The increasing popularity of ETFs (exchange traded funds) has been one of the notable trends in Singapore investing over recent years. It boils down to the fact that ETFs are a super-easy way to gain exposure to the markets you want to. The stats stack up to suggest the trend has some way to go. The combined AUM (assets under management) of all ETFs listed in Singapore has exploded by 57% from S$5.49bn in 2019 to a total of S$8.60bn just 12 months later. Combined turnover of Singapore ETFs also increased by 2.5 from 2019 levels, reaching S$5.41bn in 2020.
In some respects, the party has only just started. It wasn’t until 2019 that Singapore authorities reclassified ETFs as ‘retail’ instruments and opened the way to smaller investors getting involved. As of 29th January, there were 51 ETFs listed in Singapore. That number looks ready to head north as more and more products coming to the market. This consumer demand has resulted in further brokers supporting traders who want to trade ETFs. This review will pick out a few of the best ETFs and give a steer on where and how to trade them.
#1ABF Singapore Bond Index Fund (SGX:A35) at Nikko Asset Management
Nikko Asset Management – What we liked:
- Low-cost trading
- A big player that ranks in the top-10 SGX table of ETF managers
- More than US$81bn of ETFs under management
- NAM’s Singapore ETF business grew 32% in 2019
Bond markets do lack some of the fireworks associated with higher volatility markets. But as ETF investing is, for many, a way of balancing out risk and returns, fixed income ETFs are a good way to demonstrate the role ETFs can play in an investment portfolio.
For many investors, slow and steady wins the race. Even those with more aggressive risk profiles might still find space for some bond ETFs, even if to avoid the cost of holding wealth in cash form.
ABF SG BOND ETF
The ABF Singapore Bond Fund Index is a way to get exposure to the fixed income assets of a group of government and government-linked organisations. The ETF manager takes positions in Singapore Savings Bonds, Temasek Holdings Bonds and the Temasek-linked Astrea IV and V Bonds. The fund has been operating for more than a decade, so has enough of a track record for potential investors to be able to carry out effective due diligence. In performance terms, the fund has demonstrated resilience and, even during volatile market conditions, it has performed well.
While the upside is limited, so too is the downside risk, and with an expense ratio of just 0.26%, it’s an obvious candidate for those looking to improve on returns found at cash savings accounts.
- Fund NAV: S$1.181bn
- Expense Ratio: 0.26%
Nikko Asset Management registered address: 12 Marina View, #18-02, Asia Square Tower 2, Singapore 018961. Tel: +65-6500-5700, 1-800-535-8025
#2Lion-OCBC Securities China Leaders ETF at Saxo Markets
Saxo Markets – What we liked:
- Strong in terms of account security
- Easy onboarding – it only takes five minutes to open an account
- Market-leading proprietary platform with user-friendly functionality
- Over 3,000 ETF markets to trade
- Active trading and regular savings plans
- Global coverage
- Invest from as little as S$25Â in a single trade of 10 units
- Trade in SGD or RMB
- Has been operating in Singapore since 2006
The Lion-OCBC Securities China Leaders ETF is a way to tap into the growing influence of China in the global economy. As a lot of Chinese growth has been relatively recent, there is higher price volatility in some stock names than those in more ‘established’ markets.
This ETF aims to replicate, as closely as possible, the performance of the Hang Seng Stock Connect China 80 Index before expenses. It uses a policy of direct investment, investing substantially, or in all of the underlying Index Securities. The fund manager does the legwork and investors get the exposure they want with a management fee of 0.45%.
- Expense ratio: 0.45% fees, capped at 0.62% per annum – two years from fund inception.
Saxo Markets Singapore registered address: 3 Church St, #30-00 Samsung Hub, Singapore 049483. Tel: +65 6303 7800.
The China Leader ETF was launched in August 2021.
#3Global X Lithium & Battery Tech ETF at CMC Markets
CMC – What we liked:
- Tight trading spreads
- One of the highest-ranking trading platforms in Singapore
- Round-the-clock customer service
- Research and analysis designed to help you spot trading opportunities
- Well regulated (MAS)
- Access to more than 10,000 ETF markets
CMC Markets has been operating for more than 30 years and attracts discerning investors. Around 98% of CMC client accounts with open positions on Global X Lithium & Battery Tech ETF are currently long and expect the price to rise in conjunction with the interest in the sector.
The fund’s investment mandate covers the whole spectrum of the industry, from mining lithium, refining the metal and battery production. It also cuts across geographical boundaries. With demand for the product surging, there is potential for bottlenecks in the supply chain, which might favour one particular group of operators, such as refiners. By covering all bases, this ETF aims to ensure investors achieve a return that reflects broad growth across the market.
Lithium battery technology is a core element of the move to electric vehicles (EVs), with the renewable energy element of the proposition putting the sector in a good position to tap into the move away from carbon fuels. This is reflected in the prices of the fund’s underlying assets surging. In the 12 months up to 30th June 2021, the fund NAV increased by 130%.
- Expense ratio: 0.75%
- ETF AUM: US$ 4.7bn
- Inception date: 22/7/2010
CMC Markets Singapore registered address: 9 Raffles Place, #30-02 Republic Plaza Tower I, Singapore 048619.
#4Lion-Phillip S-REIT ETFÂ at OCBC Markets
OCBC Markets - What we liked:
- Great research features including in-depth analysis
- 24/7 access to investments via OCBC Digital
- Account types to suit all users — from trading accounts to the Young Investor Program
- A range of platforms to choose from, with each dedicated to a specific market
- Updates, news, and insights from the OCBC Wealth Panel
- Access to Singapore listed exchange-traded funds from as low as S$100
A large chunk of the Singapore ETF market is devoted to property investments and REITs.
The Lion-Phillip S-REIT ETF investment’s objective is to replicate the performance of the Morningstar Singapore REIT Yield Focus IndexSM as closely as possible before expenses. The Index is intended to screen for high-yield REITs, which translates into a dividend income that can be invested back into the fund. The properties targeted are chosen because they are of superior quality and in good financial health.
- ETF inception date: 30th October 2017
ETF manager Lion Global Investors Ltd has the registered address: 65 Chulia Street, #18-01 OCBC Centre, Singapore 049513.
#5SPDR S&P 500 ETF
What we liked:
- One of the easiest platforms to use
- Great for beginners and intermediate level traders
- Registration takes minutes to complete
- Take advantage of the ‘copy’ and ‘social trading’ services where you can share ideas with others
- Competitive pricing
- More than 20 million registered account holders
Investing in ETFs is not about ‘gaming’ the system. That’s why tracker ETFs that follow the performance of major stock indices are amongst the most popular markets on the platforms.
The SPDR S&P 500 ETF is the largest ETF in the world and a perfect example of an instrument many invest in to try to generate a healthy return on their capital but cap downside risk.
The S&P 500, which is made up of the largest 500 firms across the globe, is available in ETF format. The manager monitors the markets and buys the 500 constituent members so that clients can get exposure to them with one click of a button.
Nothing can be guaranteed, but the S&P 500 ETF has rebounded to now trade above the price levels seen prior to the COVID-crash of March 2020. As of 16th August, it was posting at 31.24% one-year return. It is made up of some household staples such as Caterpillar, Colgate-Palmolive and Costco but also contains a range of tech stocks, including Amazon and Intel. Another benefit of trading in such popular markets is that trading fees are super-low, with the expense ratio coming in near 0.09%.
- Inception date: January 1993
- Expense ratio: 0.0945%
- Assets under management: US$389,442m
Trustee: State Street Global Advisors Trust Company Channel Center, 1 Iron Street, Boston. MA 02210