Keeping Bonds From Start To Finish

A thought experiment just came up while I was overseas a few days ago, and it goes something like this: is it a good idea to hold individual bond securities from start to finish?

The bonds in question are not from corporates, nor are they perpetuals, but rather government treasury bonds, specifically the Singapore Government Securities (SGS) of at least 10 years’ tenure. This means auctioning for them at the start, collect coupon payouts and keep it till maturity, regardless of what the prices and bond yields are along the entirety of the bond duration.

Picture generated by ChatGPT

Typically, bond returns are viewed as lower to that of equities’, and that made them looked like “boring” investment vehicles. Still, as per the Bedokian Portfolio’s diversification ethos, bonds are a must-have in the make-up. Since it is a permanent fixture, there is no harm in having SGS in one’s portfolio, and possibly as a core holding within the asset class.

While there are risks involving with bonds, some could be overlooked as the probability of them happening is minimal, like default and call risks, given the current high rating of SGS, and liquidity risk, which is negligible as it is planned to hold it till the end. The primary one which I see it would be inflation risk, i.e., the risk of the coupon rate being lower than the prevailing inflation rate.

Singapore’s inflation rate for the past 10 years stood at around 1.72%, with 30 years at 1.68%¹, and that is relatively low as compared to the United States’ (3.22% for 10 years and 2.53% for 30 years²). Though we may not know how the inflation rates will be like in the future, taking past data as reference and to mitigate inflation risk, a coupon rate of at least 2% is expected.

The above settles the theoretical aspects. The practical part, however, is a little bit tedious to maneuver around. First up would be the availability of 10-year and above tenure SGS; from the Monetary Authority of Singapore (MAS) website, for the year 2026, there are only four that has a period of at least 10 years, and it seems this is the average issuance looking back the past years’ figures. On top of the deemed low frequency of the issuance of such durations, one would still need to bid for it and, depending on the prevailing macroeconomic situations, one may not be able to get the 2% yield after the auctions close.

Of course, there is the option of getting the bond from the secondary market immediately after it got listed, but the volume transacted is quite low if you monitor the listings on the Singapore Exchange website, so there is liquidity risk, on another context.

By now, some would have the idea of using another MAS-issued instrument: the Singapore Savings Bond (SSB). Issued every month, the 10-year average return and the yearly interest rate are made public, thus reducing the hassles of applying for the SGS bonds. The only limit that SSB has, and SGS do not, is the SGD 200,000 ownership cap per individual, so those with larger portfolios may need to look for other securities to fill in their bond component after the quota amount is reached. Another point about SSB is that they only come in 10-year tenures.

Whether is it SGS or SSB, or both, they are classified as investment grade bonds with their high credit ratings, and these are suitable for inclusion within the Bedokian Portfolio.

Disclosure

The Bedokian is vested in SSB.

Try out the Growth Indicator, Equities Indicator and S-REITs Indicator screening app for FREE. You can use it as a web page or save it as an app-like bookmark on your home screen of your computer, tablet or mobile for faster access.

Disclaimer

 

1 – Lim, Abram. Average Annual Inflation Rate in Singapore (2026). 28 Feb 2026. https://smartwealth.sg/average-inflation-rate-singapore/ (accessed 22 May 2026). Inflation rates used are CPI All-Items.

2 – U.S. Inflation Rate by Year (1913-2026). Macrotrends. https://www.macrotrends.net/2497/historical-inflation-rate-by-year (accessed 22 May 2026). Average calculated for 10-year: 2016 – 2025; for 30-year: 1996 – 2025.

 

Transact During Trading Hours Or Extended Hours?

Newcomers to the U.S. markets will notice the option to trade during extended hours, a feature that is not present in Singapore markets. Regular U.S. trading occurs from 9:30 AM to 4:00 PM Eastern Time or ET (which is 9:30 PM / 10:30 PM to 4:00 AM / 5:00 AM Singapore Time, depending on whether Daylight Savings Time is observed), while extended trading hours are typically pre-market from 4:00 AM to 9:30 AM ET and after-hours from 4:00 PM to 8:00 PM ET. These sessions allow market participants to react to news and earnings reports that typically happen outside the standard trading window.

Picture generated by ChatGPT

 

There are several benefits to transact in extended hours: Investors can quickly respond to breaking news, company earnings, or global events that take place beyond regular market hours, enabling them to seize opportunities or manage risks before the main session begins. Extended hours also make it easier for those who cannot trade during traditional market times to participate.

On the downside, trading during extended hours usually means dealing with lower liquidity, which leads to wider bid-ask spreads and increased volatility and potentially resulting in less favourable prices. Not every security may be available for trading, and orders might be filled more slowly or with less certainty compared to normal trading sessions.

The Bedokian’s Take

Considering the advantages and disadvantages highlighted above, all of it could boil down to just one main reason: price discovery. The more market participants there are for a particular counter, the more bid and ask data points are available for investors and traders to see and act upon, and this happens (as one can guessed it) during trading hours. This in my opinion gives a proper valuation and a feel of sentiment level of the counter.

Still, the low liquidity and wider spreads in the extended hours could give a huge plus especially when trying to buy at a deemed lower price and/or sell at a deemed higher price, which works when the buy-in price came out higher and/or the sell-out came out lower upon market opening, The flip side, however, if the opposite happens, then one would be frustrated if he/she had bidded higher or asked lower in the extended hours. In this case, as long as the price bought/sold is within one’s reasonable valuation, then it is not much of an issue to fret on the overpaying/underselling woes since the focus is long-term (unless it is a trading play).

 

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The Local Banks Are Starting To Look Very Different

For the longest time, many Singapore investors viewed the three local banks almost the same way. Pick DBS, OCBC or UOB, collect the dividends, reinvest if possible, and sleep peacefully at night. To be fair, that strategy worked very well for many years. The local banks were stable, profitable, well-regulated and deeply entrenched within Singapore’s economy.

 

(Picture credit: cegoh from pixabay.com)

But after going through the latest quarterly results from the three banks (see Fig. 1 for selected financial metrics), something is slowly changing. The differences between them are becoming much more meaningful; not just in terms of profits, but also in business quality, strategic direction and where future growth is likely coming from.

 

Selected Financial Metric (Latest Quarter)	DBS	OCBC	UOB
Net Profit	S$2.93B	S$1.97B	S$1.44B
YoY Profit Growth	+1%	+5%	-4%
Net Interest Margin	1.89%	1.76%	1.82%
Wealth Management Fees	S$907M	S$422M	Not separately disclosed
Fee Income Growth	+16%	+24%	-8%

Fig.1: Selected financial metrics of DBS, OCBC and UOB from their recent quarterly reporting. Data sourced and calculated from their respective presentations.

More importantly, the banking story itself is evolving. A few years ago, investors mainly focused on loan growth, net interest margins and bad debts. Now the discussion increasingly revolves around wealth management, fee income, regional expansion, digital ecosystems and capital efficiency. The banks are quietly transforming to beyond traditional lending businesses.

The Bedokian’s Take

In my opinion, the most important takeaway from this earnings season is that Singapore banks are evolving. The easy phase of banking profits may already be behind us. When rates rose sharply after COVID, the banks benefited enormously from wider lending spreads. Profit growth became relatively straightforward.

Now things are becoming more complicated; as rates normalise, margins compress, deposit competition increases and loan growth moderates. The banks therefore need new growth engines, and increasingly that engine is wealth management.

This actually aligns very closely with Singapore’s broader economic direction. Singapore is becoming one of Asia’s major wealth hubs, supported by family offices, regional capital flows, affluent Asian clients and cross-border investments, not to mention possibly being a strong alternative candidate to two other Asian financial cities. The local banks are positioning themselves directly within this ecosystem, and I view this trend may define the next decade of Singapore banking.

DBS seems like the highest-quality franchise overall, with the best execution, scale and operational efficiency. But it is also the most expensive for now. OCBC, meanwhile, may quietly have one of the most interesting long-term setups today because of its growing combination of banking, insurance and wealth management. UOB remains the clearest ASEAN growth story among the three, although it probably also carries the highest execution risk.

And perhaps the most interesting part is this: the future winner may not necessarily be the bank with the biggest loan book or the widest net interest margin. It may be the bank that captures Asia’s rising wealth most effectively.

Disclosure

The Bedokian is directly vested in OCBC, and indirectly vested in all three banks via exchange traded funds.

Try out the Growth Indicator, Equities Indicator and S-REITs Indicator screening app for FREE. You can use it as a web page or save it as an app-like bookmark on your home screen of your computer, tablet or mobile for faster access.

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What Yield Hunters May Be Missing

One may have encountered headlines that goes:

“ABC’s yield is now X%! Is it time to buy?”

 

Granted that most of such titled contents would provide an explanation and/or decision, at first glance, if X% is in the high ones or in double digits, I would be interested, too. However, let us remind ourselves the typical formula for dividend yield, and that is:

 

Dividend yield = Past 12 months’ dividend amount / Current price

 

Picture generated by Gemini.

Before I hit the “buy” button, I would be interested in ABC itself, and that means I would need to do some fundamental analysis on the company. Some of the financial figures I would look at are:

 

Dividend Growth Rate

A growing yield over time is tricky as the percentage could increase with both the dividend amount and price decreasing simultaneously, as the formula had shown above. A better metric to look at would be the dividend growth rate, i.e., the amount of dividends one gets last year versus the amount gotten this year. Percentages could mislead, but not the cash that is about to land on one’s hands.

 

Dividend Payout Ratio

 

The percentage of retained earnings earmarked for dividend distribution. Different companies have different dividend payout ratios, and some of them made it a policy to distribute at least a certain percentage. In the Bedokian Portfolio’s selection guideline, a payout ratio of above 25% is reasonable. However, if the payout ratio is more than 100%, though can be considered a red flag, one needs to dig deeper by looking at the cash flow statement (in the next section).

 

Dividends Paid in Cash Flow Statement

 

While a company paying out more dividends is a good thing for investors, another point to be aware is whether the cash flow of the company can sustain the dividend amount paid. Under the company’s cash flow statement, there is a line item called “Dividends Paid” or something similar; if this amount is very close to the free cash flow, and the dividend payout ratio is very high, then due consideration must be given. There is no point in exhausting the goose to its limit to produce more golden eggs in a short time.

 

In summary, a holistic approach is needed when looking at dividends and not be blinded by just the yield alone.

 

Related posts

Financial Ratios: Much More Than Meets The Eye

The Quest For Higher Yields

 

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Jedi Finance: Three Investing Lessons From A Galaxy Far, Far Away

"Always remember: Your focus determines your reality." — Qui-Gon Jinn

Whether one is a rookie investor or a seasoned commander of his/her own portfolio, the Star Wars story offers profound insights into navigating volatile markets, overcoming psychological traps, and long-term wealth creation. As we navigate the "dark side" of market volatility, here are three investing lessons from Star Wars:

Picture generated by ChatGPT

#1: Don't Put All Your Credits in One Basket (Avoid the Death Star Trap)

The Empire made a fatal flaw, not once, but twice, by concentrating all their resources into one massive, vulnerable asset: the Death Star (for the uninitiated, look up Episodes IV and VI of the movie franchise). A tiny, unexpected event (a small thermal exhaust port or a concentrated energy source) destroyed the entire investment.

Learning Point: Diversify one's portfolio across different asset classes, regions/countries and sectors/industries to protect against unexpected events, rather than relying on a single counter.

#2: "Your Eyes Can Deceive You" (Beware of Recency Bias)

Obi-Wan Kenobi’s advice is crucial for investors. In finance, we often overweight recent events, buying high out of greed during a bull market or selling low out of fear during a downturn.

Learning Point: Don't let recent market fluctuations dictate the long-term strategy. Stick to the plan and look at the long-term.

#3 "Train Yourself to Let Go of Fear" (Avoid Loss Aversion)

Fear of loss can lead to irrational behaviour, such as holding losing stocks hoping they will break even, or staying entirely in cash, losing purchasing power to inflation.

Learning Point: Train oneself to focus on the long-term potential of the investments. As Yoda advises, fear of loss is the path to the dark side (of investing).

Remember, the Force will be with you, always. 

May the Fourth be with you.

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Big (Tech) Week

Wednesday and Thursday saw the quarterly earnings report for big tech companies, including those that we have in our Bedokian Portfolio, namely Alphabet, Amazon, Apple and Microsoft. Let us go through these four companies’ earnings reports and what is The Bedokian’s take on them.

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Alphabet

Earnings per share (EPS): USD 2.62 adjusted vs USD 2.63 expected.

Revenue: USD 109.9 billion vs USD 107.2 billion expected.

Other points of note: Missed expectation for YouTube advertising.

Amazon

EPS: USD 2.78 vs USD 1.64

Revenue: USD 181.52 billion vs USD 177.3 billion expected.

Other points of note: Web services and advertising beating expectations.

Apple

EPS: USD 2.01 vs USD 1.95 expected

Revenue: USD 111.18 billion vs USD 109.66 billion expected

Other points of note: Revenue across all segments had beaten their expected amounts except for iPhone.

 

Microsoft

EPS: USD 4.27 adjusted vs USD 4.06 expected

Revenue: USD 82.89 billion vs USD 81.39 billion expected

Other points of note: Mixed segment results, with Cloud and Productivity and Business segments higher, while More Personal Computing unit lower.

 

The Bedokian’s Take

Cloud plays an important part in the revenues of Alphabet, Amazon and Microsoft, with all three dominating the market at a combined 63% market share as of the last quarter of 2025¹, and this dominance is very likely to continue after the numbers from the latest earnings report. Alphabet’s Google Cloud revenue had seen an increase of 63%, while Amazon’s AWS and Microsoft’s Azure (and other cloud services) experienced a rise of 28% and 40% in their revenues, respectively.

The common narrative that binds all mentioned companies here is, as easily guessed by most, artificial intelligence (AI), though there are variances in their strategies on approaching it; Alphabet is using it to enhance their existing consumer applications, Amazon is providing them as tools to their clients, and Microsoft utilises it for their office productivity suite.

For Alphabet, Amazon and Microsoft, capital expenditure (capex) on AI infrastructure is becoming the norm, with the three of them projected to spend close to 0.7 trillion USD combined this year. The exponential trend of AI, from answering common questions and creation of entertaining animations and videos, to possible disruptions in some sectors (e.g. software services by Claude), and others, may provide enough demand for the spending.

 

Apple looked to be the weakest in this aspect as they has yet to develop (and possibly may not) their own AI, but they are entering into discussions and/or partnerships with other AI providers like Open AI’s ChatGPT, Alphabet’s Gemini and Anthropic’s Claude to power its Siri, leveraging on their still growing user base of Apple products and services.

Overall, the runway of growth is still paved for Alphabet, Amazon and Microsoft, with cloud and AI providing the twin engines for these three companies. Though they could be seen as competitors in the same product and service segment, there is still differentiation in their other, albeit original core, businesses, which they are already a major player in, like search (Alphabet), office productivity (Microsoft) and online shopping (Amazon). Therefore, investing in these three companies could be seen as not having a concentrated position on a sector, but rather on their own individual merits.

As for Apple, the incoming change of its CEO would signal the beginning of a new era for the company and based on the specialization of the new head honcho, we could probably see more hardware and software focused integrated products coming to increase the already huge number of users.

Disclosure

The Bedokian is vested in Alphabet, Amazon, Apple and Microsoft.

Try out the Growth Indicator, Equities Indicator and S-REITs Indicator screening app for FREE. You can use it as a web page or save it as an app-like bookmark on your home screen of your computer, tablet or mobile for faster access.

Disclaimer

All earnings figures are sourced from CNBC unless otherwise stated.

1 – Richter, Felix. Big Three Hold Dominant Lead In Accelerating Cloud Market. Statista. 9 Feb 2026. https://www.statista.com/chart/18819/worldwide-market-share-of-leading-cloud-infrastructure-service-providers/ (accessed 30 Apr 2026).

 

Apps Update

Click on the picture above to go to the Apps page! 

The Growth Indicator, Equities Indicator and S-REITs Indicator apps had gone through an upgrade (v 1.0.1 beta) with the addition of AI generated insights for further fundamental analysis. This is in line with The Bedokian Portfolio’s fundamental analysis framework that incorporates the environmental factors and economic conditions¹.

For both the Growth Indicator and Equities Indicator, the AI generated insights consisted of three sections, namely: Market Share, Sectoral/Industry SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis and Macro Factors. The former two covers the environmental factors analysis part while the latter covers the economic conditions portion. As for the S-REITs Indicator, only the SWOT Analysis and Macro Factors are featured. While the insights displayed are relatively brief, they provide a direction for the investor to engage in deep dive for further fundamental analysis. 

If one may have noticed, the financial statement part is still limited to the selection guidelines stated in the eBook²; this is to prevent clutter and “information overload” on the apps, therefore it is preferred that one look through other sources for detailed numbers. 

Below are sample screenshots of the new version:

 Growth Indicator screener as seen from a computer (click for larger view).

 

S-REITs Indicator screener as seen from a mobile phone (click for larger view).

 

Equities Indicator screener as seen from a tablet (click for larger view).

Disclosure

The Bedokian is vested in Apple, OCBC and Frasers Centrepoint Trust.

 

Disclaimer

1 – The Bedokian Portfolio (2^nd Ed), chapter 11

2 – ibid, chapter 12