OCBC unveils three-year hybrid unit trust

It combines a fixed maturity product through a call option strategy.

OCBC Bank and Lion Global Investors jointly launched the Lion-OCBC Global Income 2021 Fund, a three-year fixed maturity fund investing in a diversified portfolio of global bonds which provide quarterly payouts of at least 9%.

The pay out of at least 9 % is broken down into 3.5 % per annum in Year 1, 4.0% per annum in Year 2, and a variable distribution with a minimum of 1.5% per annum in Year 3.

The Lion-OCBC Global Income 2021 Fund is said to be the first hybrid fund in Singapore to also provide participation in capital upside through an allocation into a call option strategy, potentially acting as a return generator.

“With the needs of our retail customers in mind, we worked with Lion Global Investors to create a first-of-its-kind fund for our retail customers. This fund mimics the construct of a fixed maturity fund, which has been popular in the private banking space these past two Years,” said Tan Siew Lee, head of wealth management Singapore, OCBC Bank.

“This fund incorporates all three desires of our customers – quarterly fixed pay outs of at least 9% over three years, downside protection as long as the underlying bonds do not default, and potential capital appreciation through exposure to a multi-asset allocation across a range of bond and equity Exchange Traded Funds (ETFs),” she added.