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The current investment landscape is marked by heightened geopolitical tensions. Given this outlook, investors tend to become more cautious – flocking to safer investments such as fixed income over stocks.
But, interest rates have been dropping too. For instance, the latest Singapore 6-month T-bill auctioned on 11 September 2025 had a cut-off yield of just 1.38% p.a. This is over 2%-points lower than the 3.6% p.a. cut-off yield that the T-bills was paying as recently as July 2024.
One way investors can aim for more attractive yields, while still protecting against price volatility in riskier investments, is to consider short duration bonds.
Investors who may not know exactly what to buy or how to manage short duration bonds can consider investing in a short duration bond ETF – which comprises a diversified portfolio of such bonds across issuers, sectors, and geographies.
To better understand short duration bond ETFs, we look at how the upcoming LionGlobal Short Duration Bond Fund (Active ETF SGD Class) that will be listed on SGX on 29 September 2025 works.
Read Also: 5 Things You Need To Know Before Investing In The Lion-Nomura Japan Active ETF (Powered by AI)
#1 What Exactly Are Short Duration Bond Funds?
Short duration bond funds primarily invest in bonds with short maturities – typically one to three years. The LionGlobal Short Duration Bond Fund (Active ETF SGD Class) has a weighted duration of 2.25 years.
The benefit of investing in short duration bonds is:
– Lower interest-rate sensitivity, which reduces price swings, especially during rate adjustments. This will limit the risk of capital loss.
– Higher liquidity, as short-dated bonds are easier to trade and value, whether in stable or volatile markets.
– More flexibility in investment decisions, especially with a mandate for active management. Short duration bond ETFs can invest in a broader range of securities, such as corporate bonds, compared to money market funds, while still offering relatively stable returns.
#2 How An Actively Managed Short Duration Bond ETF Works
Interest rate changes may lead to fluctuations in the ETF’s NAV. This is what provides the potential for capital gains and higher returns, but with slightly increased risks. However, as an actively managed ETF does not track the benchmark index, there may be a potential to outperform the broader market.
For example, the managers of the LionGlobal Short Duration Bond Fund (Active ETF SGD Class) focus on both capital growth and coupon payments, by actively managing a mix of Singapore and international short-maturity bonds, which can include both high-quality and sub-investment-grade corporate bonds.
#3 Risk, Returns & Benefits
In a world where the safest short-term securities, i.e. the 6-month Singapore Government T-bills, are already paying 1.38% p.a. interest, short duration bond funds can offer a more attractive return.
For reference, the LionGlobal Short Duration Bond Fund (Active ETF SGD Class) has a Weighted Yield-to-Maturity of 3.18%.
At the same time, short duration bond portfolios also have minimal price sensitivity to rate changes. Incepted since 22 Mar 1991, the LionGlobal Short Duration Bond Fund has built a solid track record.
This ETF is Singapore’s first active bond ETF and first listed share class of an existing fund, giving you access to the same mother fund’s portfolio while providing you liquidity to trade the ETF units on SGX.
In the chart below, we can see the Cumulative Performance has risen steadily for decades.
Source: Lion Global Investors as of 31 July 2025
As mentioned, an active management strategy means that the ETF can outperform the benchmark, which it has done so: 3.7% p.a. compared to the benchmark of 1.8% p.a. since its inception.
For those who may have compared equities charts, you may recognise that the LionGlobal Short Duration Bond Fund (Active ETF SGD Class) has less volatile performance fluctuations and offers a relatively smoother rate of return.
Short duration bond funds typically offer better yields than money market funds while taking on moderately higher – but still manageable – risk.
Since short duration bond ETFs may also have exposure to sub-investment grade securities, there may be an element of credit risk in this regard. Nevertheless, its active managers would take this into account, and help mitigate this while endeavouring to outperform T-bills and deposits rates.
For the benefit of this, actively managed LionGlobal Short Duration Bond Fund (Active ETF SGD Class) charges a management fee of 0.25% p.a. In addition, unlike typical unit trust platform, an ETF is less likely to be charged annual platform fee or wrap fee.
#4 Exposure Across Geographies & Themes
The LionGlobal Short Duration Bond Fund (Active ETF SGD Class) is diversified across both geographies and sectors.
The ETF has over 40% exposure to Singapore, and 99.7% Singapore Dollar (SGD) exposure. This rides on the track record of the country and the currency as a safe haven – which reduces the likelihood of volatile fluctuations in its performance.
The remaining global geographies are each limited to less than 8% of its portfolio, and spread across Asia Pacific, Europe, the Middle East, Australia and others.
Source: Lion Global Investors as of 31 July 2025
Similarly, there is relatively broad sector diversification across Financial, Real Estate, Sovereign, Industrial, Consumer Discretionary, Energy and more.
Source: Lion Global Investors as of 31 July 2025
#5 How to Invest In Short Duration Bonds
Unlike single stocks, it can be challenging for individuals to invest into short duration bonds in the market. Typical corporate bonds can have maturities that is up to 5 – 7 years and they are generally not heavily traded in the secondary market once issued.
The good news is – through the SGX-listed LionGlobal Short Duration Bond Fund (Active ETF SGD Class), you can easily gain access to short duration bond funds – in the same way you invest in any other stocks.
During its Initial Offer Period (IOP) between 8 September 2025 to 23 September 2025, you can subscribe to the LionGlobal Short Duration Bond Fund (Active ETF SGD Class) via:
– ATM, Mobile Banking and Online Banking Subscription, through OCBC
– Participating Dealers, such as:
- OCBC Securities Pte Ltd
- Phillip Securities Pte Ltd (POEMS)
- iFAST (FSMOne)
- DBS Vickers Securities
- Maybank Securities
You can also look out for exclusive promotions on the brokerages you may be using:
- FSMOne: Get S$10 for every S$10k invested (capped at S$200). Valid 8 Sep–31 Oct 2025. Only cash subscription is eligible during 8 Sep – 23 Sep 2025. Cash and SRS subscriptions are both eligible for promotion after 29 Sep 2025 listing. Cash reward credited 6 weeks after 31 October 2025.
- POEMS: S$10 for every S$5k invested (capped at S$500 per client). First 200 clients, valid 8–22 Sep 2025. Cash reward credited after 31 October 2025.
Learn more about the LionGlobal Short Duration Bond Fund here.
Of course, after it is listed on 29 September 2025, you can invest in it through all the local brokerages, under the Ticker SBO (SGD) or SBV (USD). It will also be traded in board lots of 1 unit, which means you can buy and sell just 1 unit of the ETF.
For income investors, you can expect quarterly coupon payments near the end of each quarter, in March, June, September and December.
You can find out more about the LionGlobal Short Duration Bond Fund (Active ETF SGD Class) by registering for a webinar, presented by Ong Xun Xiang (Head of ETFs at Lion Global Investors) and Gerald Wong (Founder at Beansprout) on an expert panel to share their insights on the ETF and how it fits into a resilient income portfolio for investors. Sign up here.
Balancing Risk and Yield For Your Fixed Income Portfolio
Short-duration bond fund ETFs serve as a middle ground – offering a better yield compared to T-bills, money market funds or fixed deposits, while limiting exposure to market volatility.
As with any investments, though, a higher return usually means you’re taking on higher risks. It’s the same in this case, as the LionGlobal Short Duration Bond Fund (Active ETF SGD Class) delivers a Weighted Average Yield-to-Maturity of 3.18%, while actively managing a portfolio of high-quality government and corporate bonds, and also having the flexibility to gain exposure to sub-investment grade securities.
For conservative, income-seeking investors in Singapore, the LionGlobal Short Duration Bond Fund (Active ETF SGD Class) can offer a relatively attractive yield, with manageable risks, especially given its track record.
Find out more about the LionGlobal Short Duration Bond Fund (Active ETF SGD Class) today.
