Dollar bonds gain higher on likely Fed rate peak — AUB

As offshore interest rates have moved up post-pandemic, AUB said it achieved 7.47 percent annualized net return for bond investors last year through its Gold Dollar Fund, surpassing the 6.23 percent return from the GDF in 2022.

Asia United Bank (AUB) expects retail investors in dollar bonds to gain more in annual return as it sees the policy rate of the US Federal Reserve peaking within this year.

As offshore interest rates have moved up post-pandemic, AUB said it achieved 7.47 percent annualized net return for bond investors last year through its Gold Dollar Fund (GDF).

This surpassed the 6.23 percent return from the GDF in 2022, AUB shared.

“The Fund will continue to benefit from the higher accruals on outstanding investments as a result of the higher interest rate environment and will potentially book gains on its marked-to-market with the tapering of interest rates by next year,” AUB senior vice president and head of Trust Andrew Chua said.

Diversified portfolio

The GDF features a diversified portfolio of fixed income securities and aims to exceed a benchmark rate equivalent to the rolling yield of the 5-year US Treasury Notes.

GDF investors have the option to withdraw any time after the minimum holding period, AUB said.

The Federal Reserve has held its rate steady at 5.3 percent as it aims to pull down US inflation from 2.7 percent to 2 percent.

“What we’ve said is that we need to be more confident that inflation is coming down sufficiently and sustainably before cutting rates. It appears that it’s going to take longer for us to reach that point of confidence,” Federal Reserve Chairman Jerome Powell said.