Bought $20k of this Unit Trust

 

I actually bought $20k of LionGlobal All Seasons (Standard) unit trust this month. This will entitle me to some cashback which is nice but not the main reason I am buying.

Why buy unit trusts?

I was looking for a low beta instrument with reasonable prospects for capital appreciation. I am already holding a number of US$-centric bond ETFs (IBTU, LQDE, VDCP for instance) so it would have been good to have part of my bond component in S$ fixed income.

The key point of this fund is that it holds a number of LionGlobal equity and fixed income unit trusts and gets fee rebates on those funds so that its overall expense ratio is only 0.41%, which is close to the expense ratio of some basic money market funds!

It holds 70% fixed income and 30% equity, and the equity side comprises ETFs and active LionGlobal funds. The 70% fixed income, which is clearly tilted towards shorter duration and with >50% in S$, will provide a lot of stability and steady returns from interest payments.

Alternatives?

For pure a SGD fixed income play, Nikko AM SGD Investment Grade Corporate Bond ETF came to mind. Its 5-year performance is 2.45% which seems worse than simply rolling over T-bills. The SG fixed income market is also so small and the universe of bonds the ETF can invest in is so limited, it makes me wonder whether active management might outperform (as long as the expenses are reasonable, as they are in this case).