The 10 ETFs most bought and held in Singapore spanned three asset classes (equities, bonds, and commodities) and posted an average return of 6% for the first 11 months of the year. The 10 ETFs maintained US$2.6 billion in AUM as of the end of November 2016 and generated positive gains – ranging from 12.8% for both the SPDR® Gold Shares and iShares Barclays Capital USD Asia High Yield Bond Index ETF to a 0.2% gain for the iShares MSCI India Index ETF.
The six equity ETFs cover the Asia ex-Japan region with two ETFs focused on Singapore, two on China, one on India, one on ASEAN and one focused on the broader Asia ex-Japan region.
The ETFs are tabled below.
| Top 10 ETFs in Singapore | CCY | AUM (US$m) |
Total Return* |
| SPDR®GOLD SHARES | USD | 899 | 12.8% |
| ABF SINGAPORE BOND INDEX FUND | SGD | 560 | 2.4% |
| ISHARES MSCI INDIA INDEX ETF | USD | 392 | 0.2% |
| SPDR® STRAITS TIMES ETF | SGD | 378 | 3.1% |
| NIKKO AM SINGAPORE STI ETF | SGD | 103 | 3.6% |
| DBXT MSCI AC ASIA EX JAPAN INDEX UCITS ETF | USD | 59 | 6.5% |
|
ISHARES BARCLAYS CAPITAL USD ASIA HIGH YIELD BOND INDEX ETF ** |
USD | 55 | 12.8% |
| ISHARES J.P. MORGAN USD ASIA CREDIT BOND INDEX ETF | USD | 50 | 8.2% |
| LYXOR ETF CHINA ENTERPRISE (HSCEI)** | USD | 42 | 5.8% |
| CIMB FTSE ASEAN 40 ETF | USD | 32 | 7.1% |
| Average | 6.2% |
* Total return from January to November 2016 in SGD.
** Specified Investment Product (SIP); Note that average return for the 10 ETFs for 2016 through to 16 December (rather than 30 Nov), was 6.1%.
Eight of the 10 ETFS are Excluded Investment Products (EIP, i.e., non-SIP). An EIP ETF generally invests in a basket of stocks that make up the index it is designed to track, rather than a derivative product that derives its value from the index. EIPs are considered to be less complex, and can be bought and sold by individual investors without having to complete a Customer Assessment Review, or take the online SIP test.
Under MAS’ guidelines to enhance safeguards to retail investors, brokers must assess if investors have the relevant education, knowledge or experience before they can invest in SIPs. SIPs are products that have structures, features and risks that may be more complex in nature. If investors do not satisfy the relevant education, investment transaction experience or work experience, they must undergo and complete an e-tutorial and pass and online quiz – both of which can be found here.
Just like the indices they track, the biggest risk ETF investors face is market risk; that is, investors can buy units today and be faced with a lower unit price tomorrow. There are other risks associated with ETFs that are unique to the type of ETF. Most ETFS charge an annual management fee from 0.3 %to 0.6%.
| ♦ STI ETFs |
| STI ETFs can be used with the 30 STI constituents to build stock portfolios that have both a passive and active element. For example, one half of the portfolio could be the ETF, whilst the other, more active half of the portfolio, could be made up of a group of STI stocks. Investors can rotate the different STI sectors or regional focus based on trends or outlooks, while maintaining a passive exposure to the local stock market through the STI ETFs. The three strongest STI stocks in the 2016 year thus far were Thai Beverage PCL, SATS and Genting Singapore. These three stocks averaged a 30% total return for the period and were also amongst the five best-performing STI stocks of the last 10 years. Over the past 10 years, the best STI performers were Thai Beverage, Jardine Cycle & Carriage, SATS, Jardine Matheson Holdings and Genting Singapore. Three of these five stocks represent Consumer Sectors, while the other two stocks, SATS and Jardine Matheson Holdings, have consumer-facing business interests. |
Excerpted from SGX My Gateway Newsletter.