In a surprising turn of events, Singapore’s Treasury bill (T-bill) yields have been steadily declining, hitting a notable low during the most recent 6-month T-bill auction on March 13, 2025. The cut-off yield fell to 2.56%, a figure not seen since June 2022, which has prompted many investors to reassess their strategies in the current economic climate.

As T-bills and fixed deposit rates wane, a conversation has ignited among investors, especially within the Beansprout Telegram community, regarding alternatives to park cash savings for potentially better returns. One option that stands out amidst this chatter is the United SGD Fund, managed by UOB Asset Management.

United SGD Fund: What Makes It Worth Considering?

This bond fund is designed to offer a diversified portfolio of high-quality bonds, helping investors seek competitive yields without taking on excessive risk. Boasting a sizeable fund of over S$2.2 billion and a proven track record, the United SGD Fund aims to deliver higher yields than typical Singapore dollar deposits.

Key Features of the United SGD Fund

1. **Lock in Higher Yields**: By strategically investing across various interest rate environments, the fund has shown impressive returns. As of December 31, 2024, the fund reported a 1-year return of 4.07% for the Class A (Acc) SGD share class. Furthermore, its yield-to-maturity stands at 4.21% per annum, setting it apart from other cash alternatives as interest rates are expected to either stabilize or decline further.

2. **Strong Capital Preservation Record**: A crucial aspect of investment is risk management. The United SGD Fund has successfully delivered positive returns in 24 of the last 26 years, showcasing its strong capital preservation strategy. With a focus on high-quality government and corporate bonds, it has maintained an average credit rating of BBB+ and has never experienced default within its holdings.

3. **CPF and SRS Approved**: This fund doesn’t just accommodate cash investments; it can also be purchased with your Central Provident Fund (CPF) Ordinary Account and Supplementary Retirement Scheme (SRS) funds. This accessibility allows for greater flexibility in managing retirement and savings investments.

Factors to Consider Before Investing

While the United SGD Fund shows promise, there are a couple of crucial factors to bear in mind:

- **Market Risks**: Although the fund has a solid track record, it is still a market-based investment and not capital guaranteed. Unexpected fluctuations in interest rates can negatively impact the bond value, leading to potential short-term losses for investors who may need to divest quickly.

- **Management Fees**: With an annual management fee of 0.63% (excluding Class B, which charges 0.33%), potential investors should weigh this cost against their financial goals and consider how it impacts overall returns.

Conclusion: Is the United SGD Fund Right for You?

As interest rates continue to exhibit uncertainty going into 2025, the United SGD Fund presents an opportunity for investors to secure higher yields while maintaining a balanced risk profile. Its appeal lies in its capital preservation and the potential for locking in current interest rates before potential further declines.

In a market where alternatives like T-bills and Singapore Savings Bonds are offering lower yields, this fund offers a compelling reason to reassess your cash management strategies.

For those considering a move, the United SGD Fund can be accessed through various platforms, including Endowus, Webull, and UOBAM Invest, among others.

Take charge of your investment strategy now and potentially grow your wealth in uncertain times!