To The Moon

Speaker: Ong Xun Xiang, Head of ETFs at Lion Global Investors, explains duration in plain language, why SGD short duration bonds are in focus as yields rise, and what “active” means in Singapore’s first active bond ETF.

[About the Speaker] Ong Xun Xiang is Head of ETFs at Lion Global Investors, where he is responsible for building and commercialising the firm’s ETF business, including speaking at ETF events to share investment and industry knowledge with the public. He has worked across asset management, private banking and fintech. Before joining Lion Global Investors, he was a Capital Markets Assistant Vice-President at ADDX (formerly iSTOX), a MAS-licensed digital securities platform, and earlier an Assistant Vice-President in BNP Paribas Wealth Management’s Key Client Group, where he helped originate and manage private market investment opportunities for ultra-high-net-worth individuals. He holds a Bachelor of Accountancy from Nanyang Technological University and is a Chartered Financial Analyst (CFA), Chartered Alternative Investment Analyst (CAIA), Chartered Accountant (Singapore) and ASEAN CPA charterholder.

[The Hook] Bonds are often described as the “steady” part of a portfolio, but their prices still move when interest rates move. Xun Xiang used the current rate backdrop to show why one bond feature, duration, matters so much, and why an ETF that can adjust its holdings may help. This is Part 4 of 4 from the seminar “Diversifying for Changing Markets: Financials, Bonds and Singapore’s Green Leaders”, held at the Tiger Brokers office on 27 October 2026.

[The Backdrop: Higher-for-Longer Rates]

• US: the slides describe US bond markets as volatile, with the Fed shifting from cautious to hawkish and markets adjusting to a higher-for-longer rate environment as inflation, energy prices and fiscal risks keep Treasury yields elevated.

• Singapore: SGD bonds were comparatively resilient, supported by safe-haven demand, strong domestic fundamentals and stable demand for high-quality government and corporate bonds.

• T-bills: Singapore T-bill yields have been gradually rising since April 2026. The 12-week average buying yield was 1.69% and the 6-month T-bill 1.68% in the 18 September data shown.

[Duration, Plainly]

Duration is a measure of interest rate sensitivity. Bonds with a long duration are more sensitive to interest rate changes, so their prices swing more: they can gain more when rates fall and lose more when rates rise. Short duration bonds have lower sensitivity and therefore fewer price fluctuations. The slides add a currency point: SGD has been a stable currency, which reduces currency fluctuations for a Singapore investor.

As of 31 August 2026, the LionGlobal Short Duration Bond Fund (Active ETF SGD Class) had a duration of 2.48 years, shorter than the other SGX-listed bond ETFs with SGD exposure in the comparison. The portfolio’s weighted average duration was 2.30 years as of 30 September 2026, and the portfolio managers’ stated approach is to keep duration short, around 2.5 years.

[What Is Inside the Fund]

• Portfolio snapshot (30 September 2026): 283 holdings, a weighted average yield to maturity of 3.60%, weighted average duration of 2.30 years and a weighted average credit rating of BBB+.

• Where it invests: Singapore is the largest country allocation at 38.2% of NAV, and the largest sectors are financials (47.7%) and real estate (31.7%).

Learning point: how risks are managed. The slides group the fund’s risk controls into three buckets:

• Currency risk: non-SGD exposure is hedged back to SGD (SGD 99.7%, others 0.3% as of 30 September 2026).

• Interest rate risk: managed by keeping portfolio duration short.

• Default risk: the fund invests primarily in investment-grade bonds. Maximum high-yield exposure is 5% (with a 3% single-issuer limit for high yield and 5% for investment grade). Xun Xiang added that current high-yield exposure is much lower than the cap, at around 2%, and that the manager does not intend to build large high-yield positions over the long term.

[Why Active? And What Is Different About the ETF Version]

The slides note that flows into active US ETFs in 2025 were more than 18 times those in 2019, and that active ETFs took in about 38% of all US ETF flows in the first half of 2026. For this fund, the advantages shown are:

• Liquidity: intraday trading and real-time pricing on the exchange.

• Cost-efficiency: lower cost than mutual funds’ retail share classes.

• Flexibility: the fund does not track a benchmark index. Xun Xiang’s example: a passive index ETF only changes its holdings when the index rebalances, whereas an active manager can respond around events such as Fed meetings.

The slides describe this as Singapore’s first active bond ETF and the first listed share class of an existing fund. The same strategy is available in two forms:

• Unlisted unit trust (Class A SGD Dist): minimum initial investment S$1,000, management fee 0.50% p.a., preliminary charge currently 3% (maximum 5%), priced once daily at NAV, and included under CPF-OA and CPF-SA.

• ETF (Active ETF SGD Class): trades on SGX through any broker that offers SGX-listed ETFs, from as low as S$1 (one-unit board lot), management fee 0.25% p.a. (up to a maximum of 1% p.a. of NAV), no preliminary charge, and real-time intraday pricing. It is not included under CPF-OA and CPF-SA.

Key details of the ETF: listed on 29 September 2025 at an issue price of S$1.00; SGX codes SBO (SGD) and SBV (USD); reference benchmark 3-month SORA plus 0.35%; and an intention to distribute quarterly (distributions are not guaranteed). Learning point: investors normally buy and sell ETF units on the exchange (the secondary market). Creation and redemption happens through Participating Dealers in blocks of 50,000 units.

[Track Record, With the Fine Print]

The performance shown is for the unlisted Class A SGD (Dist) fund, incepted on 22 March 1991, which follows the same strategy as the ETF; the ETF’s own returns will differ. The fund moved to a short duration strategy in April 2012.

• Since inception (annualised): 3.6% on a NAV basis (3.4% if a one-off maximum 5% initial sales charge is assumed).

• Versus benchmark (NAV basis): 2026 YTD 0.4% vs 1.1%; 1 year 0.6% vs 1.5%; 3 years p.a. 3.8% vs 2.8%; 5 years p.a. 1.9% vs 2.7%; 10 years p.a. 2.3% vs 2.0%. In other words, the fund trailed the benchmark over the YTD, one-year and five-year periods, and was ahead over three years, ten years and since inception (3.6% vs 1.8% p.a.).

• Calendar years: the fund delivered positive returns in 14 of its 15 years under the short duration strategy (before any sales charge). The one negative year shown was 2022, at -4.0%, when yields surged. 2025 was 4.7% and 2026 YTD is 0.4%.

Reading yield-to-maturity (YTM): YTM is the expected annual return from a bond if held to maturity. As of 31 August 2026, the slide showed the unlisted fund’s YTM at 3.33% (on an unhedged basis), versus 2.87% for the Amova SGD Investment Grade Corporate Bond Index ETF and between about 1.4% and 1.7% for fixed deposits, MAS bills, T-bills and the 2-year SGS bond. The slide adds an important caveat: the fund is a different product from a fixed deposit, MAS bill or T-bill, with higher liquidity and flexibility but also more volatile returns.

[Key Takeaways]

• Duration is interest rate sensitivity. Shorter duration generally means smaller price swings when rates move.

• Active means the manager can adjust. An index fund follows a rebalancing schedule; an active fund can change positions between them.

• The same strategy can come in different wrappers. Compare minimums, fees, trading method and CPF eligibility, not just the strategy.

• Read the fine print on yield and returns. YTM is not a guaranteed return, sales charges reduce returns, and a bond fund is not a fixed deposit.

[Call to Action 🎯]

1. Find the duration of one bond ETF you follow and compare it with 2.48 years. What does the difference tell you about its sensitivity to rate changes?

2. List the differences between the unlisted fund and the ETF (minimum, fee, trading method, CPF eligibility) and decide which fits a given goal.

3. Drop a comment: how do you think about balancing interest rate risk and yield in the bond part of your portfolio?

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