Bonds Robo Advisors Singapore Market

Syfe Income+ Review: New High-Yield Fixed Income Portfolios Powered by PIMCO

Calvin Lo

Syfe has recently launched Income+ portfolios which offer investors yet another high-yield fixed income option in Singapore. These Income+ portfolios (Preserve and Enhance) are offered in partnership with PIMCO which provides the actively-managed fixed income funds. In this post, I’ll share my thoughts on Income+ and compare it against other options in the market.

Read: A First-Of-Its-Kind Partnership between Syfe and PIMCO To Offer Fixed Income Portfolios

In conjunction with the launch, Syfe has also published several articles to explain the Income+ product and to compare it against other fixed income instruments like T-bills, SSBs, and FDs.

Read: Income+ Investment Strategy & Portfolio Construction

Read: Differences Between Syfe Income+ vs T-Bills, SSBs and Fixed Deposits

Syfe touts PIMCO’s funds as having the advantages:

  • Active management: Potentially produce attractive income while maintaining a relatively low risk profile, automatic rebalancing to stay aligned to target asset allocation.
  • Tax efficient: Funds are Irish-domiciled thus pays less dividend withholding taxes compared to U.S.-domiciles funds.
  • SGD-hedged: To mitigate currency risks for a stable monthly dividend profile.

Product Highlights

  • Subject to minimum investment amount of S$5,000 (refer to FAQs)
  • Monthly payouts directly to your bank account (minimum funding threshold of S$5,000, below which will default to automatic dividend reinvestment)
  • No lock-in or withdrawal penalties

Note: Since these are bond funds, the Yield to Maturity (YTM) are just indicative and is NOT meaningful for investors. Investors should be looking at the estimated monthly payouts.

Underlying Funds

Income+ Preserve invests in investment-grade quality bonds such as U.S. Trasuries and investment-grade corporate bonds.

Income+ Enhance (slightly riskier) invests in higher-yielding, lower-rated bonds such as high-yield corporate bonds and emerging market bonds.

Fees

Income+ net fund level fees are not cheap at 0.68% and 0.65% for Income+ Preserve and Income+ Enhance respectively.

Note that this is on top of Syfe’s management fees, which adds another 0.65% maximum depending on your tier (which depends on your total invested amount with Syfe Wealth).

So, in total you might be paying up to 1.32% p.a. in fees to PIMCO + Syfe for Income+ Preserve (you would only see Syfe fees in your Syfe account, PIMCO fees would charged at the fund level). IMO, that’s not cheap.

My Thoughts

IMO, the monthly payout net Syfe management fees might not be high enough to be attractive given the higher risk investors are taking in active bond funds. Assuming the lowest Syfe blue tier management fee of 0.65%, the effective monthly payout for Income+ Preserve and Income+ Enhance would be in the 3.35-3.85% and 4.35-5.35% ranges respectively.

In contrast, Syfe Cash+ which Syfe doesn’t charge any management fees for, yields 3.5% at the moment. Cash+ invests in money market funds (MMF) which are also safer. IMO, the additional yield is too small to justify the higher risk you might be taking by investing in bond funds which has higher risk of depreciating in value vs MMF.

I find it hard to justify investing in Income+ Preserve, but maybe there might be a case for Income+ Enhance especially if you’re willing to take higher risk for the prospect of higher yield and even some capital appreciation (e.g. if U.S. Fed pivots and starts cutting interest rates again that might result in bonds increasing in value). However, since Income+ is geared towards monthly payouts, I would be hesitant to bank on capital appreciation. That said, bonds have taken such a huge beating that there might be a good case for some capital appreciation in view of interest rates potentially peaking soon (not financial advice).

Since the product is new, I would be interested to track its performance and monthly payout levels over coming months. If the Income+ portfolios payout in the top of the estimated range and show some capital appreciation, these might actually become a more attractive proposition.

As with any actively-managed fund, the track record at both the fund manager level (in this case PIMCO) and the individual fund levels are critically important. I haven’t looked into this yet, but I might do a deeper dive and share my findings in a future post.

Finally, here are other possible fixed income options in Singapore for comparison:

Above is a screenshot from my Fixed Income Tracker.

If you’re interested to sign up for a Syfe account, you can do so through my referral link and you can get up to 6 months waiver of Syfe management fees upon first deposit.

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Disclaimer: This is not financial advice. I am not professional financial advisor nor do I work in the finance industry. Anything I write here is purely my personal opinion. Please do your own research and due diligence before investing into anything. All investments come with associated risks. Best to consult a financial advisor if you’re still unsure.

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Disclosure: This post may contain affiliate links and I may get a commission when you click on the links or open an account through the links, at no additional cost to you. I only recommend products or services that I have personally tried and have found useful.

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