Tuesday November 5, 6:57 PM
WHAT YOU MAY NOT KNOW ABOUT THE AIGIF ACORNS OF ASIA BALANCED FUND
By Vasu Menon, Chief Editorial finatiQ
The latest October factsheet for the AIGIF Acorns of Asia Balanced Fund, shows that the fund manager turned more defensive in September, raising cash and bond holdings.
The fund's cash level rose from about 21 per cent of the end of August to 24 per cent at the end of September.
Its fixed income exposure also increased as it bought into a five-year Singapore government note yielding 2.65 per cent per annum. The five-year note was amongst the top ten holdings, accounting for 9.1 per cent of the fund as at September 30th.
Another noticeable difference between end-September and end-August was the fact that the top ten holdings in September comprised wholly of cash and bonds and accounted for 54 per cent of the fund. In contrast, the end-August total of 50 per cent, included a 7 per cent exposure to equities as well.
The higher cash and bond holdings could imply that the fund manager had turned more defensive given the sharp stock market sell-off in the third quarter. However as equity markets rebounded from oversold levels in October, it is likely that the fund manager for the AIGIF Acorns of Asia Balanced Fund would have reduced the cash holdings in favour of equities.
The AIGIF Acorns of Asia Balanced Fund is an exceptional performer amongst the universe of balanced funds which tend to be safer bets compared with pure equity funds.
Launched last August, the fund has returned 11 per cent since inception to October 31st this year (excluding front-end fee). This is much higher than the 4 per cent interest rate offered for CPF special account savings, which can used to purchase this fund.
The AIGIF Acorns of Asia Balanced Fund is the only balanced fund with an Asia ex-Japan focus available for CPF special account investments.
As at September 30th, the fund's equity assets were invested in South Korea (27.76 per cent), Hong Kong (27.33 per cent), Singapore (17.65 per cent), Taiwan (14.27 per cent), Malaysia (7.17 per cent), Indonesia (3.93 per cent) and Thailand (1.89 per cent).
The fund seeks to invest in fast-growing Asian (ex-Japan) stocks. The electronics sector accounted for 36.4 per cent of the fund's equity investments as at September 30th, automobiles 11.7 per cent, consumer 10.5 per cent, transport 7.5 per cent and manufacturing 7.3 per cent.
The fund's current bond holdings include both government and corporate issues. With a bias for high-quality fixed income instruments, the fund has invested in Singapore Government bonds. Companies like Tuas Power and City Development make up some of the corporate bond holdings. Interest rates offered by these companies are higher, around 5 per cent or so.
Balanced funds are a more conservative form of investment compared to pure equity funds, as the fixed income portion of the fund ensures that there is a steady stream of income coming through even though equities are not doing well.
The AIGIF Acorns of Asia Balanced Fund, with its track record to date, has delivered good returns to investors. For those who prefer a higher yielding investment with a touch of safety, this is a fund that is worth considering.
Note also that the fund has a low expense ratio of less than 2 per cent due its large size (which implies lower per unit cost) of more than $100 million and also because it is not a feeder fund and it's managed locally.
AIGIF Acorns of Asia Balanced Fund 1st Anniversary Promotion:
Invest in the fund between November 5th and December 27th and get premium gifts including a foldable cabin bag, Robinson shopping vouchers and a SONY WEGA Flat Screen TV.
|
