Fund Size
S$2,574.8 mil
Annual Management Fee
1.25% p.a.
Subscription Modes
SRS / Cash
Top 5 Equity Holdings
%
HSBC
2.0
Link REIT
2.0
National Australia Bank
1.8
HKT Trust & HKT Limited
1.8
Spark New Zealand Limited
1.7
NAV Movement
nav movement

Source: NAV chart based on Bloomberg data as at 13 January 2017; fund information extracted from the fund’s factsheet provided by Schroder Investment Management was as at 30 November 2016.

Sector Allocation
sector allocation

Note: Performance as at 30 November 2016, 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.

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