How to Buy Fixed Income ETFs in Singapore: Bond ETF Types, Risks and Costs

The ABF Singapore Bond Index Fund (A35), the SGX-listed ETF that holds mainly Singapore government bonds, managed S$1,130.36 million on 23 October 2026, with a weighted average yield to maturity of 2.12% at the end of June 2026. It is one of several ways investors here can own a diversified basket of bonds in a single trade.

A fixed income ETF, or bond ETF, is an exchange-traded fund that holds a portfolio of bonds and trades on a stock exchange like a share. The basket can be very large: the iShares Core Global Aggregate Bond UCITS ETF (AGGG) held 19,980 bonds on 22 October 2026. Unlike a single bond held to maturity, most bond ETFs have no date on which they repay your capital, because they keep replacing bonds as they mature.

For investors in Singapore, the first choice is currency. SGX-listed funds such as A35 hold Singapore dollar bonds and trade in SGD, while most global bond ETFs are priced in US dollars and trade in New York or London. The second choice is how much interest-rate and credit risk you want, which varies widely from one bond ETF to the next.

The main categories are Singapore government bonds, SGD corporate bonds, global aggregate bonds (unhedged or hedged), US investment-grade corporate bonds, high-yield bonds, floating-rate notes and US Treasuries. Each has a different mix of duration, credit quality and currency exposure.

This guide explains how bond ETFs work, the three risks that drive their returns, the main types available to Singapore investors, how currency moves change your result in SGD, how bond ETFs compare with T-bills, Singapore Savings Bonds and fixed deposits, and how to buy them.

Fixed income ETFs at a glance

Each fund here represents one of the main bond categories. Duration estimates the percentage price change for a one percentage point move in yields; yield to maturity is shown where the issuer publishes it.

Source: Amova A35, Amova MBH, iShares AGGG, Vanguard BNDX fact sheet, iShares LQD, iShares IHYU, iShares FLOT (as of 25 October 2026)

What is a fixed income ETF?

"Fixed income" describes any investment that pays a set stream of interest, and bonds are the main example. A bond is a loan to a government or company: you lend a face amount, receive a coupon at regular intervals, and get the face amount back at maturity if the issuer does not default.

Bonds, bond funds and bond ETFs

An individual bond gives you a known schedule of payments and a maturity date, but buying one usually needs a larger sum and leaves you exposed to a single issuer. A bond unit trust pools many bonds and is bought from the manager at the day's net asset value. A bond ETF also pools many bonds, but trades on an exchange throughout the day at market prices.

Most bond ETFs track an index with a maturity window. As bonds approach the short end of that window, the fund sells them and buys new ones, so it keeps a fairly steady maturity profile. The ETF therefore has no maturity date of its own, and the price you get when you sell depends on market yields at that moment.

Coupon, yield to maturity and distributions

These figures are easy to mix up. The coupon is the fixed interest rate printed on each bond. Yield to maturity (YTM) is the annual return the fund's current bonds would deliver if all were held to maturity and paid in full; for MBH it was 2.67% for the fund against 2.65% for its index at the end of June 2026. Distributions are what the ETF actually pays you. A35 and MBH pay semi-annually at the manager's discretion, and their distributions are not guaranteed.

The three risks that move bond ETF prices

Bond ETFs are usually less volatile than equity funds, but their prices still fall at times. Three separate risks explain most of the movement, and a fund can be low on one and high on another.

Interest-rate risk and duration

When market yields rise, existing bonds with lower coupons become less attractive and their prices fall. Duration measures that sensitivity: the price change is roughly minus the duration multiplied by the change in yield. A fund with a duration of 6 years would lose about 6% if yields rose by one percentage point, before income.

Example only, based on durations from iShares, Vanguard and Amova (as of 25 October 2026). Assumes an instant, parallel change in yields and ignores convexity, income and fees.

FLOT barely moves because its notes reset their coupons to short-term rates every few months. The trade-off is that its income falls quickly when central banks cut rates.

Credit risk and spreads

Corporate bonds pay more than government bonds because the issuer could default. The extra yield is the credit spread, and it widens when investors worry about the economy. Spread changes hit a fund's price through the same duration arithmetic, so a high-yield fund can fall even when government yields are steady.

Example only, based on durations from iShares IHYU and iShares LQD (as of 25 October 2026). Assumes spread changes apply across the whole portfolio and ignores defaults, income and fees.

In the second scenario, falling government yields fully offset LQD's wider spreads, while IHYU's shorter duration gives it little rate cushion against a bigger spread jump. High-yield bonds tend to move with equities in a downturn, and investment-grade bonds lean more on rate moves.

Currency risk

A US dollar bond fund earns its return in US dollars. When you measure it in Singapore dollars, every move in USD/SGD is added or subtracted. For short-duration funds, this risk often matters more than rates.

Bond ETF risk map showing duration on one axis and credit quality on the other for FLOT, IHYU, MBH, AGGG, BNDX and LQD

Types of bond ETFs for Singapore investors

Each category suits a different job in a portfolio. The fund named under each heading is one example, and other issuers run similar funds.

Singapore government bonds: A35

A35 tracks the iBoxx ABF Singapore Index, which covers SGD bonds issued by the Singapore Government and quasi-government bodies such as HDB, Temasek and the Land Transport Authority. Its ten largest holdings at the end of September 2026 were all Singapore Government bonds. Its 0.24% TER is higher than most global bond ETFs, but for SGD-based investors it removes currency risk entirely.

SGD corporate bonds: MBH

The Amova SGD Investment Grade Corporate Bond Index ETF (MBH) follows the iBoxx SGD Non-Sovereigns Large Cap Investment Grade Index. It had S$725.79 million in assets on 23 October 2026 and charges a 0.26% TER. At the end of June 2026 its YTM sat about half a point above A35's: that gap is what investors earned for taking corporate credit risk in SGD.

Global aggregate bonds: AGGG and BNDX

AGGG tracks the Bloomberg Global Aggregate Bond Index: government, corporate and securitised investment-grade bonds from many countries. Its USD share class is unhedged, so you carry exposure to the euro, yen and other currencies in the index. BNDX tracks non-US bonds but hedges to offset currency fluctuations, with a 0.07% expense ratio. Hedging removes the swings in foreign bond currencies against the US dollar; the fund is still priced in US dollars, so USD/SGD risk remains for a Singapore investor.

US investment-grade corporate bonds: LQD

LQD tracks the iBoxx USD Liquid Investment Grade Index, with a weighted average maturity of 12.62 years on 22 October 2026. That long maturity gives it the highest duration of the funds here, so it reacts strongly to both rate and spread moves.

High-yield bonds: IHYU

The iShares $ High Yield Corp Bond UCITS ETF (IHYU) is an Ireland-domiciled fund, ISIN IE00B4PY7Y77, with a 0.50% TER, and it pays distributions quarterly. Its bonds are rated below investment grade, so it pays more income and carries more default risk. Its shorter duration of 3.23 years makes it less sensitive to rates than LQD.

Floating-rate notes: FLOT

FLOT tracks the Bloomberg US Floating Rate Note < 5 Years Index. Its 0.02-year duration makes it a US dollar alternative to cash for investors who accept investment-grade corporate credit risk.

US Treasuries and inflation-linked bonds

US Treasury ETFs range from funds holding 0 to 3 month bills to funds holding 20+ year bonds, and their rate sensitivity differs more than any other category here. Inflation-linked Treasury funds adjust their principal with US inflation. A separate guide to US Treasury ETFs covers both fund by fund.

SGD vs US dollar bond exposure

For an investor whose spending is in Singapore dollars, a US dollar bond fund carries two sources of return: the fund's return in USD and the change in USD/SGD. On S$10,000, a modest fund gain can turn into a loss.

Example only. Assumes a 4% total return in US dollars, a 6% fall in USD/SGD over the same year, and no fees or FX spreads.

The same 4% fund return would become +7.12% in SGD if the US dollar rose 3%, and +0.88% if it fell 3%.

How a 4% US dollar bond return becomes a 2.24% loss in Singapore dollars when USD/SGD falls 6%

SGD bond ETFs such as A35 and MBH avoid the problem but give you a narrower market and, at the end of June 2026, lower yields to maturity. Many investors split the difference: SGD bonds for money they will spend locally in the next few years, and global bonds for long-term diversification.

Bond ETFs vs T-bills, Singapore Savings Bonds and fixed deposits

Singapore offers several low-risk alternatives to bond ETFs, and each handles your capital differently. Singapore Savings Bonds have a 10-year tenor, a S$500 minimum and can be redeemed in any month with your investment returned in full plus accrued interest. Singapore T-bills come in 6-month and 1-year tenors, with a S$1,000 minimum, and their price may rise or fall before maturity. SGD deposits at a Scheme member bank are insured up to S$100,000 per depositor per Scheme member.

Source: MAS Singapore Savings Bonds FAQs, MAS T-bills for individuals, MoneySense deposit insurance (as of 25 October 2026)

Maturity is the main difference. A T-bill, an SSB or a fixed deposit tells you how much you will have on a known date. A bond ETF gives you diversification and daily liquidity, but the amount you get back depends on yields when you sell. For money needed on a specific date within a year or two, a product with a fixed maturity or a very short-duration fund fits more closely.

How to buy bond ETFs in Singapore

The buying route depends on where the fund is listed.

Decide the role first. Cash parking, a 1 to 3 year spending reserve and a long-term bond allocation call for different durations and currencies.

Choose the listing. A35 and MBH trade on SGX in SGD through any SGX brokerage. AGGG and IHYU trade in London in US dollars, and LQD, BNDX and FLOT are US-listed, so you need a platform with access to those exchanges.

Check the exact share class. For London-listed funds, confirm the ISIN, whether the class accumulates or distributes, and whether it is currency-hedged. AGGG, for example, has both distributing and accumulating USD classes as well as hedged versions.

Complete the paperwork. US-listed funds require a W-8BEN form, which certifies that you are not a US person; a guide to buying US ETFs covers the full process. If your broker classifies a product as a listed Specified Investment Product, it must first carry out a Customer Account Review.

Place a limit order and fund it. Bond ETFs can have wider spreads than large equity ETFs, particularly smaller SGX listings, so a limit order keeps execution under control. Count the FX cost on any SGD to USD conversion.

Check retirement-scheme eligibility separately. Whether you can use SRS or CPF savings depends on your provider's approved route, even when the fund is open to cash buyers.

Tax on bond ETF income

Singapore generally does not tax individuals on gains from selling financial instruments held as investments, and SGX-listed funds such as A35 and MBH add no foreign withholding layer. Distributions from US-domiciled ETFs count as US-source dividends, which face 30% withholding or a lower treaty rate for nonresident aliens by default. US tax law lets nonresidents exclude certain interest-related dividends, which can reduce withholding on bond funds; how much applies depends on each fund's designations.

Ireland-domiciled funds such as AGGG and IHYU pay distributions from an Irish company. They also sit outside the US estate tax net, which applies when a nonresident's US-situated assets exceed US$60,000. If you hold large amounts in US-domiciled funds, a tax adviser can look at your situation.

How to use bond ETFs in a diversified portfolio

A practical way to organise fixed income is by when you will need the money.

Source: MAS T-bills for individuals, iShares FLOT, iShares AGGG (as of 25 October 2026)

Matching duration to your horizon reduces the chance of selling at a bad time. If you will need the money in two years, a fund with a 7-year duration can lose several percent just before you sell. For a long-term allocation, a medium-duration aggregate fund spreads risk across thousands of issuers and tends to cushion a portfolio when equities fall on growth worries.

The split between bonds and equities usually shifts towards bonds as a goal approaches. Rebalancing once or twice a year, selling what has risen and buying what has lagged, keeps that split in place without trying to forecast rates.

Invest in bond ETFs with StashAway

ETF Explorer lets you build the bond mix this guide describes from individual funds, from Singapore government bonds (A35) and SGD corporate bonds (MBH) to global aggregates such as AGGG and BNDX. Each order costs US$1 (excluding GST), plus a 0.09% operation fee on SGX-listed funds such as A35 and MBH, and you can invest with cash or SRS.

If you would rather hand over the bond and equity split and the rebalancing, General Investing powered by StashAway runs a managed, globally diversified ETF portfolio for you.

Bond ETF prices fall when rates rise or credit worsens, so you could get back less than you invest.

Frequently asked questions

Here are short answers to common questions about fixed income ETFs in Singapore.

Are fixed income ETFs safe?

Bond ETFs are generally less volatile than equity ETFs, but their prices do fall. A fund with a 7.63-year duration, such as LQD on 22 October 2026, would lose about 7.6% if yields rose one point, and high-yield funds can drop further in a recession. For capital you cannot afford to see fall, deposits, T-bills or SSBs fit better.

What is the difference between a bond and a bond ETF?

A single bond pays fixed coupons and returns its face value on a set maturity date, provided the issuer does not default. A bond ETF holds many bonds and keeps replacing them, so it never matures. You gain diversification and easy trading, and give up the certainty of a known payout date.

Is A35 a good alternative to T-bills?

They do different jobs. A T-bill returns its face value after 6 months or a year, while A35 holds Singapore government and quasi-government bonds across many maturities and its price moves with SGD yields. A35 suits a longer holding period; T-bills suit money needed on a known date.

Can bond ETFs lose money?

Yes. Rising yields, widening credit spreads, defaults and currency moves can all reduce a bond ETF's value, and a US dollar fund can show a loss in SGD even in a year when it gains in USD. Holding for longer gives income more time to offset price falls.

Should I choose a hedged or unhedged global bond ETF?

Hedged funds such as BNDX remove the swings in foreign bond currencies against the US dollar, which makes them behave more like a pure bond investment. A Singapore investor still carries USD/SGD risk in both cases, since the hedge is not to the Singapore dollar.

Do bond ETFs pay a fixed income?

Distributions vary with the coupons the fund collects and the bonds it buys as old ones mature. A35 and MBH pay semi-annually at the manager's discretion, and LQD and FLOT pay monthly; none of these payments is guaranteed.