ABF SG BOND ETF (A35) – rock steady?

My portfolio is highly skewed towards equities. As I get older (forming-a-one-pec aka beer belly), I want to slowly shift a percentage to bonds to get that stability in my portfolio … I know it is probably at an opportunity cost of getting higher returns on your capital, but priorities change.

Then, I found this ABF bond fund (A35).. so what exactly is this?

A35 is a bond ETF, it holds many bonds to maturity. One can treat it like a bond. It’s stable and yields about 2%. As you can see for the past 5 year historical  chart, it is an extremely boring trend, when STI plummeted early this year, there wasn’t much movement. expense ratio of this fund is 0.25%.

The holdings of A35 are generally the SGP govt, LTA, HDB etc etc. Pending a WW3, or zombie invasion, I have faith that it will hold up pretty well.

Will be using POSB to RSP into this fund for 0.5% sales charge. i think is reasonable.

 

 

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13 thoughts on “ABF SG BOND ETF (A35) – rock steady?

    1. haha… i was just waiting for someone to bring up SSB !
      SSB is of course another alternative..
      infact, the ABF bond fund has some SG govt bond funds too..

      there’s no right or wrong, just which one rocks your boat

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      1. Indeed the ABF has plenty of SG govt bonds (in fact 86.5%!) but these are SGS bonds, not SSBs which are only available to individuals and pay a higher coupon (if held to maturity). Coupled with the low upfront fee ($2), zero expense ratio (btw ABF’s ER is 0.15%, not 0.25%) and zero capital risk, the SSB is very attractive if you intend to hold till maturity – only downside is that you have to wait up to a month to get your cash if you redeem.

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      2. Serendib,

        thanks for the clarification for the ER. I might have gotten it mixed it with something else.

        I think the point of the SSB is that you have to hold to maturity, to reduce the transaction charges.
        yes, i agree on the 1 month wait for the SSB redemption too.

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  1. Hi, considering how we can enter the SSB with as little as $500, would it be a better choice as compared to this bond fund? What do you think of the risks between both? Any reason if you pick one?

    Thanks!

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    1. Mr K,
      i don’t think there is any risk between both. Even if there is, it is very limited.
      In my opinion, both are quite/very good.

      For me, its about the your strategy.
      the SSB is something you buy once, then then keep it till maturity. (Obviously you can buy every issue of the SSB, but remember you need to keep it for 10 years to get the max rate, as it is progressive rate. (iirc, the first few months/years is just 1%? )
      the A35 is something you can buy with a small fixed amount (i.e. $100) every month or a fixed interval. (I use POSB RSP, so i set it up once and forget about it, it will just auto deduct. personally, i like the auto feature, as I travel quite frequently, so one less thing to remember)

      To each his own!

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    1. Kevin,

      Haha. Bebop! Haven’t heard that for quite a while…

      Great graph there! Just what we need to show the resilience of A35. Looks like you are an advocate of it too 🙂
      The flip side, is that if the STI does well, it also doesn’t move up that much.

      Btw, would you know how to plot the A35 vs SSB?

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      1. Yeah I think mostly people of a certain age and above get the Bebop/Rocksteady thing. True that, A35 itself isn’t much of a hard-hitter for returns but it has it’s role to play. Sorry man, I have no idea where to start in order to plot A35 vs SSB.

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  2. Hi FC,

    Good to see yet again another new blogger. Kevin had given me a lot of good insight about ABF and I had done my own research as well.

    Hi Both,

    Just one queries. Over the past 1 year, the ABF has lo/hi of 1.08/1.17 (>5%) and in the last 5 yr, 1.0/1.2.

    My question is really if there are a right timing to enter or exit?

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    1. hi Rolf,

      thanks and welcome.

      i just came from your blog, your question is like the asking if the oil price has bottomed out and right time to enter the O&G? =)

      the best time to enter is.. yesterday
      my point is that its almost impossible to time the market.
      for me, the whole idea of the A35 is just to RSP/DCA, and just forget about

      Like

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