DBS has launched the DBS CIO Target Maturity Fund 2027, a three-year fixed-income portfolio exclusive to the bank.
The fund is managed by BlackRock and comprises over 50 high-conviction investment grade (IG) corporate bonds and low-risk government bonds. It is designed to offer higher total returns compared to cash or money market funds over a three-year period.
With its focus on bonds that mature in 2027, the fund seeks to provide steady and regular payouts while maintaining a portfolio that is able to mitigate reinvestment risk.
It is said to give clients an “attractive alternative” to cash or money market funds, given that cash yields typically drop when the yield curve normalises and when the US Federal Reserve (US Fed) begins to cut interest rates.
The fund is also open to the bank’s retail customers with a minimum lump sum investment of $1,000 or US$1,000 ($1,345.69).
“Investors should be mindful to not take on systematic risks that are specific to individual industries or firm. This principle also extends to bond investments, which present attractive opportunities for investors today,” says Hou Wey Fook, DBS’s chief investment officer (CIO).
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“Over the years, I’ve seen multiple clients, including some ultra-high net worth clients, unknowingly buy and hold single bonds in their portfolios. It is wise to invest into bond funds, like our new DBS CIO Target Maturity Fund 2027, instead because they offer similar returns to single line bonds, but without investors having to take on unnecessary concentration risk in the case of a default. It ultimately gives our customers more security and peace of mind as an investment component of a well-diversified financial plan,” he adds.
“Amid the fast-changing investment landscape with potential rate cuts, investors are looking to have a high-quality and diversified portfolio while enjoying a higher income. The tailored portfolio underscores BlackRock global investment team’s capability in robust credit selection and prudent investment management,” says Dennis Quah, head of Singapore wealth at BlackRock. “We are delighted to collaborate with DBS and will continue to help investors in Singapore access investment opportunities in the global bond market to achieve their financial goals.”
The fund’s initial offer period spans from July 15 to Aug 12 with an option to extend two weeks until Aug 26. Investors pay an annual management fee of up to 0.6% per annum (p.a.).
