With the rise of robo-advisors in Singapore, there’s been an increased allocation into US listed bond ETFs that most investors would probably not have known about or invested in otherwise. This article, I cover the key difference between bonds and bond ETFS and explain why they are quite different things.

Bonds in a nutshell

Bonds are essentially debt obligations. You can think of them as IOUs. You are essentially lending money out to a company in exchange for interest for a fixed duration of time. Bonds are normally regarded as safer because they rank higher than equity holders. That’s really just a fancy way of saying that in the event of a default or liquidation, you are more likely to get back your money than shareholders.

The problem with bonds in Singapore

There are two main problems. Firstly, the retail bond market for Singapore bonds are woefully small and its ......