KGI Research Singapore

Singapore's leading broker offering Futures, FX, Equities and Wealth Management.

16 March 2023: Wealth Product Ideas

Fund Name (Ticker)iShares 0-5 Year TIPS Bond ETF(STIP US)
DescriptionThe iShares 0-5 Year TIPS Bond ETF seeks to track the investment results of an index composed of inflation-protected U.S. Treasury bonds with remaining maturities of less than five years.
Asset ClassFixed Income
30-Day Average Volume (as of 13 Mar)1,110,587.00
Net Assets of Fund (as of 14 Mar)US$12,870,629,083
12-Month Trailing Yield (as of 13 Mar)5.48%
Weighted Average YTM (as of 13 Mar)3.86%
Weighted Average Coupon (as of 13 Mar)0.46
Management Fees (Annual)0.03%

Top 10 Holdings

(as of 13 Mar 2023)

  • BUY Entry – 97.3
  • Moderation of rate hikes. With US inflation still remaining high in February, the Federal Reserve is expected to pause rate hikes in the FOMC meeting next week and raise rates in May by 25 basis points. Due to the recent turn of events that resulted in the failure of two banks, the Fed is expected to be more cautious when raising rates. 
  • Outlook of rate hike cycle. The overall market believes that the Feds will attempt to decrease systemic risk in the financial sector by reducing interest-rate hikes and start to cut rates by 3Q23, with interest rates expected to peak at 4.75% to 5.00%.  
  • Tapering inflation in the US. Inflation is on a downward trajectory but still above the 2% long-term target, reducing the probability of aggressive rate hikes going forward.  

(Source: Bloomberg)

Fund Name (Ticker)iShares MBS ETF (MBB US)
DescriptionThe iShares MBS ETF (MBB) seeks to track the investment results of an index composed of investment-grade mortgage-backed pass-through securities issued and/or guaranteed by U.S. government agencies.
Asset ClassEquity
30-Day Average Volume (as of 14 Mar)2,421,123
Net Assets of Fund (as of 14 Mar)USD$$25,315,497,083
12-Month Trailing Yield (as of 13 Mar)2.47%
Weighted Average YTM (as of 13 Mar)4.41
Weighted Average Coupon (as of 13 Mar)2.84
Management Fees 0.04%

Top 10 Holdings

(as of 13 Mar 2023)

  • BUY Entry – 93.0
  • Easing interest Rates Hikes. The US Federal Reserve is likely to ease rate hikes to maintain the stability of the financial system and prevent systematic risk. Following the recent event of a bank run that triggered the failure of 2 banks, expectations towards interest rate hikes shifted abruptly, with the thinking that the Fed is expected to pause rate hike in March, and a 25 basis point hike in May.
  • Tapering inflation rate. The February CPI shows a 6% YoY rise which is in line with market expectations. As it is still way above the inflation rate target of 2%, Fed will continue the rate hike cycle, but the pace is smaller and slower. 
  • Outlook of rate hike cycle. The overall market believes that the Fed will attempt to decrease systemic risk in the financial sector by pausing rate hikes in the near term and starting cutting rates by 3Q23, with expectations of interest rates peaking at 4.75% to 5.00%. 

(Source: Bloomberg)

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