The United Asian High Yield Bond Fund (the “Fund”) seeks to achieve a total return consisting of high income and capital appreciation by investing primarily in high yield fixed income or debt securities (including money market instruments) issued by Asian corporations, financial institutions, governments and their agencies.
What are Asian high yield bonds?
*BBB- for Standard & Poor’s and Fitch, and Baa3 for Moody’s
Why Asian high yield bonds?
1) Asia has shown resilience despite global challenges
Asia continues to show economic resilience with healthy real gross domestic product (GDP) levels net of inflation compared to the rest of the world. High yield bonds are expected to benefit from Asia’s consumption-led recovery.
Source: International Monetary Fund, World Economic Outlook, October 2024
2) Peaking interest rates
The potential end of the US interest rate hikes means that besides high yields, investors also have the potential to capture bond price appreciation when interest rates eventually fall.
The spread (i.e. yield differential) of Asian high yield vs investment grade bonds is also likely to compress further given limited supply. This signifies higher bond prices, thereby increasing investors’ capital gains.
Source: Bloomberg, as of 30 September 2024
Source: Bloomberg, as of 30 September 2024
3) Strong yields and low volatility
Demand is expected to further strengthen for Asia high yields given that they are averaging yields close to 9 percent. This is close to Asia equity returns but with lower volatility. Asia credit market is 2.6 times less volatile than the Asia equity market4.
Source: Bloomberg, as of 30 September 2024. Asia high yield is represented by J.P. Morgan Asia Credit Index (JACI) Non-Investment Grade Index.
4) Low default risk
Asian high yield bonds’ default rate is typically lower than 3 percent. The rate jumped during the COVID pandemic due to defaults among Chinese developers, but the default rate is gradually returning to normal, which signifies moderating risk levels.
Source: J.P. Morgan, as of 31 December 2023.
5 reasons to invest in the United Asian High Yield Bond Fund (the “Fund”)
1) Attractive income
The Fund aims to offer investors a potential attractive regular monthly income of up to 7% per annum*.
*Distributions are not guaranteed. Distributions may be made out of income, capital gains and/or capital. This relates to the disclosed distribution policy as set out in the Fund’s prospectus.
2) Strong outperformance versus peers
With its strategic positioning and emphasis on credit spreads for additional returns, the Fund has delivered returns well above both its benchmark and industry peers’ performance.
Source: Morningstar, as of 30 September 2024. | Refers to United Asian High Yield Bond Fund - Class SGD Dist | Fund performance is calculated on a NAV to NAV basis. Performance as at 30 June 2024, SGD basis, with dividends and distributions reinvested, if any. Past performance is not necessarily indicative of future performance. | Peers category (Morningstar): Asia High Yield Bond | Benchmark: J.P. Morgan Asia Credit Index (JACI) Non-Investment Grade Total Return Index.
3) Lower volatility, no default since inception
The Fund is focused on generating returns at an acceptable risk level. As a result, it has a lower volatility compared to its peers and benchmark over both the long and short term.
The Fund also has a track record of no default and restructuring since portfolio inception.
Source: Morningstar, as of 30 September 2024 | Refers to United Asian High Yield Bond Fund - Class SGD Dist | Peers category (Morningstar): Asia High Yield Bond | Benchmark: J.P. Morgan Asia Credit Index (JACI) Non-Investment Grade Total Return Index.
4) Bottom-up driven with active risk-return positioning
The Fund is based on a bottom-up bond selection process that leverages UOBAM’s network of on-the-ground analysts and deep fundamental research, supported by a disciplined top-down strategy. It is managed flexibly with a focus on risk management rather than hugging the index.
The Fund’s strong credit analysis and regular portfolio reviews also allow for switching to undervalued securities and helps limit unsystematic risks. For example, in 2023, the Fund adopted a strong underweight position in the China high yield property sector, enabling it to outperform its peers.
5) Award-winning and highly rated5
Received the Outstanding Achiever award for the Singapore Fixed Income category at the Benchmark Fund of the Year 2023 awards.
Source: Morningstar, as of 30 September 2024
| Fund Name | United Asian High Yield Bond Fund |
| Investment Objective | To achieve a total return consisting of high income and capital appreciation by investing primarily in high yield fixed income or debt securities (including money market instruments) issued by Asian corporations, financial institutions, governments and their agencies. |
| Fund Classes Available6 | Class A SGD Acc (Hedged), Class A SGD Dist (Hedged); Class SGD Acc, Class SGD Dist; Class USD Acc, Class USD Dist |
| Subscription Mode6 | Class SGD: Cash & SRS Class USD: Cash |
| Minimum Subscription6 | S$1,000/US$1,000 (initial); S$500/US$500 (subsequent) |
| Subscription Fee6 | Currently up to 3%; maximum 5% |
| Management Fee6 | Currently 1.25% p.a., maximum 2% p.a. |
| Fund Classification for Retail Investors | Units of the Fund are Excluded Investment Products (EIP). |
| Dealing Frequency & Deadline7 | Generally every business day, on a forward pricing basis up till 3pm (Singapore time). |
| Distribution Policy (for Dist classes) | The Fund aims to make regular monthly distributions of up to 7% p.a.* *Distributions are not guaranteed. Distributions may be made out of income, capital gains and/or capital. This relates to the disclosed distribution policy as set out in the Fund’s prospectus. |
1 Refers to United Asian High Yield Bond Fund Class SGD Dist that was incepted in April 2013.
2 Morningstar, as of 30 September 2024
3 Morningstar, as of 30 September 2024
4 Morningstar, as of 30 September 2024
5 Please refer to uobam.com.sg/awards for the latest list of UOBAM awards.
6 Investors should refer to the Fund’s prospectus for more details on the different classes available. Please check with our distributors on the availability of the Fund classes.
7 Please check with the distributor(s) or refer to the Fund’s prospectus for more details.
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This document is for general information only. It does not constitute an offer or solicitation to deal in units in the Fund (“Units”) 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 is based on certain assumptions, information and conditions available as at the date of this document and may be subject to change at any time without notice. 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 UOB Asset Management Ltd (“UOBAM”) and any past performance, 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 UOBAM. The value of Units and the income from them, if any, may fall as well as rise. 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 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 read the Fund’s prospectus, which is available and may be obtained from UOBAM or any of its appointed agents or distributors, before investing. 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. Applications for Units must be made on the application forms accompanying the Fund’s prospectus.
Distributions will be made in respect of the Distribution Classes of the Fund. Distributions are based on the NAV per unit of the relevant Distribution Class as at the last business day of the calendar month or quarter. The making of distributions is at the absolute discretion of UOBAM and that distributions are not guaranteed. The making of any distribution shall not be taken to imply that further distributions will be made. UOBAM reserves the right to vary the frequency and/or amount of distributions. Distributions from a fund may be made out of income and/or capital gains and (if income and/or capital gains are insufficient) out of capital. Investors should also note that the declaration and/or payment of distributions (whether out of income, capital gains, capital or otherwise) may have the effect of lowering the net asset value (NAV) of the relevant fund. Moreover, distributions out of capital may amount to a reduction of part of your original investment and may result in reduced future returns. Please refer to the Fund's prospectus for more information.
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