All-in-One Guide to Investing in SG Listed ETFs September 9, 2024

All-in-One Guide to Investing in SG Listed ETFs

Singapore is a global financial hub known for its political stability, robust economy, and strategic geographical location in Asia. As a gateway to both developed market privileges and the vibrant economies of Southeast Asia, it offers investors a unique combination of developed market attributes and exposure to fast-growing Southeast Asian economies. This guide explores the distinct advantages of the Singapore market, helping you make well-informed investment decisions.


Why invest in Singapore?

  • Stable Economic Environment: Singapore boasts a stable political system and a strong regulatory framework, making it an attractive destination for investors.
  • Diverse Economy: The economy is diversified across various sectors including finance, technology, and manufacturing, which helps mitigate risks.
  • Growing Digital Economy: The digital economy in Singapore is expanding rapidly, contributing significantly to GDP growth and creating opportunities in tech-related investments.


Key Economic Insights

  • GDP Growth: As of the second quarter of 2024, Singapore’s GDP grew by 2.9% year-on-year, with an average growth of 3.0% for the first half of the year. The growth was primarily driven by sectors like wholesale trade and finance, despite challenges in manufacturing.
  • Consumer Spending: While consumer-facing sectors such as retail and food services faced a contraction, overall consumer spending is expected to rebound as domestic demand improves.
  • Industrial Output:The manufacturing sector showed mixed results, with a contraction in biomedical manufacturing but growth in electronics, particularly in AI-related technologies.
  • Technological Innovations: The digital economy accounted for approximately 17.3% of Singapore’s GDP in 2022, reflecting strong growth in sectors like e-commerce and online services.


Investment Merits

  • Strong Regulatory Framework: Singapore boasts one of the most transparent and investor-friendly regulatory environments globally, providing a safe and secure platform for investments.
  • Strategic Location: Being a major logistics and trade hub in Asia, Singapore provides exposure to regional growth while offering the safety of a developed market.
  • Diversified Economy: Singapore’s economy is well-diversified across finance, manufacturing, trade, and technology sectors, reducing the risks associated with market volatility.


Investment Risks

  • Global Trade Dependence: Singapore’s economy is highly dependent on global trade, making it vulnerable to international economic fluctuations and trade tensions.
  • Small Domestic Market: The small size of the domestic market means that economic growth is largely driven by external factors, which can introduce higher risk during global downturns.
  • Sectoral Concentration: Certain sectors like financial services and electronics dominate the economy, which could be a risk if these industries face downturns.


Why Choose ETFs?

  • Diversification: ETFs provide exposure to a basket of stocks, reducing the risk associated with single-stock investments.
  • Low Costs:ETFs typically have lower management fees compared to actively managed funds.
  • Liquidity: Like individual stocks, ETFs can be traded throughout the trading day, providing flexibility and timely investment opportunities.


To mitigate concentration risk in SG market with banks and REITs as its core sectors, it’s prudent to consider diversification across different countries and asset classes.


Top 5 SGX-listed ETFs by Trading Volume


7 Noteworthy SGX-listed ETFs to consider for a Diversified Portfolio


Depending on your investment goals, time horizon and risk profile, consider incorporating these ETFs into your portfolio to achieve your financial goals.


Who Should Consider ETFs, and Who Should Not?

Ideal For:

  • Long-Term Investors: Perfect for those seeking exposure to a stable, growing economy with a diversified portfolio that can weather market fluctuations over time.
  • New Investors: An excellent option for individuals looking to start investing in Singapore’s market with a low-cost, low-maintenance approach.
  • Experienced Traders: Ideal for investors who want to capitalize on Singapore’s economic strengths without the need to select individual stocks, offering a strategic way to leverage market opportunities.


Not Ideal For:

  • Short-Term Speculators: If you’re looking for quick profits, ETFs might not be the best choice as they tend to move more slowly compared to individual stocks.
  • High-Growth Seekers: Investors in search of rapid growth might prefer emerging markets in regions like Southeast Asia or Latin America over Singapore, which typically offers more steady growth.
  • Dividend Hunters: Those focused on securing the highest dividend yields might find better opportunities in markets like Hong Kong, where payouts are generally higher.


How to Start: Active Trading vs. Passive Dollar-Cost Averaging (DCA)

For most investors, utilising Dollar-Cost Averaging (DCA) to invest regularly in these ETFs is a smart way to reduce volatility while benefiting from portfolio’s growth. This strategy helps build positions over time without worrying about market timing.

Active traders, on the other hand, can use these ETFs for short-term tactical moves based on market trends but need to be mindful of the risks involved in active trading.

By adopting these strategies, investors can make well-informed decisions that are in line with their financial goals and risk tolerance, enabling confident navigation through the stock markets.

We also offer free webinars and seminars to support your investment journey. Check them out here


References:


Disclaimer

These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

About the author

MuMing Yong
ETF Specialist
Phillip Securities Pte Ltd

Mu Ming traded and invested for more than 8 years in various instruments including ETFs, Equities, Unit Trusts, Options, DLC, CFD, and ILP from the US, SG and HK market. He's a believer of personal finance, macroeconomics, and, technical analysis - so much so that he found himself analysing his social media engagement using trend lines and patterns.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you

IMPORTANT INFORMATION

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  

 

Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com