To provide investors an affordable access into a diversified investment portfolio containing a ‘balanced’ mixture of equities and fixed income securities to achieve a balance of growth and income over the medium to long term.
Balanced Fund EPF – MIS
28 July 2003
The Fund may be suitable for investors who:
prefer more stable investment returns;
are relatively conservative with a bias towards receiving regular income;
want a meaningful medium to long-term capital growth.
The Fund will focus on achieving its objective by investing in a balanced portfolio consisting equities, debentures, money market instruments and/or deposits.
When selecting its fixed income instruments such as debentures, money market instruments or deposits, macroeconomic trends and market analysis are the important considerations taken. Whereas, when investing into equities, we will focus on companies that are able to provide growth potential over the medium to long-term investment horizon.
While we typically take an active trading policy, we look to maintain some core holdings that are held over the medium to long term which is similar to a buy and hold strategy. We will also maintain a trading portion for the portfolio, which we use to take advantage by participating in investment opportunities that are set to benefit from prevailing market conditions, with the aim of boosting the Fund’s performance.
To achieve its objective, the Fund will also have the flexibility to hold exposure in warrants, as well as collective investment schemes that have similar investment objectives to the Fund.
Derivative trades may be carried out for hedging purposes, through financial instruments including, but not limited to, forward contracts, futures contracts and swaps. Future and forward contracts are generally contracts between two parties to trade an asset at ana greed price on a pre-determined future date. Swaps, whereas, is an agreement to swap or exchange two financial instruments between two parties.
The intention of hedging is to protect the value of the asset from any adverse price movements. For example, to hedge against foreign currency exchange risk, the Fund may enter into a currency forward contract to offset any adverse foreign currency movements by determining an agreed rate for an agreed tenure with its counterparty. While these hedging transactions would protect the Fund against potential losses, trades for hedging purposes would also limit the returns that the Fund may have potentially received from foreign exchange gains would the Fund not have hedged its foreign currency exposure.
Temporary Defensive Position
We hold the option to take temporary defensive measures that may be inconsistent with the Fund’s principal strategy and asset allocation to protect the Fund against adverse market conditions. To manage the risk of the Fund, we may shift the Fund’s focus into lower risk investments such as money market instruments and/or deposits.