Singapore’s financial sector is renowned for its robustness and diversity, offering investors myriad options for wealth accumulation. Among these are mutual funds, which, when carefully chosen, can provide an effective hedge against inflation. The nature of these funds, which are pooled investments managed by financial professionals, offers security and potentially high returns.
During inflationary periods, the cost of goods and services tends to rise, eroding the purchasing power of your money. In such a climate, smart investing is more crucial than ever. This article will explore some of Singapore’s best mutual fund options that have traditionally performed well during inflation.
Table of Contents
ABF Singapore Bond Index Fund
A popular choice among investors, the ABF Singapore Bond Index Fund has operated for several years and seeks to copy the performance of the SGD Singapore Government Securities Total Return Index, composed of a portfolio of high-grade government and quasi-government debt securities denominated in SGD. This fund offers stability due to its low volatility and potential capital appreciation from higher yields on longer-term bonds.
Lion Global Investors – Asian Bond Fund
The Lion Global Investors – Asian Bond Fund invests primarily in high-grade fixed-income instruments from the Asia Pacific region, focusing on corporate bonds and government securities. It suits investors looking to capitalise on potential capital appreciation through higher yields. The fund also allows investors to diversify their portfolios and reduce risk.
Lion Global Investors – Asia Income Fund
The Lion Global Investors – Asia Income Fund is a diversified fund that invests in debt instruments across the Asian region, including government bonds, corporate bonds and investment-grade securities. The fund emphasises relatively higher yield instruments which help to cushion inflationary threats while generating an impressive income stream.
Nikko AM Singapore STI ETF
The Nikko AM Singapore STI ETF is the perfect choice for investors looking to benefit from a well-diversified portfolio of Singapore’s blue-chip stocks. The fund tracks the performance of another index composed of 30 of the most significant and liquid stocks on the Singapore Exchange so that investors can gain exposure to various industries. This fund has consistently outperformed its peers during inflationary periods, making it an ideal choice for those seeking growth and stability during economic uncertainty.
Why mutual funds are a haven during inflation
Inflationary periods present unique challenges for investors. As the general level of prices rises, the real value of money decreases, eroding the purchasing power of your savings. One of the strategies to combat inflation and prevent loss of wealth is to invest in mutual funds.
Mutual funds can be a haven during inflation for several reasons. Firstly, they offer diversification. Instead of putting all your eggs in one basket, mutual funds spread the risk across various investments, including stocks, bonds, and other assets. This diversified portfolio can help mitigate the risk of any investment performing poorly due to inflation.
Many mutual funds, especially those that invest in bonds or dividend-paying stocks, provide a regular income stream. This income can help offset the rising cost of living during inflationary periods.
Investing in mutual funds in Singapore gives you access to professional management. Professional fund managers have the expertise and experience to navigate market volatility and inflationary pressures. They continuously monitor the market and adjust the portfolio to optimise returns.
Some mutual funds, such as those investing in tangible assets or inflation-protected securities, are designed to perform well during inflation. These funds can provide a real return, that is, a return above the inflation rate, thus preserving the purchasing power of your investment.
Mutual funds are highly liquid assets that can be easily bought or sold on any business day, allowing investors to react to inflationary trends and adjust their investment strategy accordingly.
Utilising a broker when investing in mutual funds in Singapore
Brokers offer several advantages for those investing in mutual funds. They provide expert advice and guidance, helping investors make informed decisions. Brokers in Singapore also provide access to a wide range of funds that may only be available to some investors. They also handle all administrative details of buying, selling, and holding funds.
Brokers like the Saxo Bank Group keep investors updated on market trends and changes, giving them enough information to conduct fundamental analysis to allow themto react quickly. They also provide technical indicators that can help traders analyse price charts and spot patterns and trends. Therefore, investing with a broker can be smart, providing both convenience and a tremendous potential for high returns.
All in all
Investing in mutual funds in Singapore can be an intelligent way to protect your finances during inflation. With careful research and sound financial advice, suitable funds can provide stability and growth potential while shielding you from economic turbulence. As this article has demonstrated, many excellent mutual fund options in Singapore have traditionally performed well during inflationary periods.
With these funds, investors can rest easier knowing their finances are managed effectively. With thoughtful consideration of your investment goals and risk appetite, you can make the most of mutual funds and enjoy a more secure financial future during inflation.