United SGD Fund: Secure Higher Yields Before Rates Drop?

This post was created in partnership with UOB Asset Management. All views and opinions expressed in this article are Beansprout's objective and professional opinions.

What happened?

Singapore’s T-bill yields have been on a steady decline recently, and the latest 6-month T-bill auction on 13 March 2025 confirmed that trend. 

The cut-off yield dropped to 2.56%, the lowest we’ve seen since June 2022.

With yields falling, I’ve been actively looking for ways to put my cash to work without taking on excessive risk or giving up too much liquidity. 

And I’m not alone. Over in the Beansprout Telegram community, there’s been a lot of chatter about where to park cash savings for better returns.

One option that’s caught my attention is the United SGD Fund, managed by UOB Asset Management. 

This short-duration bond fund gives investors access to a diversified portfolio of high-quality bonds, potentially offering a competitive yield for my spare cash.

Let’s take a closer look at how this fund works and whether it might be worth considering.

A quick rundown of the United SGD Fund

The United SGD Fund is a fixed income fund managed by UOB Asset Management, one of Singapore’s most established asset managers.

With a fund size of over S$2.2 billion as of 31 December 2024 and a track record spanning more than 25 years, it stands as one of Singapore's more established fixed income funds.

The fund primarily invests in:

• Money market instruments
• Short-term interest-bearing debt securities such as investment grade government bonds and corporate bonds
• Bank deposits

Its goal is to deliver a higher yield than Singapore dollar deposits. This means that the fund offers investors an opportunity to secure higher potential returns while keeping risk under control.

After looking deeper into this fund, I see three key reasons why the United SGD Fund may potentially be a compelling choice in today’s market:

• Lock in higher yields before further rate cuts
• Strong track record
• CPF and SRS approved

Let's examine each of these aspects in detail to understand how they could benefit investors in today's market environment.

Why United SGD Fund?

#1 - Lock in higher yields before rates fall

The United SGD Fund takes a strategic approach to fixed income investing, aiming to optimise returns across different interest rate environments. 

As of 31 December 2024, the fund’s 1-year return is 4.07% on the Class A (Acc) SGD share class. 

Over longer periods, it has delivered an annualised return of 1.98% annualised over 3 years and 1.82% over 5 years. 

As of 31 December 2024, the Fund’s weighted average yield-to-maturity stands at 4.21% p.a.—meaning that if all its holdings are held until maturity, they may deliver an annual yield of 4.21%.

Should we look at performance since its inception, the Fund has outperformed its benchmark, earning a higher yield than the 6-month compounded Singapore Overnight Rate Average (SORA) which is the Fund’s benchmark since April 2022. 

What makes this fund particularly interesting to me is that it implements a laddered investment strategy to deliver consistent returns despite fluctuating interest rates.

How does it work?

The fund staggers bond maturities across a three-year timeframe, which helps optimise returns in both rising and falling rate environments:

• When rates rise: As shorter-term bonds mature, the capital gets reinvested at higher yielding, shorter dated bonds 

• When rates fall: The fund benefits from staying invested in longer-duration bonds that had opportunistically locked in the higher yields from earlier periods

Interest rates are expected to either stay put or start declining this year, and typically, when interest rates go down, bond prices go up. 

This opens the door for potential capital appreciation, on top of income from the fund.

The Fund’s 3-year maturity bonds that were picked up at lower prices when rates were higher could appreciate in value.

At the same time, its short-term bonds (1-year or 2-year) that are maturing soon can be reinvested at today’s rates, locking in yields before they potentially drop further.

This flexibility allows the fund to adapt to market conditions while aiming for steady returns.

For me, that’s exactly what I’m looking for right now, a chance to secure current yields before rates possibly dip further.

As of 31 December 2024, the fund maintains a well-diversified portfolio across sectors and geographies. 

The top three sectors the fund invests in include Financials (34.9%), Government (14.77%) and Consumer Discretionary (10.14%) as of 31 December 2024. 

The fund has the highest allocation in Singapore assets (22.15%) followed by Hong Kong (12.15%) and China (11.48%).

It's important to note that while the fund includes non-Singapore assets, these investments are denominated in SGD, which helps manage currency risk.

#2 – Strong track record 

When investing in short-term bond funds, managing risk is just as important as earning returns. That’s why I also look at how well a fund preserves capital in different market conditions. 

The United SGD Fund has a strong track record of capital preservation, having delivered positive returns in 24 out of the last 26 years.

This performance is built on several key risk management pillars.

First, the fund commits to selecting short-term high-quality government and corporate bonds to reduce credit risk. 

With an average credit rating of BBB+ as of 31 December 2024 and zero defaults in its holdings throughout its history, the fund maintains high credit quality standards with an objective of preserving investors’ capital. 

The fund also manages its overall duration by maintaining an average yield to maturity of 1.52 years (as of 31 December 2024). 

With a shorter maturity, the fund's bond holdings are less susceptible to significant price swings compared to bond funds with longer maturities. 

The focus on shorter-maturity bonds serves multiple purposes. 

Not only does it help maintain more stable unit prices through different interest rate environments, but it also provides more frequent opportunities to reinvest at prevailing rates. 

This flexibility allows the fund to adapt to changing market conditions while maintaining its focus on capital preservation.

#3 – CPF and SRS approved

The United SGD Fund doesn’t just allow cash investments, you can also buy into it using your CPF-OA and SRS funds.

For those looking to activate their Supplementary Retirement Scheme (SRS) and CPF-OA funds, the United SGD Fund is a potential avenue to put those funds to work due to its short-duration, high-quality bond strategy.

What I’m considering before investing in the United SGD Fund

# 1 - Not capital guaranteed

While the United SGD Fund has a strong track record and is considered a relatively lower risk product compared to equities or longer-duration bond funds, it's important to remember that it is an investment and it’s not capital guaranteed

That means there’s always a possibility of short-term fluctuations, and understanding potential downside scenarios is crucial before investing.

For example, if interest rates rise unexpectedly, the value of the fund’s bond holdings could drop, leading to a decline in its net asset value (NAV). 

If I need to sell my units during such a period, I might end up locking in a loss.

That said, it’s worth noting that in past periods of uncertainty, the United SGD Fund’s drawdowns have been less severe compared to an index of Asia Pacific Equity and Global Equity. 

#2 – Annual management fee

The United SGD Fund has an annual management fee of 0.63% for all classes (except Class B, which has a fee of 0.33% per annum), with a maximum cap of 1.5% per annum.

When considering this investment, it's important to weigh these management fees against how the fund fits into your investment portfolio and goals and the potential returns. 

What would Beansprout do? 

With interest rates stabilising or possibly declining in 2025, I’ve been thinking a lot about how to optimise my cash holdings while keeping risk in check.

What stands out to me about the United SGD Fund is its balanced approach. 

It offers the potential to lock in higher yields and has a proven track record of lower drawdowns or downside during uncertainty (delivered positive returns 24 of the last 26 years). 

That’s a pretty compelling mix, especially in a market where cash alternatives like T-bills and SSBs are offering lower yields currently. 

This is a fund that I can consider adding to my portfolio to enhance the stability of my portfolio, especially when I have exposure to more volatile assets like equities. 

Another big plus is that it’s CPF and SRS-approved, which means I can use my CPF-OA or SRS funds to invest in it. 

Of course, I’ll have to factor in the management fee and the fact that it’s not capital guaranteed when deciding to invest in the fund. 

To learn more about the United SGD Fund, click here.

Where can I buy the United SGD Fund?

You can access the United SGD Fund through the following distributors:

• Endowus
• Webull
• grow with Singlife
• Moomoo
• FSMOne
• PhillipCapital
• Tiger Brokers
• UOB Kay Hian
• UOBAM Invest

Distributions are not guaranteed. Distributions may be made out of income, capital gains and/or capital. This relates to the disclosed distribution policy as set out in the Fund’s prospectus.

Important Notice and Disclaimers

Distributions will be made in respect of the Distribution Classes of the Fund. Distributions are based on the NAV per unit of the relevant Distribution Class as at the last business day of the calendar month or quarter. The making of distributions is at the absolute discretion of UOBAM and that distributions are not guaranteed. The making of any distribution shall not be taken to imply that further distributions will be made. UOBAM reserves the right to vary the frequency and/or amount of distributions. Distributions from a fund may be made out of income and/or capital gains and (if income and/or capital gains are insufficient) out of capital. Investors should also note that the declaration and/or payment of distributions (whether out of income, capital gains, capital or otherwise) may have the effect of lowering the net asset value (NAV) of the relevant fund. Moreover, distributions out of capital may amount to a reduction of part of your original investment and may result in reduced future returns. Please refer to the Fund's prospectus for more information.

This document is for general information only. It does not constitute an offer or solicitation to deal in units (“Units”) in the United SGD Fund (the “Fund”) or investment advice or recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it.

The information contained in this document, including any data, projections and underlying assumptions, are based upon certain assumptions, management forecasts and analysis of information available and reflects prevailing conditions and the views of UOB Asset Management Ltd (“UOBAM”) as of the date of this document, all of which are subject to change at any time without notice. In preparing this document, UOBAM has relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was otherwise reviewed by UOBAM. While the information provided herein is believed to be reliable, UOBAM makes no representation or warranty whether express or implied and accepts no responsibility or liability for its completeness or accuracy. Nothing in this document shall, under any circumstances constitute a continuing representation or give rise to any implication that there has not been or there will not be any change affecting the Fund. No representation or promise as to the performance of the Fund or the return on your investment is made. Past performance of the Fund or UOBAM and any past performance or prediction, projection or forecast of the economic trends or securities market are not necessarily indicative of the future or likely performance of the Fund or UOBAM. The value of 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. Investments in Units involve risks, including the possible loss of the principal amount invested, and are not obligations of, deposits in, or guaranteed or insured by United Overseas Bank Limited (“UOB”), UOBAM, or any of their subsidiary, associate or affiliate (“UOB Group”) or distributors of the Fund. The Fund 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. The UOB Group may have interests in  the Units and may also perform or seek to perform brokering and other investment or securities-related services for the Fund.

An investment in unit trusts is subject to investment risks and foreign exchange risks, including the possible loss of the principal amount invested. Investors should read the Fund’s prospectus, which is available and may be obtained from UOBAM or any of its appointed agents or distributors, before deciding whether to subscribe for or purchase any Units. You may wish to seek advice from a financial adviser before making a commitment to invest in any Units, and in the event that you choose not to do so, you should consider carefully whether the Fund is suitable for you. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.