Asia United Bank, one of the country’s fastest-growing banks, expressed optimism its Gold Dollar Fund would continue to benefit from the high-interest rate environment in the United States.
AUB senior vice president and head of trust Andrew Chua made the statement after accepting the “Best Managed Fund” in the Dollar Medium-Term Bond Fund category for the AUB Gold Dollar Fund at the CFA Society Philippines’ 2023 Best Managed Funds of the Year Awards held recently.
A total of 86 funds from 16 investment houses and trust institutions joined the competition.
The Gold Dollar Fund enables retail investors access to the US dollar bond market normally reserved for foreigners and high net worth investors. It offers flexibility as returns can be withdrawn any time after the minimum holding period and investors benefit from a team of professional fund managers that will ensure their investments are kept safe as risk and returns are balanced appropriately.
The fund invests in a diversified portfolio of fixed-income securities and targets to outperform a benchmark rate equivalent to the rolling yield of the five-year US Treasury Notes, net of fees.
“With US interest rates expected to peak this year, 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,” Chua said.
He said local investors in search of higher-yielding assets would be well positioned if they load up on US dollar assets such as AUB’s GDF.
“Given the US Fed closing in on the end of the rate hiking cycle, the fund will be gradually increasing its duration while maintaining safe and diversified securities as well as hold sufficient cash to manage liquidity risk,” Chua said.
AUB sustained its seventh-year winning streak due to the GDF’s consistently stellar performance. The fund performed relatively well compared to the benchmark five-year US Treasury rates.
It said that as of end-June 2023, the fund had a year-to-date absolute net return of 4.90 percent, equivalent to an annualized return of 9.75 percent net, outperforming the benchmark’s performance of 2.95 percent annualized return for the same period.