Allianz Income and Growth Fund
Below is the detailed analysis of “Allianz Income and Growth fund”performance, focusing on its dividend yield, investment composition, and potential risks and returns. Here's a breakdown of the key points:
Name and Performance: The fund is known for high dividend yield. However, it's noted that despite being named for both "income" and "growth," the fund's net asset value (NAV) has not appreciated since its launch in July 2013 (launch NAV in July 2013 – SGD 10. Current NAV – SGD 7.45), suggesting that it has failed to deliver on the growth aspect.
Investment Composition: The fund is primarily invested in three types of instruments: equity, convertible bonds, and high-yield bonds, each comprising about 33% of the portfolio. While convertible bonds and high-yield bonds may appear to provide stability and income, they are actually closely tied to equity market performance.
Convertible Bonds: Convertible bonds are flexible and can be converted to equity at an agreed strike price. This flexibility comes with low coupons/interest rates. The current yield to maturity for convertible bonds in the portfolio is just 1.92%. The convertible bond prices rise when equity price is near to agreed strike price and hence, their returns are directly linked to equity market performance.
High-Yield Bonds: High-yield bonds, also known as junk bonds, carry higher risks and offer higher coupon rates. Such bonds are issued by risky businesses. When the economy is not doing good, such businesses are expected to fail and hence, default in payments. So, these bond prices are influenced by the state of the economy (instead of interest rates), which is often correlated with stock market performance.
Risk and Volatility: As you have noted that all three instruments in the unit trust's portfolio are tied to equity market performance but provide returns similar to the debt (10-year historical return is around 6%). This suggests that investors might be accepting lower returns in exchange for higher volatility.
Dividend Consistency: The fund is inconsistent in providing dividends, with two downward revisions in recent months. It's worth noticing that the fund distributes dividends even when its NAV is substantially below the launch value, sometimes dipping into the capital itself.
Summary: It's advisable that investors should not make investment decisions solely based on the monthly dividend, as it may come from the capital at times. One may allocate a small portion (5-10%) of one's portfolio to this fund at current prices, with the possibility of averaging down if the price falls due to correction in equity and bond market. It's important to note that staying invested for a longer period may be an option if the expected return (dividend + capital appreciation) is around 6%. However, as mentioned above this return comes with higher volatility due to the unit trust's reliance on equity market performance.
Declaration:
I have invested a small amount in this fund. At the same time, one shall carry out its own assessment before making its own investment decision and not treat above as investment advice or otherwise.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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SkyInvestor :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Thy GoD : Yeah after your first post I went and made my own analysis and found out it's rlly just good because of dividends. I guess if you don't plan on ever selling you can just take the dividends.
Mainly my initial issue w the fund was that I never knew fun performance was calculated with dividends in mind, hence inflating the actual return value in the growth aspect.
72464866 : you are right not growth only income
72464866 : As it good time now to buy bond based product do you suggest any good funds . Kindly help as am planning to close my investment in Allianz funds coz I don’t see much growth in NAV
VineetKumarGupta OP 72464866 : You need to define what you mean by good investment ? What’s your time horizon for the investment ? How much drawdown you are willing to accept on invested amount ? Then you can zero in on an investment.
72464866 : I am planning for 10 to 15 k usd. For coming 4 to 5 years period . As US market can get corrected in coming year. Which can be a good option . Also if I do a sip like the Allianz I come and growth is there better option with nav growth also in addition to income. Thanks for your reply
VineetKumarGupta OP 72464866 : Consistent dividend along with growth in NAV is matter of chance.
In my opinion, a young or middle age person shall focus on growth in NAV. An old person may find dividend a better option.
Do remember, unit trust dividend is paid out from NAV and is entirely different to stock dividend.
Typically equity can be volatile for 4-5 years. In case you are lucky, you may make more money viz. investing from the covid crash till so far.
In my humble opinion, next few years shall belong to debt and one can make decent money with a reasonable appreciation in NAV and with low risk.
I have invested in PIMCO GIS Income fund via Endowus and getting decent monthly dividend with small increase in NAV. This unit trust is less volatile than Allianz and investment is in solely investment grade bonds.
Hope this helps.
72464866 : Thank Al lot for all your prompt replies. Let me check I am able to buy pimco gis through my broker. Am planning to shift some money from Allianz . What is your thoughts on SPYI and TLT etf. Is it better bet than Allianz income
72464866 : I this the pimco gis you mentioned