Omar Slim, Pinebridge Investments
The Singaporean dollar market has been and will continue to be one of the lower volatility local currency markets, Omar Slim, senior portfolio manager, Asia fixed income, Pinebridge told FSA.
Yet, issuance in the Singaporean dollar market has been very low this year, particularly on the higher quality side, he added.
“That is causing the market to be very well anchored, as there is a growing money pool that is chasing a market that is not growing very quickly.”
“Despite global fixed income markets not performing well at the beginning of the year, the Singaporean market has outperformed its peers by having a relatively low volatility.”
The low issuance can be attributed to the fact that most high-quality local issuers have been strongly banked and well-funded in the past.
As a result of their high cash levels, Singaporean companies are generally more opportunistic.
Real estate investment trust (Reits) are also expected to outperform, especially industrial Reits, data centre Reits, and retail Reits, said Slim. “With the reopening of Singapore, Reits bonds should perform well because they benefit from government fiscal support.”
The local free opening trades sectors, such as aviation and hospitality, are also expected to outperform due to the reopening of Singapore, he added, and Sim also likes some Singapore banks, especially their two bonds.
Acorns of Asia Balanced Fund
Slim manages Pinebridge Investments’ Acorns of Asia Balanced Fund, which invests in both equities and fixed income.
From “acorns to oak trees”, the fund’s name refers to its objective to seek long-term returns by investing in companies with good fundamentals and high credit quality.
It is comanaged by Elizabeth Soon, head of Asia Ex-Japan equities at Pinebridge, who is responsible for the equity side.
In terms of asset allocation, 57.5% of the fund’s AUM is allocated to equities, while 37.7% is invested in bonds, and 4.8% in cash.
The fund only invests in investment grade bonds, with 26% of the fixed income allocation in triple-A bonds, 29.1% in Baa1 to Baa3 bonds, and 23.8% in A1 to A3 grade bonds. The top holding is the Pinebridge Singapore Bond Fund (34.4%), with the remaining proportion invested in Singapore government bonds.
The equity side is also heavily invested in Singaporean stocks, with almost 40% allocated to local equities, followed by 18.8% in Taiwan stocks, and 14.4% in Hong Kong.
Over the past three years, the fund generated a cumulative return of 15.44%, while the sector average was 7.40%, according to FE Fundinfo.
After a difficult year in 2021 which saw property giants such as Evergrande and China Fortune Land Development defaulting on their bonds, Chinese real estate developers still face big debt maturities this year.
Although the fund has no exposure to the Chinese property sector, Slim believes part of the market will not come back from the crisis.
“That is harsh to say, but it is how we see it. I think some issuers which have value will survive and potentially thrive at some point, but there are really a limited number of them. They will also have to rely on Chinese policy support, which have been quite timid so far.”