Recent activity highlights of ETFs traded on SGX

The Daily Summary featured on SGX My Gateway provides a daily account of the top three Exchange Traded Funds (ETFs) by turnover that are traded on Singapore Exchange (SGX). In the first four months of 2012, SPDR Gold Shares accounted for 51.8% of the turnover of all ETFs traded on SGX. The activity in the SPDR Gold Shares has coincided with greater demand emphasis from countries like India and China as noted in the World Gold Council Q1 2012 statistics commentary.

ETFs offer investors the broad diversification benefits of an index in one security. With Q1 of 2012 over, the recent activity in the wide range of equity index tracking ETFs traded on SGX provides an opportunity to observe where in the globe, investors have sought exposure.

Source: SGX

The relative turnover of the 24 ETFs implies investors have remained active in the equity indices of ASEAN, China and India in the first four months of 2012. ASEAN, China and India make up a large part of the growth of Developing Asia. Although Singapore is not categorised within Developing Asia, it is a member with developed economy status in ASEAN. As a bloc, Developing Asia is forecast by the IMF to grow by 7.3% in 2012. Last month the International Monetary Fund (IMF) left this forecast unchanged from its previous estimates in January. Meanwhile the Advanced Economies are expected by the IMF to produce economic growth of 1.4% in 2012.

The IMF Data Mapper ® also extended its nominal GDP forecasts on account of the April World Economic Outlook. The nominal GDP of Developing Asia to grow to US$19.74 trillion in 2017, from US$11.3 trillion in 2011. It is now in 2017 that the nominal GDP of Developing Asia is expected to surpass the nominal GDP of the United States. The IMF forecasts nominal GDP of the Unites States at US$19.70 in 2017.

The amount of activity in the SPDR Gold Shares provides context to the participation in the regional equity indices. SPDR Gold Shares has accounted for half the turnover of ETFs listed on SGX in the first four months of 2012 and infers that investors-on-a-whole have balanced equity participation with participation in Gold. The ETFs that track equity indices of Japan, Europe and the United States accounted for 4.6% of the turnover of ETFs traded on SGX in the four months.

Exchange Traded Funds have been categorised as Specified Investment Products (SIPs). SGX SIPs have structures, features and risks that may be more complex in nature.

The price and value of all ETFs may go down as well as up and past performance does not guarantee of future returns.

As a comparative product class ETFs are commonly known as open ended investment funds that are listed and traded on an Exchange. Unlike traditional funds, ETF prices are readily accessible any time during trading hours via security brokers enhancing price transparency. There are also relatively low distribution expenses, no upfront sales fee and low annual management fee compared with Unit Trusts.