Best Bond Market Index Funds To Buy in 2022 On The Singapore Stock Exchange

Yen Joon
Last updated Apr 06, 2022

Bond index funds can help you to diversify your portfolio and mitigate risk. If you’re looking to invest in bond index funds on the Singapore Stock Exchange (SGX), read on.  

Bonds are popular investments because they offer stable yields and are generally low risk. Although they do not provide as much returns as other investment vehicles such as stocks, they generally offer predictable returns and thus can be a good source of fixed income.  

That said, unless you invest in relatively stable government bonds, investing in corporate bonds comes with higher interest rate risks, market risks, and credit risks.

One way to navigate this is to invest in bond exchange traded funds (ETFs), which are indices that own a portfolio of bonds. Compared to regular bonds, bond ETFs have lower cost and commission fees, and they may be more attractive to some investors.

If you’re looking to invest in the best bond index funds to buy on the SGX, here’s the best bond ETFs to buy right now. 


EDM Lead Gen

Start managing and saving money like a pro with SingSaver’s weekly financial roundups! We dole out easy-to-follow money-saving tips, the latest financial trends and the hottest promotions every week, right into your inbox. This is one mailer you don’t want to miss.

Sign up today to receive our exclusive free investing guide for beginners!


Bond ETFs vs regular bonds: what’s the difference?

A bond is an investment security where the investor borrows money to a government or corporation to fund its business or to generate additional revenue. 

Typically, a bond has a maturity period where you’re not allowed to withdraw your funds. In return, you will receive interest payments — either every six months or yearly — and also your full principal amount when the bond matures. Most bonds are considered fixed income assets because they offer predicted returns throughout the life of the bond. 

Meanwhile, a bond ETF is a portfolio of bonds, making it more diversified and less volatile in general. 

Like stocks and ETFs, bond ETFs are traded on the stock market. This means that you can actively trade bond ETFs whenever you like, making them more liquid as you don’t have to wait until the maturity period to get your money back. Most bond ETFs also pay out monthly dividends, giving you a more regular income stream. 

Conversely, bond ETFs generally have higher expense ratios, which is a fee that you pay for a fund manager to manage the ETF. With interest rates so low, the expense ratio will further eat into the small yield that you get from a bond ETF, making your returns even more minimal. 

Beware of bonds that offer high interest rates

When looking for bonds, it’s important not to pay too much attention to the bond’s yield as it’s likely an indication of a junk bond. A junk bond is a bond issued by a bond issuer that typically offers a higher interest rate than normal, at the cost of a higher risk. 

Companies that issue a junk bond do not have investment-grade credit rating, and thus it’s likely that they may default on their loan or go bankrupt. 

With that, let’s take a look at three of the best-performing bond index funds on the SGX in 2022. 

ABF Singapore Bond Index Fund (A35)

BenchmarkiBoxx ABF Singapore Bond Index Total Return Series
Management fee0.15% p.a.
Total Expense Ratio0.24% p.a. (as of financial period ended 30 June 2021)
Average yield to maturity2.12%
Average duration8.35 years
Average credit ratingAAA

The ABF Singapore Bond Index is one of the first Exchange Traded Funds (ETFs) in Singapore It tracks a basket of bonds issued by the Singapore government and government-linked bonds, and therefore has a relatively low-risk portfolio. 

Here’s the fund’s performance against the benchmark over the last five years:

Return3 months6 months1 year3 years5 yearsSince inception
Fund-1.41-3.12-2.912.291.942.44
Benchmark-1.33-3.01-2.642.632.282.73

What’s more, the fund has the highest credit rating of ‘AAA’, and is considered as one of the world’s highest-yielding government bonds. It’s also one of the few investments that you can invest with your CPF via the CPF Investment Scheme (CPFIS), providing you the opportunity to earn higher than your CPF. 

The Nikko AM SGD Investment Grade Corporate Bond ETF (MBH)

BenchmarkiBoxx SGD Non-Sovereigns Large Cap Investment Grade Index
Management fee0.15% p.a.
Total Expense Ratio0.25% p.a. (audited as of financial period ended 30 June 2021)
Average yield to maturity 2.81%
Average duration 6.72 years
Average credit ratingA

The Nikko AM SGD Investment Grade Corporate Bond ETF is one of the most affordable investment-grade corporate bonds in Singapore. It’s benchmarked against the iBoxx SGD Non-Sovereigns Large Cap Investment Grade Index, which consists of corporate bonds from the likes of HDB, Temasek Financial, and UOB. 

According to Nikko Asset Management, Singapore corporate bonds have provided better returns compared to Singapore government bonds and more stable returns versus Singapore equities since 2012. 

Return3 months6 months1 year3 years5 yearsSince inception
Fund-1.35-2.18-1.092.272.62
Benchmark-1.28-2.19-0.933.123.02

The fund also has an average maturity period of 4.7 years, which is shorter than most bonds. This is because almost 90% of its corporate bonds will mature in 10 years. The shorter average duration also means that the fund is less sensitive to changes in interest rates compared to bonds with a higher maturity. There’s also a very low correlation to Singapore equities, which is good if you want to diversify your risk and portfolio. 

ICBC CSOP FTSE Chinese Government Bond Index ETF (CYC)

BenchmarkFTSE Chinese Government Bond Index (CGBI)
Management fee0.25% p.a.
Total Expense Ratio0.25% p.a. 
Indicative yield 2.98%
Indicative duration5.7 years
Average credit ratingA1/A+

ICBC CSOP FTSE Chinese Government Bond Index ETF is the largest Chinese government bond ETF with assets under management (AUM) of US$676 million. The fund replicates the FTSE Chinese Government Bond Index (CGBI), which consists of fixed-rate government bonds in mainland China.

Although it has only been on the SGX since 2020, the fund is managed by CSOP Asset Management Limited (CSOP AML), an offshore asset management company set up by a regulated asset management company in China. The company manages public and private funds and also provides investment advisory services to investors. It currently has US$ 8.2 billion in AUMs. 

Here’s the fund’s performance as of 28 February 2022:

Return3 months6 monthsYear to date
Fund1.131.830.59
Benchmark1.191.950.63

As you can see the fund has performed positively since being listed on the SGX. Although it has a slightly higher management fee, the expense ratio is still quite low, which helps to reduce your cost. 

What if I can’t stomach the risk of volatility?

While bond ETFs help to diversify your risk, it’s not completely risk-free. If you don’t want to have a high risk appetite and volatility, consider Singapore bonds. Two of the safest Singapore government bonds to invest in are the Singapore Savings Bonds (SSBs) and Singapore Government Securities (SGSs) Bonds.  

SSBs vs SGSs

Singapore Savings Bonds (SSBs)Singapore Government Securities (SGS) Bonds
Minimum investmentS$500S$1,000
Maximum investmentS$200,000No limit
Maturity period10 years2, 5, 10, 15, 20, or 30 years
Coupon rateFixedAccording to the market
Source of fundsCash, Supplementary Retirement Scheme (SRS)Cash, Supplementary Retirement Scheme (SRS), CPF

Singapore Savings Bonds (SSB)

SSBs are a type of Singapore Government Securities (SGC) and are managed and issued by the Singapore Government. As such, they have excellent credit ratings, holding the highest rating of ‘AAA’. This means that SSBs are relatively safe investments and are unlikely to default on their loans. 

SSBs are also quite flexible as the minimum amount to invest is just S$500. What’s more, you can withdraw your funds before the 10-year maturity period. 

That said, the returns are pretty low; with the average returns over 10 years is 1.91%, which is only slightly higher than some savings accounts and insurance savings plans.

Singapore Government Securities (SGS) Bonds

Aside from that, you can also invest in SGS Bonds. Like SSBs, SGS Bonds are issued and managed by the Singapore government, and in return for borrowing the money to the government, you’ll receive a fixed interest sum every six months until the bond matures.

The main difference between SSBs and SGS Bonds is the coupon rate (interest rate); for SSBs it’s a fixed coupon rate, whereas the coupon rate for SGS Bonds depends on the market. 

Another difference is that SSBs have a maturity period of up to 10 years (but you can withdraw anytime you want), whereas SGS Bonds have a maturities ranging 2, 5, 10, 15, 20, or 30 years. You also need a minimum of S$1,000 to invest in SGS Bonds, and you can invest any amount you like. 

Last but not least, you can invest in SGS Bonds with your CPF money, but you can’t do it with SGS Bonds. 

Ready to start investing in bond index funds? 

Compare and find the best brokerage accounts in Singapore. 

Read these next:
Guide To Singapore Savings Bond (SSB): Is This The Right Investment For You?
What Are SINGA Bonds And Should You Invest In Them?
Best ETFs In Singapore For Tracking Stocks, Bonds And REITs
Priority Banking In Singapore: Does It Help To Grow Your Wealth?
Best REITs In Singapore 2022 For Your Investment Portfolio


By Kang Yen Joon
In my past life, I was always broke (I still am) because of a lack of financial literacy. These days, I publish a few posts every week* on personal finance to help you manage your money better.

*I mean, I’ll try


Yen Joon April 6, 2022 86978