How can I invest in bonds in Malaysia?
Bonds are generally available only for sophisticated investors in Malaysia. Sophisticated investor is being categorized as high networth individuals, high networth entities or accredited investors. Read here to find the definition of sophisticated investor.
However, bond is served as a very important diversification tools in one’s investment portfolio. But, how can one have bond elements in his / her portfolio before he / she is qualifying as the sophisticated investor? One can invest in:-
- Managed bond fund (mutual fund): the minimum investment in bond fund starts from RM1,000. It leverages on accredited investors (various unit trust schemes) to invest in bonds. Some popular bond funds in Malaysia are Eastspring Investment Bond Fund, KAF Bond Fund, etc. There are also various high yield foreign bond funds available in Malaysia such as United Asian High Yield Bond Fund, Eastspring Investments – Asian High Yield Bond Fund, etc.
- Exchange Traded Fund (ETF): On the stock exchange, bond fund is also available via ETF. Example of bond ETF is Vanguard Total Bond Market ETF (Ticker symbol: BND), iShares Core U.S. Aggregate Bond ETF (Ticker symbol: AGG), Vanguard Short-Term Corporate Bond ETF (Ticker symbol: VCSH) etc.
Generally, bond fund return is ranging from 4 to 7% per year, depending on the nature of the investment. High yield bond fund tends to seek more capital gain, however the volatility of the prices will also be higher.
For high networth individuals, bonds can be easily available via their premier bankers or bond express platform recently launched. For primary bonds, the minimum investment amount is normally higher, usually starting from RM 200,000. Bond express platform allows trading of bonds at secondary market, improving the liquidity of the bond. The minimum investment amount for secondary market bond is now available at RM5,000.
If you are interested in including bond products within your investment portfolio, please feel to contact me.
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