#1 - Gain exposure to Singapore government bonds

When investors think about “flight to safety”, the US government bond would usually come to mind.

What many may not be aware of, is that the Singapore government bond has a comparable or higher rating according to the rating agencies.

In fact, Singapore is also the only Asian country that has the highest AAA credit rating awarded by all 3 major credit rating agencies.

Government bond credit rating

#2 - Historically higher returns compared to other government bonds

The ETF tracks the iBoxx ABF Singapore Bond Index, which has generated a return of 1.6% per annum over the last 10 years.

This was higher than the return of 1.1% per annum generated by the FTSE World Government Bond Index, which is a widely used benchmark tracking government bonds over 20 countries.

ABF Singapore Bond Index Performance

#3 - Helps to diversify an equities portfolio

Singapore government bonds could be a compelling asset to diversify a portfolio and improve its risk-adjusted returns.

Notably, the iBoxx ABF Singapore Bond Index has performed well during previous episodes of financial uncertainty, supported by the high credit quality of Singapore government bonds and the strength of the Singapore dollar.

After all, Singapore has maintained the highest AAA credit rating in the last 25 years, including during the Asian Financial Crisis of 1997 and the Global Financial Crisis of 2008.

This is driven partly by the significantly foreign reserves held by the Singapore government, which stood at US$ 381 billion as of 31 March 2022.

ABF historical performance

Singapore-focused ETFs