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What is the selection criteria behind the benchmark constituents?
Five criteria are used to select the index constituents:
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Bond Type |
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Rating requirements and issuer classification |
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Bond life at issuance |
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Time to maturity |
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Amount outstanding |
In addition, the number of bonds from a quasi-sovereign issuer is limited to 5. The index is likely to have 35 issues in total.
Can you give an indication of the type of bonds that the Fund invests in?
The Fund presently has holdings in mainly Singapore government bonds (about 90%) and 10% in quasi-Singapore government bonds such as PSA, HDB and Singapore Power+. See Fund Composition for details.
What is the benchmark - iBoxx ABF Singapore Bond Index - made up of?
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The iBoxx ABF Singapore Bond Index is an indicator of investment returns of debt obligations denominated in Singapore dollars issued or guaranteed by the government of Singapore (or any other Asian government of People's Republic of China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore or Thailand, collectively (the "Asian Governments")), by an agency or instrumentality of the Singapore government (or any other Asian Government), by a Singapore government (or any other Asian Government) sponsored entity or a quasi-Singapore government (or any other Asian Government) entity and Singapore dollar denominated debt obligations issued by supranational financial institutions. |
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Currently, the iBoxx ABF Singapore Bond Index comprises only of bonds denominated in Singapore dollars issued by the government of Singapore (e.g. bonds issued by MAS) and Singapore government agencies (e.g. bonds issued by HDB, LTA). The Fund may in the future invest in bonds denominated in Singapore dollars issued by other Asian Government, agencies of other Asian Government, or other quasi-Asian Government entities if the composition of the iBoxx ABF Singapore Bond Index include such bonds. In that event, the credit risk of the investments of the Fund may be different from its credit risk now. |
What do you mean by Tracking Error?
When using an indexing or any other benchmarking strategy, the amount
by which the performance of the portfolio differed from that of
the benchmark is the tracking error. In reality, no indexing strategy
can perfectly match the performance of the index or benchmark, and
the tracking error quantifies the degree to which the strategy differed
from the index or benchmark.
What is the volatility for ABF Singapore Bond
Index Fund versus a global bond fund like Shenton Income Fund?
The volatility should be lower than that of Shenton Income Fund as ABF invests in mainly government and quasi-government issues while Shenton Income Fund will invest in corporate bonds as well. However, ABF will initially invest in mainly Singapore issues+ whereas Shenton Income Fund is diversified globally.
What is indicative yield to maturity?
Indicative yield to maturity means that if the Fund Manager were
to do nothing and just collect coupons from the bonds. This yield however does not stay stable throughout
and it will fluctuate daily according to market conditions. It does
not take into consideration annual management and trustee fees.
This yield is not guaranteed as well.
Who are the participating dealers?
The product will be listed on the Singapore Stock Exchange and will be traded like any stock after the initial offering period (from 31 August 2005). Buying and selling is possible through any participating dealers and they include DBS Vickers, Philips Securities, Deutsche Bank AG and CIMB GK Securities. This list will be expanded as more participating dealers sign on.
How long do I need to hold the Fund before selling it?
You should consider holding the Fund for a longer term view.
What transaction fees do I need to pay when I buy or sell ABF Singapore Bond Index Fund?
For new units:
Duties and charges imposed by the Fund is chargeable at up to a maximum of 0.5% of the Fund's NAV, but currently, we charge 0.25%.
The duties and charges imposed by the Fund will be waived for creation of less than 10 million units, but this applies to market makers (OCBC Bank & DBS Vickers for now) only. Participating dealers may charge a handling fee of 0.03%.
Assuming that the NAV of the Fund on Dealing Day on September 2005 is $1.00 and an investor subscribes for 50,000 new units. The fees and charges are:
Duties and charges (payable to the Fund) - 25 bps (or 0.25%) x $50,000 = $125
Handling fees, payable to Participating Dealers - 3 bps (or 0.03%) x $50,000 = $15
Total Fees payable: $140.
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For trading of existing units:
Trading existing units can be done in board lots of 1,000 units. Clearing fees (charged by SGX) are chargeable at 0.05% of transaction value, subject to a maximum of $200. Investors also bear brokerage fees charged by their stockbrokers.
Assuming that investor bought 1000 units at $1.00. The fees and charges are:
Clearing fee - 5 bps (or 0.05%) x $1,000 = $0.50
Brokerage fee, payable to stockbroker, (up to Stockbrokers), in this case, we assume 30 bps (or 0.30%) x $1,000 = $3
Total Fees payable: $3.50
Total investment outlay for 1,000 units: $1,000 + $3 .50 =$1,003.50
Assuming that the investor sells 1,000 units at $1.00 on SGX. The fees and charges are:
Clearing fee - 5 bps (or 0.05%) x $10,000 = $0.50
Brokerage fee, payable to stockbroker, we assume 30 bps (or 0.30%) x $1,000 = $3
Total Fees payable: $3.50
Investor will received $1,000 - $3.50 = $996.50
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Please note:
Handling fees will be charged for only creation of new units and this fee is charged by participating dealers for the handing over of the new units to the registrar.
Brokerage fee is charged by stockbrokers for the transaction of units on SGX, i.e. buying and selling of existing units.
Upon listing, investors can trade existing units on SGX with any SGX brokers (not necessarily the participating dealers)
Investors who wish to subscribe for new units must go through the participating dealers (or ATMs during the initial offering period)
Where can I trade units of ABF Singapore Bond Index Fund?
You can trade units in the Fund (in board lots of 1,000 units) with cash in the same way as you buy or sell stocks on the Singapore Stock Exchange through your stockbroker. For subscription of new units, a minimum of 50,000 units is required. For new units, you need to go through the participating dealers. There is no need to open a separate trading account with your broker for the Fund.
Can I subscribe for units with participating dealers that are not mentioned in the marketing collaterals?
For trading of existing units on SGX, you may trade with any SGX stockbroker that are not mentioned here. For creation of new units into the Fund, you need to go through the authorized participating dealers.
What do you mean by new units?
The fund size for ABF Singapore Bond Index Fund will remain quite stable after the listing. Retail investors if they trade, will be likely to trade the existing units. Only when new units are created via subscription into the Fund will the fund size grow. This would target mostly the institutional investors.
Trading existing units can be done in board lots of 1,000 units, whereas new units require a minimum subscription of 50,000. This is required to reduce the tracking error.
When was the initial offering period and listing date for the Fund?
Initial offering period was from 15 August - 26 August 2005. The Fund was listed on the Singapore Stock Exchange on 31 August 2005.
Can I apply for units of the Fund through internet banking?
No. You need to go through the participating dealers if you wish to buy new units in the Fund..
Is the fund included under the CPF Investment Scheme (CPFIS) and Supplementary Retirement Scheme (SRS)?
Presently, the Fund is not included under CPFIS and SRS.
Will there be any shareholders' meeting for this Fund?
No. Unlike a listed company, this Fund will not have any shareholders' meeting. Under very special circumstances, the Fund will call for an Extraordinary Meeting if there is a need to
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modify or alter the provisions contained in the Trust Deed |
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increase maximum management and trustee fee |
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permit other types of fees |
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terminate the fund |
How is the market price for the Fund determined?
The price of ABF Singapore Bond Index Fund is market driven but in general it should be close to the NAV of the Fund which is published daily.
What is the difference between DBS Asia Bond
Fund and ABF Singapore Bond Index Fund?
DBS Asia Bond Fund is a unit trust structure with front end load
and it invests in mainly Asia Pacific bonds (including, but not
limited to government and corporate bonds).
ABF Singapore Bond Index Fund is an exchange traded fund with no
front end load, and it invests initially in Singapore government
and quasi government bonds. The Fund may in the future invest in
bonds denominated in Singapore dollars issued by other Asian Government,
agencies of other Asian Government, or other quasi-Asian Government
entities. If the composition of the iBoxx ABF Singapore Bond Index^
includes such bonds. In terms of risks, the latter should be lower
than the former.
How is the ABF Singapore Bond Index Fund different from a typical unit trust?
They are different because:
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the units of ABF Singapore Bond Index are listed on the Singapore Stock Exchange. |
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after the IPO period, new units can only be created by subscription in kind or a minimum of 50,000 units (once a month only). |
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we expect most retail investors after the IPO to buy/sell in the secondary market via the exchange rather than subscribing to new units. In this instance, subscription of new units would be more applicable to the institutional investors. |
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pricing for normal UTs are based on forward pricing whereas the trading price for this Fund is transparent and is listed on every business day on the exchange. |
ABF Singapore Bond Index Fund is an exchange traded fund with no front end load and it invests initially in Singapore government and quasi government bonds. The Fund may in the future invest in bonds denominated in Singapore dollars issued by other Asian Government, agencies of other Asian Government, or other quasi-Asian Government entities if the composition of the iBoxx ABF Singapore Bond Index^ include such bonds. In terms of risks, the latter should be lower than the former.
Is the cooling period applicable for this Fund?
No, the cooling period has been waived for this Fund.
How will the management and trustee fee be calculated?
All fees will be factored into the NAV.
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+ The Fund may in the future invest
in bonds denominated in Singapore dollars issued by other Asian
Government, agencies of other Asian Government, or other quasi-Asian
Government entities if the composition of the iBoxx ABF Singapore
Bond Index include such bonds. In that event, the credit risk of
the investments of the Fund may be different from its credit risk
now.
^ The iBoxx ABF Singapore Bond Index is an indicator of investment returns of debt obligations denominated in Singapore dollars issued or guaranteed by the government of Singapore (or any government of People's Republic of China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore or Thailand, collectively (the "Asian Governments")), by an agency or instrumentality of the Singapore government (or any other Asian Government), by a Singapore government (or any other Asian Government) sponsored entity or a quasi-Singapore government (or any other Asian Government) entity and Singapore dollar denominated debt obligations issued by supranational financial institutions. Currently, the iBoxx ABF Singapore Bond Index comprises mainly bonds denominated in Singapore dollars issued by the government of Singapore (e.g. bonds issued by MAS) and Singapore government agencies (e.g. bonds issued by HDB, LTA).
The prospectus will be made available at all DBS and POSB Branches when the offer or invitation is made. All applications for units of interest in the ABF Singapore Bond Index Fund must be made on application forms accompanying the prospectus. Investors should be aware that the Fund is different from a typical unit trust. Investors should read the prospectus before deciding to purchase units in the Fund. The value of the fund and the income from them, if any, may fall or rise. Investments in this Fund or unit trusts are subject to risks, including possible loss of principal amount invested. The annual distributions are dependent on the fund's performance and are not guaranteed. Investors may only redeem units with the Manager under certain specified conditions and the listing of the Fund of the Stock Exchange of Singapore does not guarantee a liquid market for the units. The Fund's market price on the Singapore Stock Exchange may be different from the net asset value per unit of the Fund, and the Fund may be delisted from the Singapore Stock Exchange. The Fund is not guaranteed or endorsed by the Asian governments. This publication is intended for internal/general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. Investors may wish to seek advice from a financial advisor regarding the suitability of the Fund, taking into account his specific investment objectives, financial situation or particular needs before committing to invest in or purchase units in the Fund. In the event that an investor chooses not to seek such advice, he should consider whether the Fund is suitable for him.
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