AUB: High US rates continue to boost USD assets

May 07, 2024

News & Lifestyle section of Dad On The Move Family Travel Blog.

Dollar-denominated assets will continue to offer favorable yields as the U.S. Federal Reserve keep monetary policy tight and U.S. interest rates expected to peak this year.

AUB: High US rates continue to boost USD assets

AUB: High US rates continue to boost USD assets

Asia United Bank (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 (GDF) at the CFA Society Philippines’ 2023 Best Managed Funds of the Year Awards held on August 10. A total of 86 funds from 16 investment houses and trust institutions joined the competition.

AUB was able to sustain its eighth-year winning streak due to the GDF’s consistently stellar performance. The Fund performed relatively well compared to the benchmark 5-year U.S. Treasury rates. As of December 2023, the Fund had an annualized return of 7.47% net, outperforming the benchmark's performance of 6.23% annualized return for the same period.

The GDF enables retail investors access to the U.S. 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 It offers flexibility as returns can be withdrawn any time after the minimum holding period and investors benefit from a team of professional fund managers that will ensure their investments are kept safe as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 5-year U.S. Treasury Notes, net of fees.

“With U.S. 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,” said Mr. Chua.

Local investors in search of higher-yielding assets will be well positioned if they load up on U.S. dollar assets such as AUB’s GDF. “Given the U.S. 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,” Mr. Chua added.
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