The Singapore Savings Bond (SSB) programme — which has been touted as the safest form of investment in the market but struggled to gain strong demand — has been particularly attractive to older investors and small savers, figures from the Monetary Authority of Singapore (MAS) showed yesterday.
Since the launch of the programme in September 2015, more than 37,000 individuals have invested in excess of S$1 billion into the bonds, the MAS said.
The programme appealed the most to individuals aged 48 and above, who made up 44 per cent of investors, followed by those aged between 31 and 40 at 22 per cent. Individuals aged between 41 and 47 made up 18 per cent of the investors, while those aged between 18 and 30 formed the smallest group at 16 per cent.
The bonds also appealed the most to small savers, with 55 per cent of all applications comprising investments of S$10,000 and below. At the other end of the spectrum, 21 per cent were between S$40,500 and S$50,000.
SSBs are a low-entry, risk-free investment vehicle designed to help Singaporeans meet their long-term financial goals and to save for retirement. Interest rates increase the longer the investment is kept, and individuals can choose to cash out before the 10-year tenure is up without suffering any penalty. However, industry watchers have noted that SSBs have not been able to garner the level of interest expected, mainly because of a lack of awareness, low interest rates and limited application channels.
Amid weak demand for the programme, the MAS last month revised the issuance size for this year, cutting the SSBs on offer to S$2 billion, half of the $4 billion upper limit last year.
Mr Christopher Tan, CEO of financial advisory firm Providend, said: “For most financial products in the market, they’re being sold, salespeople go out and push them; whereas for SSBs, nobody is selling them and the public has to apply for it through the available channels. I think this has resulted in people not knowing much about the product.”
Since the start of the programme, investors have been able to apply for SSBs online through DBS/POSB’s Internet Banking portal, apart from the ATMs of DBS/POSB, OCBC and UOB.
MAS said it has added three additional online application channels, through OCBC’s and UOB’s Internet Banking portals and OCBC’s mobile application.
UOB economist Francis Tan attributed the lukewarm take-up largely to low yields.
“With the expectations that yields will go up this year, I think the prospect of better returns will draw more people to invest in SSB, so we can expect the volume to go up. But at the same time, higher interest rates coming on the back of better economic conditions mean that equities may also give better returns, so the spread between the equities and bonds may remain,” he said.
Mr Christopher Tan added: “SSB is a product that also targets the small investors, which is a reason why the starting amount is S$500, so that old people, homemakers can also participate … SSB is an excellent product. It’s low risk and tagged to a AAA-rated bond — it’s quite difficult to find something like that.”