(Fundsupermart.com) The SGAM Total Return Bond Fund is a feeder unit trust that focuses on US mortgage-backed securities (mortgages that have been pooled together and repackaged as debt instruments). It invests in those that are either issued and guaranteed by the US government and its agencies, or rated at least AA by Standard & Poor's.
PERFORMANCE OF MIRROR FUND
The fund mirrors the Galileo Total Return Bond Fund that's distributed in the US. Against its peers, the Galileo Total Return Bond Fund has outperformed the average return of the funds in the US mortgage-backed securities sector over longer periods. For example, it posted a cumulative return of 35.93% against a sector average of 25.3% in the last 3 years. Figures are as at 15 Nov 2002. The table below has more details.
GALILEO TOTAL RETURN BOND FUND'S PERFORMANCE* (CUMULATIVE RETURNS)
VERSUS PEER FUNDS AS AT 15 NOV 2002
| Performance | 1-Month | 6-Month | Year-To-Date | 1-Year | 3-Year |
| Fund (%) | 0.70 | 6.05 | 9.60 | 10.56 | 35.93 |
| Fund's Ranking | 112th
out of 179 | 7th
out of 178 | 4th
out of 177 | 2nd
out of 177 | 2nd
out of 161 |
| Best Performing Fund (%) | 2.43 | 7.78 | 13.17 | 14.85 | 49.02 |
| Worst Performing Fund (%) | -0.15 | 0.99 | 2.16 | 2.74 | 15.51 |
| Sector Average (%) | 0.79 | 4.17 | 6.53 | 6.90 | 25.30 |
Source: Standard & Poor's Investment Services
Returns based on net asset value to net asset value prices, income re-invested, in US dollars. INVESTMENT TEAM
The investment team behind the Galileo Total Return Bond Fund and the SGAM Total Return Bond Fund is Trust Company of the West (TCW), the US investment arm of SGAM. The firm has been managing US mortgage-backed securities for more than 13 years and this asset class makes up nearly a third of its total assets under management. It manages some US$30 billion worth of US mortgage-backed securities as at end-June 2002.
RISKS
The fund house notes that investors should be aware of 3 types of risks when they invest in mortgage-backed securities. These are: prepayment risk, market risk and credit risk. Prepayment risk refers to the possibility that the homeowner pays off his mortgages earlier or later than expected. This in turn, can affect the yield of the mortgage-backed security because the fund manager may be forced to reinvest the returned principal at a lower interest rate. Market risk refers to the likelihood that the price of the mortgage-backed security may fluctuate over time. This is influenced by factors such as changes in interest rates. Credit risk refers to the probability that the issuer may default on the interest or principal payments.
More details on the SGAM Total Return Bond Fund can be found below. To read the frequently-asked questions about the fund, you can click here. To join a discussion on the fund, you can click here.
FUND FACTS Launch Period - 25 Nov 2002 to 17 Jan 2003
Launch Price - S$1 per unit
Minimum Initial Investment - S$1,000
Minimum Subsequent Investment - S$500
Regular Savings Plan - a minimum of S$100 every month
Initial Sales Charge - up to 3%
Annual Management Fee Of Feeder Fund - currently 0.4%
Annual Management Fee Of Motherfund - 0.6%
Annual Trustee Fee - currently 0.075%
Realisation Charge - nil
Discount - no
Included in the CPF Investment Scheme - yes (Ordinary & Special Accounts)
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