Bonds only, should I use it in Endowus all bonds portfolio OR utilise it as a combo of ABF Bond ETF and Nikko SGD corporate bond ETF?

I'm now building the Bonds only aspect of my portfolio and am consdiering Endowus bonds which is SGD hedged. I can spend $10k one time and $400 a month. Should I use it in Endowus all bonds portfolio OR utilise it as a combo of ABF Bond ETF and Nikko SGD corporate bond ETF?

Or maybe even all 3 to diversify the bond aspect?

Endowus

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Shengshi Chiam, CFA

22 Feb 2020

Personal Finance Lead at Endowus

Hi!

It is possible thatall 3 options can work, some people would argue that bond exposures need to be managed. You might have heard that German/Japanese bonds are negatively yielding (or negative Yield-to-Maturity (YTM)) from the news, and that negative yeidl is reflected into the bond ETF pricing and projected YTM.

You can check out the negative german government bond etf here, look for the negative YTM:

https://www.ishares.com/uk/individual/en/litera...

If someone were to sell a bond ETF or fund with a negative YTM, or a very low YTM, rather than just looking at it from a "exposure" angle, I would think it is fair decision to make. The reason why we are not just holding cash instead of bonds to diversify is because of the higher returns bond give. The ABF Bond ETF and NIkko bond ETF has a YTM of 1.90% and 2.57%, which is decent for the credit rating, but do keep an eye on its YTM, especially if its ETF share price increases.

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