Country Garden Fixed Income Woes – Are You Exposed Via Endowus Or Syfe? – Beragampengetahuan

If you are an investor with fixed income portfolios, you may have heard about the recent debt woes of Country Garden Holdings Co. Ltd. (CG). After missing two dollar coupon payments and seeking to extend an onshore private bond repayment, the woes of Country Garden is set to impact the fixed income portfolios.

Country Garden vs. Forest City (Johor)

Meanwhile, news of Country Garden’s debt crisis in China has sparked fears among residents living in the developer’s subsidiary project –  Forest City – in Johor Bahru.

Notorious claims of Forest City being a ghost town could be a little extreme judging from the YouTube below, but there is definitely some deviation from what was promised to the buyers of the condominiums.

Remember when offshore U.S. dollar bonds issued by China Huarong plunged in value after the company missed an end-March deadline to release its 2020 financial results? Or the Evergrande bankruptcy contagion?

As a result, Endowus – Cash Smart (Ultra) dipped in value due to their exposure to the high risk assets.

The latest episode of these recurring contagions courtesy of China is set to impact fixed-income portfolios yet again.

A quick check revealed that both LionGlobal Short Duration Fund and PIMCO GIS Asia High Yield Bond Fund have a small exposure to Country Garden bonds.

LionGlobal Short Duration Fund (Endowus Cash Smart Ultra)

From what I can see, LionGlobal Short Duration Fund has limited exposure to Country Garden bonds.

When you park your money into Endowus – Cash Smart (Ultra), you are taking on more risk for more returns.

As a result, you might find yourself inadvertently exposed to higher-risk debt instruments if you don’t dig deeper into what the underlying funds are doing.

As of June 2022, it amounted to 1% of the total net assets of LionGlobal Short Duration Fund.

PIMCO GIS Asia High Yield Bond Fund (Syfe Income+)

One other fund used by robo advisors in Singapore is the PIMCO GIS Asia High Yield Bond Fund.

According to Morningstar, Country Garden is the second largest position in the sector for PIMCO GIS Asia High Yield Bond Fund.

The portfolio has an exposure of 1.23% to Country Garden from a total of eight issues.

The US$ 2.8 billion fund owns both bonds that are pending coupon payments due September 6, and the holdings represent a weightage of 0.16% at the end of July.

If you are an investor of the newly launched Syfe Income+ portfolio and have selected the higher-risk Enhance option, then you will be holding 15% of your portfolio in the PIMCO GIS Asia High Yield Bond Fund.

Investor Response?

As an investor, the news of Country Garden’s debt woes impacting fixed-income portfolios worldwide may be concerning. However, it is important to keep a level head and evaluate your investment strategy before making any rash decisions.

• Firstly, it is important to assess your risk tolerance and the role fixed income plays in your overall portfolio.
• Secondly, consider the creditworthiness of the issuers in your fixed-income portfolio.
• Thirdly, keep an eye on interest rates and inflation.

Personally, I would only deploy emergency funds and idle cash into instruments that prioritize capital preservation such as high-interest bank accounts, Singapore government securities or cash funds.

Insurance savings plans and fixed deposits are also safe options that I would consider using.

Fixed income is a totally different ball game and I would suggest taking extreme care before using them extensively.

Hello! I Am Kevin

I started beragampengetahuan when my net worth was languishing at negative $25,755. Now, passive income pays for my daily expenses and overseas vacations. My blueprint can help to give you a head start in your own FIRE – Financial Independence, Retire Early – journey.

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