What are the differences between "ABF SG BOND ETF (A35)" and "Nikko AM SGD Investment Grade Corporate Bond Fund (MBH)"? - Seedly
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Anonymous

Asked on 10 Oct 2019

What are the differences between "ABF SG BOND ETF (A35)" and "Nikko AM SGD Investment Grade Corporate Bond Fund (MBH)"?

I know they are both bond ETFs but what's the exact difference? Does A35 only include bonds issued by the Singapore government, while MBH includes both bonds by corporation and Singapore government? Would greatly appreciate such an explanation on this. Thank you!!!

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You are right.

The ABF SG BOND ETF tracks government/sovereign corporate bonds largely from the government of Singapore, as well as stat boards such as LTA, HDB. Hence, the average credit rating is AAA

The Nikko AM SGD Investment Grade Corporate Bond track corporate bonds from a mix of government/sovereign but this time with a mixture of private sector companies thrown in the mix, including our local banks, etc. Hence the average credit rating is A. It's perceived to be not as strong, credit-wise, compared to ABF SG Bond ETF, but it is still investment grade.

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Elijah Lee
Elijah Lee

10 Oct 2019

If you were to purchase this, be aware of transaction costs as it is an ETF. MBH has a higher annualized yield, but it has not been around the market very long. A35 has been around longer, but the AAA rating of the underlying will mean you cannot expect very high returns. For MBH, the A credit rating will probably allow a higher upside. Both are investment grade so that should provide you some amount of ease when it comes to risk. MBH is likely to return better returns over the long run compared to A35
Question Poster

10 Oct 2019

Okay thank you so much for the informative advice!