$UNITED SGD "A" (SGD) INC(SG9999010805)$
Manager Comments
Higher US bond yields
Government bond yields rose across major markets in May 2025. US 2-year Treasury yields climbed 29 basis points (bps), closing at 3.9 percent, while 10-year Treasury yields rose 24bps to 4.4 percent. This was driven by persistent US fiscal concerns, resilient economic data, and a cautious stance from the US Federal Reserve. These factors outweighed optimism around potential regulatory relief for US banks. In addition, rate cut expectations have moderated, with futures now pricing in two cuts for 2025, down from four in April 2025.
Tighter bond spreads
Investor sentiment improved on the back of easing trade tensions, solid US tech earnings, and policy support from the People’s Bank of China. Reflecting this, Asia credit spreads tightened, with the JACI Investment Grade index narrowing 15 basis points to 118bps as investors added to positions. More issuances Primary issuance in Asia G3 currency bonds picked up slightly in May to US$13 billion, up from US$12 billion in April. This marks a 39 percent increase in supply year-to-date, totalling US$94 billion. Key issuers included China Construction Bank (US$1.5B), ICBC Singapore (US$1.3B), and PT Pertamina Hulu Energi (US$1B).
Coming up...
Tariff developments look likely to remain a key driver of Asia credit spreads in the months ahead, though attention may shift toward economic data. While a downturn in US growth or stagflation could pressure credit markets, current yield levels across Asia continue to offer reasonable carry.
Total Returns
Fund gained 0.37 percent in May
The Fund’s positive performance in May brings its one-year returns to 4.37 percent. Returns were driven largely by coupon income. While credit spreads tightened, this was offset by an increase in interest rates.
Fund beat its long-term average
The Fund’s return in May 2025 is more than double its average monthly returns of 0.16 percent going back five years.
Yield to maturity
Narrower yield spread in May
The Fund’s yield to maturity as of 31 May 2025 stands at 3.67 percent. This puts its yield spread over US Treasuries at 113 bps, slightly narrower than in the previous two months. Nevertheless, this yield level suggests that the Fund continues to offer an attractive pick-up above US Treasuries while not being overly stretched relative to its historical average.
Volatility
Lower than average
The Fund’s current three-month volatility is 0.23 percent, lower than the average three-month volatility of 0.67 percent, looking back over the past five years. The Fund’s current volatility is also significantly lower than the 3.62 percent average three-month volatility of its Morningstar peer group over the same period1.
Summary
If you are interested in investment opportunities related to the theme covered in this article, here is a UOB Asset Management Fund to consider:
$UNITED SGD "A" (SGD) INC(SG9999010805)$
United SGD Fund Website | Factsheet (May 2025) | Prospectus
You may wish to seek advice from a financial adviser before making a commitment to invest in the above fund, and in the event that you choose not to do so, you should consider carefully whether the fund is suitable for you.
**********
Important notice and disclaimers:
All information in this publication is based upon certain assumptions and analysis of information available as at the date of the publication and reflects prevailing conditions and UOB Asset Management Ltd (“UOBAM”)'s views as of such date, all of which are subject to change at any time without notice. Although care has been taken to ensure the accuracy of information contained in this publication, UOBAM makes no representation or warranty of any kind, express, implied or statutory, and shall not be responsible or liable for the accuracy or completeness of the information.
Potential investors should read the prospectus of the fund(s) (the “Fund(s)”) which is available and may be obtained from UOBAM or any of its appointed distributors, before deciding whether to subscribe for or purchase units in the Fund(s). Returns on the units are not guaranteed. The value of the units and the income from them, if any, may fall as well as rise, and is likely to have high volatility due to the investment policies and/or portfolio management techniques employed by the Fund(s).
Please note that the graphs, charts, formulae or other devices set out or referred to in this document cannot, in and of itself, be used to determine and will not assist any person in deciding which investment product to buy or sell, or when to buy or sell an investment product. An investment in the Fund(s) is subject to investment risks and foreign exchange risks, including the possible loss of the principal amount invested. Investors should consider carefully the risks of investing in the Fund(s) and may wish to seek advice from a financial adviser before making a commitment to invest in the Fund(s). Should you choose not to seek advice from a financial adviser, you should consider carefully whether the Fund(s) is suitable for you. Investors should note that the past performance of any investment product, manager, company, entity or UOBAM mentioned in this publication, and any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance of any investment product, manager, company, entity or UOBAM or the economy, stock market, bond market or economic trends of the markets. Nothing in this publication shall constitute a continuing representation or give rise to any implication that there has not been or that there will not be any change affecting the Funds. All subscription for the units in the Fund(s) must be made on the application forms accompanying the prospectus of that fund.
The above information is strictly for general information only and is not an offer, solicitation advice or recommendation to buy or sell any investment product or invest in any company. This publication should not be construed as accounting, legal, regulatory, tax, financial or other advice. Investments in unit trusts are not obligations of, deposits in, or guaranteed or insured by United Overseas Bank Limited, UOBAM, or any of their subsidiary, associate or affiliate or their distributors. The Fund(s) may use or invest in financial derivative instruments and you should be aware of the risks associated with investments in financial derivative instruments which are described in the Fund(s)’ prospectus.
This advertisement has not been reviewed by the Monetary Authority of Singapore. UOB Asset Management Ltd Co. Reg. No. 198600120Z
Comments