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Idea of the Week: Do You Have Australian Dollar Time Deposits? [16 Dec 2011] December 16, 2011
If yes, take a minute to consider the Nikko AM Shenton Short Term Bond Fund (A$).
Author : Fundsupermart

Untitled Document

If you owe any Australian dollar time deposits with the banks, why not consider the Nikko AM Shenton Short Term Bond Fund (A$)?


Reason 1: No Lock-In Period and No Early Redemption Penalties

Unlike traditional Australian dollar (AUD) time deposits on offer in the banks, the Nikko AM Shenton Short Term Bond Fund (A$) does not impose a lock-up period on your funds. As a result, your liquidity is not affected while enjoying the higher interest rates from the AUD exposure. This also means that you will not be slapped by an early redemption penalty should you withdraw your money whenever you want to regardless of your investment duration, be it two years, two weeks, or even two days.

reason 2: Stronger Potential Returns

The current yield-to-maturity (YTM) on the Nikko AM Shenton Short Term Bond Fund (A$) is 5.78% (as at 9 Dec 2011). This represents the anticipated return should the fund holds its underlying assets to maturity. The fund’s YTM of 5.78% compares favourable against the AUD time deposits offered by banks, which ranges from 2.000% to 3.665% per annum*.

While the Nikko AM Shenton Short Term Bond Fund (A$) has a higher risk profile due to investments in short-term debt rather than pure fixed deposits, investors who are able to tolerate this increased risk will find themselves duly rewarded. Since the AUD-hedged class of the fund was launched on 29 August 2011, it has returned 3.01% over the period, in SGD terms. In comparison, the SGD class returned 0.36%.

* Interest rates as at 15 Dec 2011, based on 1 month tenure at lowest tier of deposit amount

reason 3: Low Risk Profile of Underlying Assets

The difference in returns of the SGD and AUD-hedged classes highlight the additional currency risk undertaken by the AUD-hedged class. Both currency classes invest in the same underlying assets, which is managed to comprise a diversified portfolio of good quality, short-term bonds and money market instruments. As of the end-July 2011, the portfolio was diversified across 107 bonds, with 76 issuers from 12 countries, with an average weight of 0.84% per issuer. The average credit rating remained at A-.


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iFAST and/or its licensed financial adviser representatives may own or have positions in the funds of any of the asset management firms or fund houses mentioned or referred to in the article, or any unit trusts or Singapore Government Securities bonds related thereto, and may from time to time add or dispose of, or may be materially interested in any such unit trusts or Singapore Government Securities bonds. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any fund. No investment decision should be taken without first viewing a fund's prospectus. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Past performance and any forecast is not necessarily indicative of the future or likely performance of the fund. The value of units and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website. If you have any queries about the above contents, please contact iFAST.

Nikko AM Shenton ShortTerm Bond(S$)
Nikko AM Shenton ShortTerm Bond(A$)

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