Fund Idea Four fixed income strategies that can protect your | FSMOne SG - Research Highlights

Fund Idea

Four fixed income strategies that can protect your portfolio against rising interest rates

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• Although bonds are negatively impacted by rising rates, an exposure to fixed income is still relevant as they provide diversification benefits. The question here is how investors can get the optimal fixed income exposure.

• Short duration bond funds are one great diversification option, as they carry lower interest rate risk while still providing a reasonable yield. Such funds include the Nikko AM Shenton Short Term Bond SGD.

• The divergent monetary policy between China and several major economies has created a positive backdrop for Chinese government bonds, which investors can seek shelter from. Our recommended product is the ICBC CSOP FTSE Chinese Government Bond Index ETF (SGX:CYC).

• Unconstrained bond funds, with their ability to adjust duration exposure, can act as a complement to traditional bond funds in a well-diversified portfolio. We like the Allianz Global Opportunistic Bond Cl AMg Dis USD.

• Investors who want higher yields but are comfortable with greater volatility can consider Asian high yield bonds, which provide the most attractive yield in relation to duration exposure. Our recommended fund is the Eastspring Investments – Asian High Yield Bond ASDM SGD-H.

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