Is it worthwhile to switch bond investment (with a 2.5% yield to maturity) to buy Allianz income and growth fund that offers 22% of return over 3 years?
I'm not sure if you are comparing like for like - they are two quite different investments.
The bond will make a fixed payment of interest + principal on maturity. The major risk is credit default. A single bond does not offer diversification.
The fund offers no guarantees and it's future returns are uncertain. But it does offer diversification. Also, the 22% return over 3 years is historical return and says nothing about future returns.
In deciding which is more suitable for your needs, you would have to consider how they fit into the rest of your investment portfolio and what your investment objectives and risk tolerances are (among other factors).
I can't speak for anyone else on this forum, but I am not qualified to give advice and, even if I was, I don't know enough about your personal circumstances etc to offer it. We may often debate the merits or demerits of various investments but, even on those rare occasions when I am sober, I am not in a position to make a recommendation.
Given that you are effectively asking a group of anonymous strangers on the internet more or less the same question repeatedly maybe it's time to speak with an independent professional adviser (if such a mythological beast exists in Hong Kong) and/or spend some time reading up on investments generally if for no other reason than nobody cares about your money as much as you do.
Thank you for your professional advice! My investment objective is to attain a high yield. The 2.5% yield to maturity in bond is too low and I hope to get a better return in bond funds. I buy the Allianz income and growth fund. And I plan to hold the fund in long term; that yields approximately doubling the original investment amount in 10 years.
In the rare case you're really not a troll (and perhaps more for any unsuspecting future readers of this thread) ....
Not sure how you considered everything till now to be an endorsement on Allianz fund. I'll just say it: it's a bad investment given the fees when you don't really have a view on what it's actually invested in and are just chasing returns anyway. for easy (and much cheaper) investment options for new or inexperienced HK investors, I suggest checking out this thread https://geoexpat.com/forum/155/thread349640.html
assuming those questions are by a semi-educated person really wanting to invest, then we can draw analogy to what happened in 2003/2005 when non-sophisticated investors swamped the mini-bonds and high notes of that time..
why ? yield was too low then... in 2002/03 Green span held interest rate at 1% for a prolonged period, forcing yield hunters to raise their risk levels to get yields..
just try to recall how the investors behaved then when one tells them that 5% p.a. product is really not for them...
I once considered bond ETF and index fund in the stock market but they are so volatile that is easy to lose money. Bond fund appears to be a viable option that has a decent yield with the NAV changes within a narrow range.
@wanda siu
Can you give us some more information?
- What bond ETF did you consider?
- What sort of yield are you looking for?
For the record, we have some amounts of following in our portfolio:
()s are where these are listed/tradable.
LQDE (UK), MUB (US), IEMB (UK)
They have been discussed in a few threads here.