Are bonds back in focus as interest rates fall?

Stocks

By Gerald Wong, CFA • 31 Aug 2025

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We speak with Kylie Soh, Client Portfolio Manager at Fullerton Fund Management to learn more about why Singapore bond yields are falling and what it means for investors.

In this article

What happened?

With the latest 6-month Singapore T-bill yields falling to 1.44%, investors have turned their attention back to bond funds.

In this episode of the Beansprout Podcast recorded at MooFest 2025, I sit down with Fullerton Fund Management Client Portfolio Manager Kylie Soh to unpack how falling interest rates and expectations of further Fed cuts can impact bonds.

We also discuss how US dollar weakness is driving investor interest in Singapore dollar–denominated assets.

For investors who are new to investing, we share how consistency and regular savings plans can help in building confidence.

Catch the full conversation in the video below.

Interview with Client Portfolio Manager at Fullerton Fund Management

01:18 – Rising Bond Demand and De-Dollarisation

Global fixed income markets in 2025 are seeing falling rates, stronger demand for bonds, rising interest in Singapore dollar assets, and growing investor sophistication beyond T-bills.

Global fixed income markets have shifted in 1H 2025 with interest rates starting to decline and expectations of further Federal Reserve rate cuts in 2H 2025.
Cash rates have fallen from above 3% at the start of the year to below 2%, making bonds more attractive and fueling stronger demand.
A de-dollarisation trend is emerging as investors diversify away from US assets amid political uncertainty and dollar weakness, driving interest in Singapore dollar–denominated fixed income products.
Rising demand for Singapore government securities has pushed T-bill yields down from above 3% to under 2%, reflecting a surge in investor appetite.

03:47 – Investors Are Becoming More Sophisticated About Fixed Income

Higher yields, greater product awareness, and geopolitical shifts are driving stronger investor interest and sophistication in fixed income, though many younger investors remain overexposed to equities and cash.

Yields today are significantly higher than five years ago, moving investors out of the previous low- or negative-rate environment and making bonds more attractive.
Increased accessibility through platforms, tools, and education has raised awareness and familiarity with fixed income products.
Broader awareness of global events, including geopolitical tensions, has encouraged investors to diversify beyond equities and cash.
Many Gen Z investors remain concentrated in equities or cash, but fixed income offers stability, diversification, and more predictable returns.
Investors are gradually expanding beyond T-bills and savings bonds to corporate bonds and bond funds, reflecting a deeper understanding of fixed income’s role in portfolios.

05:15 – How Beginners Can Start Investing in Bonds with Confidence

New investors can start small with bond funds for diversification, gradually build exposure, and adopt disciplined strategies like regular savings plans to remove emotions from investing.

Buying individual bonds often requires S$250,000 per unit, leading to concentrated risk, making bond funds a more practical starting point for most investors.
Starting with small amounts allows investors to monitor fund performance and build confidence before committing more capital.
Fullerton’s Short Term Interest Rate Fund, a 20-year-old S$1 billion fund managed since 2006, focuses on high-quality, short-duration, Singdollar-hedged credits, offering stability for Singapore investors.
Consistent investing, rather than lump-sum commitments helps new investors adjust to volatility and align with their personal risk appetite and goals.

Learn more about the Fullerton Short Term Interest Rate Fund here.

07:44 – Timeless Personal Finance Lessons for Investors

Successful investing begins with disciplined saving, building an emergency fund, and then diversifying steadily into broader assets with a long-term mindset.

Saving comes first — having a strong savings base is essential before starting to invest.
Maintaining sufficient emergency cash provides security and confidence when markets turn volatile.
Once the foundation is in place, investors can diversify through ETFs or funds to gain broad market exposure.
A disciplined, long-term approach helps align investments with life goals and reduces emotional decision-making.
Loving the process of investing and staying consistent over time often leads to better financial outcomes.