First active bond ETF on SGX to debut by end-September

Retail investors in Singapore have another avenue to invest in fixed income, via an actively managed bond fund that will be traded daily on the Singapore Exchange (SGX).

- Chor Khieng Yuit

An actively managed bond fund is one where the fund manager selects and manages the bonds in the portfolio. It is not listed.

Lion Global Investors, an asset manager wholly owned by OCBC Bank, has wrapped one such fund, the LionGlobal Short Duration Bond Fund, into an exchange-traded fund (ETF).

The ETF version of this fund, known as an active bond ETF, can be bought and sold during trading hours on an exchange.

It will be the first active bond ETF on SGX when it lists on Sept 29.

The only other active ETF currently on SGX was launched on Jan 31, 2024, after Lion Global partnered with Japan's Nomura Asset Management to introduce an actively managed equities ETF.

Investors in the bond ETF will have access to the same portfolio of Singapore and global bonds as that managed by the unlisted unit trust.

Mr Teo Joo Wah, chief executive of Lion Global Investors, said this gives investors a cost-effective way to earn income and diversify their investment portfolios.

The management fee is 0.25 per cent a year, up to a maximum of 1 per cent of the net asset value of the fund.

The unlisted version of the fund has a higher management fee of 0.5 per cent, up to a maximum of 1 per cent of the net asset value of the fund.

The ETF, like its unlisted version, intends to make a payout every quarter.

Mr Alvin Chow, assistant director of investment advisory at financial advisory firm iFast Global Markets, said this bond ETF could "fill a useful niche", drawing investors who want higher yields than Treasury bills or fixed deposits but are hesitant to take on equity risks.

Its product highlights sheet has a yellow heading band, which is the default indicator for non-complex products.