Exchange Traded Funds (ETFs) are open-ended investment funds traded on exchanges like a stock. They are design to replicate the performance of an underlying index, a commodity, bond or currency.

Efficient
ETFs allow investors can gain exposure to a diversified set of securities in a single transaction. This is much more cost efficient as compared to building a portfolio by buying individual stocks, bonds or commodities.

ETFs give investors the opportunity to gain exposure to specific markets instead of picking individual stocks to invest in.
 
In addition, the annual management fee charged on ETFs (less than 1%) are usually lower than traditional mutual funds and unit trusts (about 1% to 2%) as ETFs are passively managed funds.

Transparent
Real time information such as ETF prices, fund and index information are readily available online.

Flexible
Unlike unit trusts, ETFs can be bought and sold on exchanges during trading hours. Competitive bid/ask quotes are provided by market makers to ensure liquidity.

ETFs track the performance of a variety of broad based, narrow stock, money market, bond and commodity indices.

ETF performance is determined by the underlying benchmark index. However, ETFs may be traded at a premium or discount to the underlying value due to the supply and demand forces and other market factors.

The price of an ETF is usually equivalent to a predetermined percentage of the underlying index.Due to market factors (demand, supply, dividend and management fees), the price of the ETF and the level of corresponding index may differ

Exposure in the country or market
A country's key index, like the Straits Times Index (STI) and Dow Jones, is constructed to reflect the economic composition and market structure of the economy. Index providers will adjust the indices in order to maintain this relevance. ETF holders will not be charged for such adjustment and their ETF will always be appropriately diversified.

Quality of index stocks
The index provider will review the component stocks for suitability on a regular basis and only stocks with significant impact on market movements and high trading volume will remain in the index.

Cost Efficient
Like stocks, only brokerage commissions and exchange fees during the sale and purchase of ETFs will be charged. In addition, the annual management fees charged on ETFs are generally lower as compared to traditional mutual funds and unit. No performance fee is charged.

ETFs are open-ended funds which can be created or redeemed. 

Creation
The Participating Dealer will hand over a basket of stocks requested by the Fund Manager and the securities delivered will form the portfolio of the fund. Thereafter, the Fund Manager will create and issue the ETF units to the Participating Dealer. The Participating Dealer, who may be the market marker, will then have an inventory of ETF units where he could match any buy/sell orders.

Redemption
The Participating Dealer redeems ETF units and gets the basket of stocks in return from the Fund Manager. The Fund Manager will then withdraw these ETF units from the fund and the Participating Dealer may sell these securities in the stock market once the redemption is done.

Creation and redemption can also be done in exchange for cash payment (cash subscription) for certain ETFs, in addition to in-kind subscription.

No. Retail investors need to go through the Participating Dealer to purchase or redeem ETF units. Retail investors can place orders to the market for trades that are less than the minimum creation and redemption size specified in the prospectus.

There are two sources of liquidity for ETFs: the secondary market trading volume and the creation/redemption process. The creation/redemption process will ensure that demands are met and orders are filled. Hence, even with low trading volume, it is possible for ETFs to be liquid. Market makers in the SGX’s ETF market will also ensure liquidity by offering competitive quotes.

Most ETFs have a Designated Market Maker to provide competitive bid/ask quotes which will ensure that orders are filled throughout the trading day.

StreetTRACKS® STI ETF and SPDR® Gold Shares can be purchased using CPF.

As ETFs come in lot sizes of 10, 100, or 1,000, you need to refer to the Lot Size field when placing your order.

Like stocks, the usual brokerage and exchange fees apply for ETFs.

ETFs funds are not subjected to sales charges.
Only the usual brokerage commissions (for stock transactions) will apply.

It will depend on whether the ETF Fund Managers decide to re-invest or to distribute the dividends to the investors. Please refer to the distribution policy in the prospectus and the dividend announcement made by fund manager.

Yes, you can get hold of the prospectus from the fund’s website. You are encouraged to read the prospectus carefully before investing as it provides more comprehensive information about the funds (charges, expenses and potential risks).

You can login to our Online Trading Platform to get the most up-to-date price.

What is Net Asset Value (NAV) and indicative Net Asset Value (iNAV)?

The Net Asset Value (NAV) is the total value of all underlying assets of the fund, less its liabilities. Assets are held by a custodian and/or trustee.

Indicative Net Asset Value (iNAV), also known as indicative Optimised Portfolio Value (IOPV), provides a more real-time measure of the intraday NAV of the fund. The iNAV or IOPV is usually updated every 15 minutes.

The Net Asset Value (NAV) per unit is the closest estimation. The NAV per unit is the total value of all assets minus liabilities in the fund, divided by the number of outstanding ETF units. Since the indicative NAV is calculated periodically through the trading while the NAV is calculated only at the end of the day, investors can refer to the indicative NAV to determine if the ETF is fairly priced.

Do take note of:

• The investment objective and strategy of the ETF;
• The information on the underlying index or asset the ETF is tracking
• The distribution policy of the ETF;
• The fees and charges which the investor has to take on;
• The avenues where you can access trading information of the ETF;
• The details on the fund management company;
• The risksinvolved.

• Market risk: The potential losses the investor might incurred from fluctuations in securities prices daily;
• Tracking error risk: The risk that the performance of ETF might not match that of the underlying index;
• Foreign exchange risk: The changes in currency exchange rates which might cause the investment value to vary; and
• Interest rate risk: The changes in the absolute level of interest rates will also affect the investment value.
• Counterparty risk

We strongly encouraged investors to go through the ETFs’ prospectus in order to better understand the risks involved in investing in ETFs.