Most stock exchanges including Singapore Exchange(SGX) provide ETFs products. Beginners should know what are ETFs? And what should pay attention to when investing in ETFs in Singapore?

In 2021, the combined AUM of SGX-listed ETFs increased from S$8.53 billion to S$12.55 billion, with 22 ETFs recording AUM growth since the end of 2020, while five ETF/ETP debutants that track Singapore Equites, S-REITs, APAC REITs and China Equities ended the year with ~S$300 million in combined AUM. 

In addition to the surge in SGX-listed ETF inflows in 2021, ETF flows underlined increased interest by institutional investors in Asia Fixed Income markets, particularly in the Asia High Yield Bonds and China Gov RMB Bonds, which maintained respective 12M Gross Div. Yields of 4.2% and 2.8% at the end of 2021.

ETFs Basics

What is an ETF

Exchange Traded Funds (ETFs) are open-ended investment funds listed and traded on a stock exchange. They aim to track the performance of an underlying index (like the Straits Times Index) or asset class (like commodities).

Types of ETFs

There are various types of ETFs available to investors that can be used for income generation, speculation, price increases, and to hedge or partly offset risk in an investor's portfolio. Below are common examples of the types of ETFs based on the underlying assets.

• Equity ETFs: Tracks the movements of a stock index, such as the Straits Times Index (STI).

• Commodity ETFs: Provides exposure to a single type of commodities like gold or a basket of commodities.

• Currency ETFs: Invest in either a single currency, like the US dollar, or a basket of currencies.

• Bond/Fixed Income ETFs:  Tracks specific bonds including government bonds, corporate bonds, and state and local bonds—called municipal bonds.

ETFs can also be broken down based on geography, industry and other standards. 

How ETFs work 

The supply of ETF shares is regulated through a mechanism known as creation and redemption, which involves large specialized investors, called authorized participants(APs).

The ETF creation/redemption mechanism allows the market price and net asset value of ETF to converge within a specific range, thereby enabling the market price on the secondary market to align closely with its actual value.

ETFs in Singapore(SGX)

Trading Information

TOP ETFs in Singapore

In Singapore, the most common ETFs in Singapore mimic the performance of the Straits Times Index(STI), which tracks the top 30 companies on SGX, mainly reliable epicenter stocks like DBS, Singtel, Keppel and CapitaLand.

There are two STI ETFs available in Singapore: SPDR STI ETF(SGX: ES3) and Nikko AM STI ETF(SGX: G3B).

As we know, real estate investment trusts REITs investing are popular in Singapore, and REIT ETFs provide a less expensive way to invest in the industry compared to other options. REIT ETFs made their debut on the Mainboard of Singapore Exchange Securities Trading Limited in 2016. 

Take an example, Lion Phillip S-REIT ETF (SGX: CLR) is the only S-REIT focused ETF and comprises  28 S-REITs including CapitaLand Mall Trust, CapitaLand Commercial Trust and Mapletree Commercial Trust as its top 3 holdings.

How to find ETFs trading in moomoo

Moomoo supports the ETFs trading in Singapore,  users can find diversified ETFs and invest according to their preference and appetite for risk.

There are various ETFs provided on the stock markets, and investors need to take the risk from hedgers in pursuit of profit. Some ETFs, especially within the Specified Investment Products (SIP) classification are designed for investors who are willing to accept the risk of substantial losses up to the principal investment amount, possibly within a very short timeframe. 

Investors should also have sufficient understanding of the product and should possess either a high level of knowledge or sufficient trading experience to properly evaluate and assess the product structure, associated risks, valuation, costs and expected returns.