What's New In Investments, Funds? – DBS, Amundi

Editorial Staff

21 April 2022

is widening access to the new Amundi Asia Funds – CIO Barbell Income Fund – which adopts a strategy of holding income-generating investment and growth stocks, tapping into concerns about how to ride out volatile markets.

Previously, only accredited investors had access, DBS said in a statement yesterday.

The fund mirrors the DBS Chief Investment Office high-conviction investment calls. Investors must invest at least S$1,000, pay an initial sales charge of 0.82 per cent, and are not subjected to a lock-in investing period. French firm Amundi is running the fund, which will be exclusively distributed by DBS, with DBS acting as the investment advisor. .

The fund can exploit “best-in-class companies across different sectors and geographies.” It also uses a “buy-write strategy,” sometimes called a covered call approach to generate added income. It sells call options and collects option premiums. This also has the added benefit of mitigating downside risks during periods of market volatility, DBS said.

According to one definition, a covered call refers to a financial transaction in which the investor selling call options owns an equivalent amount of the underlying security. To execute this, an investor who holds a long position in an asset then writes (sells) call options on that same asset to generate an income stream. The investor's long position in the asset is the cover because it means that the seller can deliver the shares if the buyer of the call option chooses to exercise. A call option is the option to buy assets at an agreed price.

“Uncertainty looks set to remain in the foreseeable future, as the world continues to grapple with a myriad of challenges including the pandemic, geopolitical tensions and inflationary pressures, among others,” Said Hou Wey Fook, chief investment officer at DBS Bank, said. “Rising inflation and low rates will diminish consumer spending power in the years to come, which reinforces the need for customers to actively invest and grow their wealth. When investors start investing isn’t as important as how long they stay invested, and there’s no time like the present.”

The bank said its first “barbell” fund was rolled out to wealth clients in August 2019 and has returned more than 8 per cent on an annualised basis.