Silverdale Bond Fund

A diversified portfolio of primarily investment grade short duration US dollar bonds, actively managed for enhanced returns, using ring-fenced leverage.

Distribution NAV


Accumulation NAV


YTD Return

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OVERVIEW

Investment Objective

To generate superior return that is more predictable and unhindered by the constraints of a traditional bond benchmark, while enhancing investor return by using leverage.

Key Advantages

  • Quality assets: Investment grade bonds (minimum 75%)
  • Short duration (circa 2 years) with no material impact of interest rate change
  • Low volatility
  • Excellent returns of 8% - 10% p.a.
  • No forex risk (US dollars only)
  • Enhanced returns, prudent use of non-recourse leverage
  • Quarterly dividend distribution, pre-determined cash inflow for investors
  • Well diversified portfolio of over 100 bonds
  • Liquid open-ended fund with weekly subscription/redemption
  • State-of-the-art risk management system, using proprietary cash flow modelling.
  • As interest rates go up, performance is likely to improve due to short reinvestment period.
  • Strong track record of over 7 years.

Asset Class

Emerging Market vs Developed Market

Government debt as percentage of GDP has been sliding down for Emerging Markets (EM) while it has been rising for Developed Markets (DM).

EMs hold almost twice the amount of forex reserves as compared to DM.

EMs corporate have less debt as compared to DM corporate

Yet: EM bonds offer higher yield pickup of ~80 bps over DM bonds for same credit rating!

Investment Grade vs High Yield

Investment Grade (IG) bonds provide superior risk-adjusted returns than High Yield (HY) bonds.

According to Standard & Poor’s, the default rate of 3 years investment grade credit 0.25% as compared to non-investment grade default rate of 10.63%.

(Source: S&P Global)

Leveraged IG gives returns similar to that of HY without adding credit risk.

Short Duration Funds

The increase in interest rates is good news for fixed income investors. Simple: higher the interest rates, higher the bond returns.

True, there would be short term adjustment pain, but that can be taken care of by portfolio laddering with short weighted average duration. In an increasing interest rate environment, the coupons and sale proceeds get re-invested at increasingly higher yields!

The decrease in interest rates is good news for fixed income investors as it implies capital gains for fixed income investors. While lower interest imply lower bond yields it can be mitigated by increasing portfolio duration and/or use leverage.

 

Our Edge

Fungible Cash Flow Modeling

The key risk of investing in fixed income securities is the redemption risk.

Silverdale’s core competency is its proprietary Cash Flow Modelling based on fungible cash (SCFM), which provides us insight into the bond issuer’s Ability to Pay and Willingness to Pay. SCFM is the core of our investment process:

Quant Filters: Proprietary algos to scan and sieve the investment universe

– EM $2 trillion; 150k+ bonds with duration 0.5 to 6 yrs; 5 000 tracked; 500 actively followed

Proprietary cash flow modelling

– Based on fungible cash and legal review of the terms of issuance, structure and waterfall

Team Review

– Consensus based approach with CIO negative veto

Risk-based Allocation

– Portfolio sizing based on implied risk (Duration Times Spread)
– Internal and external investment restrictions with strict stop-loss and pro-active re-sizing of investment positions

Trade Execution

– Best execution with no conflict of interest (no soft dollars)

Learnings

– Constant feedback loop from micro/macro news, trading desk, and strategic positioning

Beyond credit filters such as credit rating of bonds, duration, YTM, etc., we deploy SCFM based on Legal Review of bond covenants, and proprietary Silverdale Risk Management Protocol (SRMP) to select bonds with superior risk-adjusted returns.

Our Duration Management, Diversification & Optimization is built on a robust Risk Management System.

Portfolio Characteristics

Net Assets (AUM) Net Loan Gross Investments1 Investment Grade Bonds
Number of Securities Max Single Security Exposure Number of Countries Max Single Country Exposure

Fund Information

Share ClassesISIN
Accumulation SGXZ66077579
Distribution SGXZ84696368
Institutional (Acc) SGXZ79922928
Institutional (Dist) SGXZ76188929
Accumulation III SGXZ95348165
Distribution III SGXZ10242964
Accumulation V SGXZ65114738
Distribution V SGXZ56141039
Distribution K SGXZ52285178
Fund Name Silverdale Bond Fund
ACRA Regn. No T20VC0123D-SF002
MAS SRS No 21CFOV10013
Umbrella Fund Silverdale Fund VCC
Country of Domicile Singapore
Fund Currency USD
Strategy Inception Date 9 Sep 2010
Management Fee 0.50% p.a.^^
Weekly NAV Launch Date 4 Oct 2013
Sub-fund Launch Date 1 Feb 2021
NAV Frequency Weekly (Friday)*
Subscription / Redemption Weekly (Monday)*
Last Quarterly Dividend US$ 2.10 per share
Next Quarterly Dividend US$ 2.10 per share#
Next Dividend Date 31 December 2021
Trailing 12-month Dividend US$ 8.40 per share
Footnotes

The NAV performance is computed taking: 1 month = 4 weeks, 3 months = 13 weeks, 6 months = 26 weeks, 9 months = 39 weeks, 12 months = 52 weeks, 3 years = 156 weeks and 5 years = 260 weeks; where attributable NAV is not available, the latest available NAV is taken for computation. NAV prior to 8 May 2015 is based on NAV of Sri Silverdale Opportunities Fund (Class-E); and NAV for the period 8 May 2015 to 23 April 2021 is that of Silverdale Fund SPC SP-1 managed by the same fund management team without change in strategy. Payment of Dividend results in equivalent amount of drop in the NAV of the Fund.
(*) Assuming to be a Business Day.
(#) Indicative
(^) Based on AUM; Credit Rating is based on best of the three ratings (S&P/Moodys/Fitch); Rating exposure of less than 3% has been clubbed as "Others"; unless otherwise specified. Sector exposure of less than 3% has been clubbed as 'Others'; unless otherwise specified. Country exposure of less than 3% has been clubbed as 'Others'; unless otherwise specified.
(^^) Based on net AUM.
(1) Gross Investments is aggregation of AUM and Net Loans and cash on hand.

Historical Communiques

To view the previous communiques, click here.

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Many of the products referred to in this Webpage are restricted funds ("Restricted Funds"), and are not authorised or recognised by the Monetary Authority of Singapore*. These Restricted Funds are not allowed to be offered to the retail public and may only be promoted exclusively to persons who are sufficiently experienced and sophisticated to understand the risks involved in investing in such schemes, and who satisfy certain other criteria. Such persons include persons to whom offer of the Restricted Funds is allowed to be made pursuant to exemption from prospectus requirements under the Securities and Futures Act, Chapter 289 of Singapore ("Act"), which broadly comprise regulated financial institutions, large pension funds, large corporates, high net worth individuals, sophisticated investors and investment professionals. Any written material issued in connection with the offer of the Restricted Funds is not a prospectus as defined in the Act and accordingly, statutory liability under the Act in relation to the content of the prospectus would not apply. There are significant risks associated with investment in the Restricted Funds listed on this Webpage. Investment in the Restricted Funds on this website is intended for sophisticated investors who can accept the risks associated with such an investment including a substantial or complete loss of their investment.

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- whose income in the preceding 12 months is not less than $300,000 (or its equivalent in a foreign currency) or such other amount as the Authority may prescribe in place of the first amount

2. a corporation with net assets exceeding S$10 million in value (or its equivalent in a foreign currency) or such other amount as the Monetary Authority of Singapore may prescribe, in place of the first amount, as determined by:

- the most recent audited balance-sheet of the corporation; or
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3. the trustee of such trust as the Monetary Authority of Singapore may prescribe when acting in that capacity; or

4. such other person as the Monetary Authority of Singapore may prescribe

Information Purposes Only

This site and the information included herein is for general information purposes only and does not constitute an offer or solicitation to subscribe to the funds or products referred to herein. This site does not constitute investment advice or counsel or solicitation for investment in any fund, products or services. The content of this Webpage should not be regarded as investment advice or financial product advice and should not be relied upon as such. In making any investment decision, prospective investors must rely on their own examination of the merits and risks involved. The information contained in this document is subject to change without notice. It is not intended for public use or distribution. Any research or analysis used to derive, or in relation to, the information has been procured from sources deemed reliable by Silverdale for its own use, without taking into account the investment objectives, financial situation or particular needs of any specific investor. To the best of its knowledge and belief, Silverdale considers the information contained herein as accurate as at the date of publication.

The funds mentioned on this Webpage are suitable for professional or institutional investors only. All investment involves risk, and past performance is not an indicator of future results. The value of funds and portfolios we manage may fall as well as rise, and the investor may not get back the amount originally invested. The loss on realization or cancellation may be very high, including total loss of investment, as the value of such an investment may fall suddenly and substantially. Forward-looking statements or projections mentioned herein are not necessarily indicative of future or likely performance.

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