Allianz Income and Growth Fund
Below is the detailed analysis of “Allianz Income and Growth fund”performance, focusing on its dividend yield, investment composition, and potential risks and returns. Here's a breakdown of the key points:
Name and Performance: The fund is known for high dividend yield. However, it's noted that despite being named for both "income" and "growth," the fund's net asset value (NAV) has not appreciated since its launch in July 2013 (launch NAV in July 2013 – SGD 10. Current NAV – SGD 7.45), suggesting that it has failed to deliver on the growth aspect.
Investment Composition: The fund is primarily invested in three types of instruments: equity, convertible bonds, and high-yield bonds, each comprising about 33% of the portfolio. While convertible bonds and high-yield bonds may appear to provide stability and income, they are actually closely tied to equity market performance.
Convertible Bonds: Convertible bonds are flexible and can be converted to equity at an agreed strike price. This flexibility comes with low coupons/interest rates. The current yield to maturity for convertible bonds in the portfolio is just 1.92%. The convertible bond prices rise when equity price is near to agreed strike price and hence, their returns are directly linked to equity market performance.
High-Yield Bonds: High-yield bonds, also known as junk bonds, carry higher risks and offer higher coupon rates. Such bonds are issued by risky businesses. When the economy is not doing good, such businesses are expected to fail and hence, default in payments. So, these bond prices are influenced by the state of the economy (instead of interest rates), which is often correlated with stock market performance.
Risk and Volatility: As you have noted that all three instruments in the unit trust's portfolio are tied to equity market performance but provide returns similar to the debt (10-year historical return is around 6%). This suggests that investors might be accepting lower returns in exchange for higher volatility.
Dividend Consistency: The fund is inconsistent in providing dividends, with two downward revisions in recent months. It's worth noticing that the fund distributes dividends even when its NAV is substantially below the launch value, sometimes dipping into the capital itself.
Summary: It's advisable that investors should not make investment decisions solely based on the monthly dividend, as it may come from the capital at times. One may allocate a small portion (5-10%) of one's portfolio to this fund at current prices, with the possibility of averaging down if the price falls due to correction in equity and bond market. It's important to note that staying invested for a longer period may be an option if the expected return (dividend + capital appreciation) is around 6%. However, as mentioned above this return comes with higher volatility due to the unit trust's reliance on equity market performance.
Declaration:
I have invested a small amount in this fund. At the same time, one shall carry out its own assessment before making its own investment decision and not treat above as investment advice or otherwise.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
SkyInvestor :
Thy GoD : Yeah after your first post I went and made my own analysis and found out it's rlly just good because of dividends. I guess if you don't plan on ever selling you can just take the dividends.
Mainly my initial issue w the fund was that I never knew fun performance was calculated with dividends in mind, hence inflating the actual return value in the growth aspect.