Bond price is rising, equity is falling

With low interest rate environment, prices of corporate bonds and debt securities were rising. Looking at both Singapore equity and Singapore corporate bonds/preference shares in my portfolio, they were at the opposite side of a see-saw. Singapore equity lost 6.48% on cost, whereas Singapore corporate bonds/preference shares rose 3.54%.

I had similar experience with LionGlobal New Target Return Fund (SGD), a unit trust with core investments in bonds in Asian region. The fund was higher by 7% since the time I bought it at inception of the fund.

On the other hand, equity was affected by corporate results of the third quarter and several global economic concerns. Unless we see better economies and stability in US, China, Japan, and Eurozone countries, one cannot hope to see a sustained improvement in share prices.

In the case of bond investments, watch out for rising interest rates in the future. If signs of increasing interest rates surface, be prepared to reduce bond portfolio to avoid decline in bond prices.

Copyright © 2012, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

Advertisements
This entry was posted in Financial Management. Bookmark the permalink.

2 Responses to Bond price is rising, equity is falling

  1. Jaime Mckean says:

    Hi there! Do you use Twitter? I’d like to follow you if that would be okay. I’m absolutely enjoying your blog and look forward to new updates.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s