Stability and Income in Uncertain Times: A Defensive Bond Fund Portfolio for the Volatile Market

The global equity markets experienced a sharp and sudden collapse in early April 2025, triggered by President Trump’s announcement on April 2 of sweeping new tariffs ranging from 10% to 46% on imports from most countries including China and the European Union. The move ignited fears of a global trade war, sending shockwaves through the financial markets. Within two days, the S&P 500 plummeted by more than 10%, marking its steepest decline since March 2020. The volatility was further amplified by ongoing geopolitical tensions, persistently high interest rates, and stubborn inflationary pressures.

During times like these, emotional discipline becomes just as important as portfolio strategy. Many retail investors may feel tempted to "sell first and ask questions later"—but this can lead to costly mistakes. If you have not already, I will encourage you to read my previous article, Mastering Your Emotions in Investing: A Framework for Success, which offers tools to help investors stay grounded and make rational decisions.

In such turbulent markets, bonds have traditionally served as a safe haven due to their predictable income streams and lower sensitivity to equity swings. A strategically diversified bond portfolio can act as a cushion, balancing risk while generating steady returns.

One practical way to ride through such volatility is by shifting part of your portfolio into more stable, income-generating investments. In this article, we explore four well-diversified bond funds that aim to provide consistent income and capital stability—giving you peace of mind while still keeping your money working for you.

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A Defensive Bond Fund Portfolio for Income and Stability

The following four bond funds have been carefully selected for their complementary roles within a defensive portfolio. Each fund offers a distinct strategy, geographical exposure, and risk-return profile. Together, they create a well-rounded, income-generating portfolio with the resilience to withstand market volatility.

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1. United SGD Fund Cl S Acc SGD

An Ultra-conservative Foundation for Stable Income.

Strategy and Objective
The United SGD Fund, managed by UOB Asset Management, focuses on money market and short term bonds and bank deposits denominated in Singapore dollars with the aim of achieving better yield over Singapore dollar deposits. It maintains a short duration profile to reduce sensitivity to interest rate changes and aims to deliver steady returns with minimal volatility.

Performance and Dividend Yield (As of 4 Apr 2025)

Year to Date Return*	6 Months Return*	1 Year Return*	Dividend Yield
1.20%	1.78%	4.55%	5.01%

* The return figures in the table above are calculated using bid-to-bid prices, with any income or dividends reinvested.

Assets Under Management (AUM)
Over S$2.4 billion, reflecting broad investor trust and institutional scale.

Role in the Portfolio
This fund acts as the anchor of the portfolio, providing capital stability and modest income. Its low-risk profile makes it an ideal choice for conservative investors looking for capital preservation and it also contributes to lowering the risk of the overall portfolio.

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2. Eastspring Investments Unit Trusts – Singapore Select Bond AD SGD

SGD-Denominated Diversifier with Broad Local Exposure

Strategy and Objective
Eastspring’s Singapore Select Bond Fund invests in SGD-denominated bonds issued by the Singapore government and high-quality local corporates. It also invests in non-SGD bonds, which will be hedged back into Singapore Dollars for diversification. It aims to generate regular income while keeping foreign exchange risk to a minimum—perfect for Singapore-based investors or those with SGD liabilities.

Performance and Dividend Yield (As of 4 Apr 2025)

Year to Date Return*	6 Months Return*	1 Year Return*	Dividend Yield
1.45%	1.57%	6.78%	4.54%

* The return figures in the table above are calculated using bid-to-bid prices, with any income or dividends reinvested.

Assets Under Management (AUM)
Over S$1.2 billion, reflecting solid local demand and strong fund performance.

Role in the Portfolio
This fund strengthens the portfolio’s local market exposure and currency stability while offering competitive income. It provides familiarity and stability for Singapore-based investors.

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3. Capital Group Global Corporate Bond (LUX) Bfdm (Inc) SGD-H

A High-quality Global Corporate Bond Strategy with ESG Considerations.

Strategy and Objective
Managed by Capital Group, this fund invests in investment-grade corporate bonds issued by reputable companies across the globe. It aims to provide long-term income and capital stability by focusing on credit quality and careful issuer selection. The fund also aims to have a lower carbon footprint for all its investments as compared to the index. It achieves this through the application of ESG (Environmental, Social, and Governance) and norms-based screening to implement a negative screening policy relating to investments in corporate issuers.

Performance and Dividend Yield (As of 7 Apr 2025)

Year to Date Return*	6 Months Return*	1 Year Return*	Dividend Yield
0.52%	-0.94%	2.58%	4.85%

* The return figures in the table above are calculated using bid-to-bid prices, with any income or dividends reinvested.

Assets Under Management (AUM)
Over S$4.1 billion, reflecting strong investor trust and institutional scale.

Role in the Portfolio
This fund delivers a reliable income stream from high-quality corporate issuers, making it ideal for investors who want better returns than government bonds without venturing into high-yield territory.

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4. PIMCO Income Fund Admin Cl Inc SGD-H

A global multi-sector income generator.

Strategy and Objective
This fund employs a flexible, actively managed strategy across multiple sectors—including U.S. Treasuries, investment-grade and high-yield corporate bonds, mortgage-backed securities, and emerging market debt. Managed by PIMCO, a global fixed income leader, it aims to deliver strong income and capital preservation under varying market conditions.

Performance and Dividend Yield (As of 7 Apr 2025)

Year to Date Return*	6 Months Return*	1 Year Return*	Dividend Yield
2.48%	1.88%	4.95%	6.42%

* The return figures in the table above are calculated using bid-to-bid prices, with any income or dividends reinvested.

Assets Under Management (AUM)
Over US$93 billion, making it one of the world’s largest bond funds.

Role in the Portfolio
The PIMCO Income Fund provides diversification, enhanced yield, and global exposure. It is well-suited for investors seeking income and willing to tolerate moderate risk for potentially higher rewards. This fund helps to improve the overall yield of the portfolio.

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A Portfolio That Adapts to You and the Market

This four-fund portfolio serves as a solid starting point—but it is not a “one-size-fits-all” solution. It is intentionally designed to be flexible and adaptable.

Depending on your investment goals and risk appetite:

• For super-conservative investors: You may replace Capital Group Global Corporate Bond (LUX) Bfdm (Inc) SGD-H and/or PIMCO Income Fund Admin Cl Inc SGD-H with money market or short duration bond funds such as Nikko AM Shenton Short Term Bond SGD and/or Fullerton SGD Cash Fund A SGD for more capital stability. But do note that the latter two funds do not have regular payouts.
• For high-yield seekers: If you are comfortable with slightly higher risk, you can consider swapping in high-yield bond funds such as PIMCO Global High Yield Bond Fund Cl E Inc SGD-H and/or Blackrock Asian High Yield Bond A8 SGD-H as macroeconomic conditions evolve—such as when interest rates begin to fall.

The key takeaway: your bond strategy should adapt to macroeconomic changes—like shifts in interest rates—and to your evolving financial goals.

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Risks to Be Aware Of

While bond funds offer many benefits such as diversification, income, and relative stability, it is important to understand that all investments in unit trusts carry inherent risks, including the potential for capital loss.

Although the mentioned bond funds above have weathered the recent storm in the equity markets pretty well thanks to their solid risk management and strategies, it is by no means guaranteed that they will continue to do so. The usual caveat of past results are not indicative of future performance applies.

Here are some key risks retail investors should be aware of:

• Capital Risk: Unit trust investments are not capital guaranteed. The value of your investment can go up or down depending on market conditions.
• Dividend Risk: Although many bond funds aim to provide regular payouts, dividends are not guaranteed and may fluctuate depending on the performance of the underlying securities and the interest rate environment.
• Interest Rate Risk: When interest rates rise, bond prices typically fall. This could lead to lower fund valuations and potential capital losses if units are sold during such periods.
• Credit Risk: There’s always a chance that bond issuers may default on their obligations, especially in the case of lower-rated securities. Fund managers actively manage this risk, but it cannot be fully eliminated.
• Liquidity Risk: During periods of market stress or low demand, certain bonds may be difficult to sell quickly without affecting their market price.

As always, it is vital for investors to assess these risks against their own financial goals and risk tolerance, and to seek professional advice where needed.

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Final Thoughts

In this climate of uncertainty, a well-constructed bond portfolio can serve as a buffer against market shocks while still delivering steady income. By diversifying across strategies, sectors, and geographies, the portfolio outlined here offers a practical solution for retail investors seeking peace of mind, regular income, and stability.

As always, our professional and helpful investment advisors are here to assist you if you need advice or guidance. Here is the email: advisory@fundsupermart.com