We Read a 50-Page Bond Fund Report So You Don’t Have To. Here Are 4 Surprising Truths We Uncovered
Introduction: The Hidden Stories in Financial Reports
Annual reports are the dense, dutiful vegetables of the investing world. Packed with tables, legalese, and mind-numbing jargon, they’re the documents investors are told to read, but almost never do. But sometimes, buried deep within the formal language and endless numbers, they tell a fascinating story.
That’s what we found when we dove into the latest annual report for the ABF Singapore Bond Index Fund—Singapore’s very first exchange-traded bond fund. On the surface, it’s a report about a straightforward fund that invests in high-quality Singaporean bonds. But beneath the complexity, it reveals a compelling narrative about performance, stability, and the quiet mechanics of the Singaporean economy.
We’ve distilled the entire 50-page document into the four most surprising and impactful truths we uncovered.
1. Who Said Bonds Were Boring? This Fund Returned Over 10% Last Year.
An equity-like return from a bond-like risk profile.
The common wisdom about bond funds is that they are the slow and steady workhorses of a portfolio—safe, but unlikely to generate exciting returns. This fund just turned that idea on its head. For the one-year period ending 30 June 2025, the ABF Singapore Bond Index Fund delivered a 10.61% return—a figure you’d be happy to see from an equity fund, let alone a portfolio of high-quality government bonds.
This wasn’t just a strong percentage on paper; it translated into a staggering absolute gain. The fund’s “Total return for the financial year after income tax” was S$105,209,737. To put that in perspective, the total return for the previous year (2024) was S$15,409,685. This represents a nearly seven-fold increase in earnings year-over-year.
For a fund with the stated objective to simply mirror an index of high-quality bonds, this level of performance is remarkable. It’s a powerful reminder that even assets designed for stability can have periods of exceptional strength. As the report states, the fund’s official goal is modest:
The Fund is an index fund which seeks investment results that correspond closely to the total return of the iBoxx ABF Singapore Index before fees and expenses.
2. The Portfolio’s Secret Weapon: Extreme Concentration in “Safe”
A masterclass in deliberate, high-quality concentration.
When you look under the hood of this fund, you find a portfolio that is anything but diversified in the traditional sense. It is a masterclass in focus. As of 30 June 2025, a massive 82.60% of the fund’s net assets are invested in bonds classified as “Sovereign.”
This isn’t just a broad category. The top 10 largest holdings in the entire fund are, without exception, Singapore Government Bonds. The two largest holdings alone illustrate this deep concentration:
- Singapore Government Bond 3.5% 01/03/2027 (6.95% of net assets)
- Singapore Government Bond 2.875% 01/07/2029 (5.33% of net assets)
The fund’s focus is absolute: the “By Geography” table reveals that 100.03% of its quoted fixed income securities are based in Singapore (the figure exceeds 100% as it includes factors like accrued interest on the bonds). This intense concentration on Singapore government and quasi-government debt isn’t a bug; it’s a core feature. Underscoring this strategy is the fact that nearly all of the fund’s fixed-rate securities carry a credit rating of ‘Aaa’—the highest possible grade, signifying an exceptionally low risk of default and making this concentration a deliberate pillar of strength.
3. You’re Investing in More Than Just Bonds—You’re Investing in Singapore’s Infrastructure
From financial statements to physical infrastructure.
While sovereign bonds form the core, the report shows that investors are also indirectly funding the nation’s physical backbone. After the “Sovereign” category, the next two largest industry holdings are:
- Real Estate: 10.95%
- Engineering Construction: 4.67%
These aren’t abstract financial sectors. A closer look at the detailed portfolio statement reveals that these holdings are primarily bonds issued by two key statutory boards: the Housing & Development Board (HDB) and the Land Transport Authority (LTA).
This means that a portion of every dollar invested in this fund goes toward financing Singapore’s public housing projects and its extensive network of roads and public transportation. It’s a unique feature of the fund: you’re not just buying a financial instrument; you’re taking a stake in the tangible, essential infrastructure that shapes daily life in Singapore.
4. It Costs Almost Nothing to Run This Billion-Dollar Machine
Scaling to a billion dollars on a shoestring budget.
For all its stability and national importance, the fund operates with breathtaking efficiency. First, let’s establish its scale. As of 30 June 2025, the fund’s “Net assets attributable to unitholders” stood at S$1,095,447,205.
Despite managing over a billion dollars, the fund’s “Total expense ratio” for the year was a remarkably low 0.24%.
To put that into plain English: for every $1,000 you have invested, the annual cost to manage, secure, and audit your investment is just $2.40. This tiny fee supports a robust structure of professional oversight, including the Manager (Amova Asset Management Asia Limited), the Trustee (HSBC Institutional Trust Services (Singapore) Limited), and the Auditors (PricewaterhouseCoopers LLP). This highlights the incredible cost-effectiveness that well-structured index fund ETFs can offer to everyday investors.
Conclusion: A Quiet Giant
Digging into this annual report revealed four key insights: a bond fund can deliver equity-like returns, its strength lies in an ultra-safe foundation of Singaporean sovereign debt, it offers a direct way to invest in national infrastructure, and it achieves all of this at an exceptionally low cost.
In a world chasing volatile trends, could the most powerful investment story be the one that’s been hiding in plain sight—the quiet, compounding strength of a nation’s own promises?
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