• 2021 was a watershed year for SGX-listed ETFs. The combined AUM surged more than 40% as of 30 Nov, with the offering expanding 17% from 30 ETFs to 35 ETFs. During the 11 months, XT Vietnam and SPDR S&P500 averaged a 33% total return, while XT MSCHINA and Lion-OCBC Sec HSTECH S$ averaged a 23% decline in total return.
   
• On 17 Jan, the board lot size of all SGX-listed ETFs will be reduced to 1 unit, supported in part by the significant growth in dollar cost averaging. The trade size flexibility that is an essential aspect of dollar cost averaging, has also been enabled by tighter bid/offer quotes provided by market makers and investors in 2021.
   
• Another enhancement for the SGX-listed ETF trading effective 17 Jan, will see greater price flexibility in the placing of limit buy and sell orders. The standard +/- 30 tick range above/below the last reference price for sell/buy limit orders will be revised to +/- 10% above/below the last reference price.    
  
   

A Watershed Year for ETF Markets

For the first 11 months of 2021, ETFs and ETPs listed globally saw a record US$1.14 trillion in net inflow. This saw their global assets under management (“AUM”) increase from US$7.99 trillion at the end of 2020, to US$9.92 trillion at the end of November 2021 (for the full ETFGI report click here).

As this year marks 20 years since ETFs were listed on SGX, we have seen the combined AUM of SGX-listed ETFs surge 41% as of 30 Nov, with the product offering expanding 17% from 30 ETFs to 35 ETFs. The combined AUM of the Singapore-listed ETFs has surged to S$1.2 billion, with as many as five ETFs maintaining AUMs above S$1.0 billion. The five ETFs are the iShares Barclays USD Asia High Yield Bond Index ETF, ICBC CSOP FTSE Chinese Government Bond ETF, SPDR Straits Times Index ETF, SPDR GLD ETF and ABF Singapore Bond Index Fund. Meanwhile, the five ETFs that have listed in 2021 include the CSOP iEdge S-REIT Leaders Index ETF, Lion-OCBC China Leaders ETF, the UOB APAC Green REIT ETF, and the Phillip MSCI Singapore Daily (2x) Leveraged and Phillip MSCI Singapore Daily (-1x) Inverse Products. Note that unlike conventional ETFs, Leveraged and Inverse (L&I) products aim to track a multiple or opposite of the daily return of its underlying index (click here for more).


Market Enhancements Effective 17 January 2022

On 17 January 2022, two significant changes will take effect in the Singapore ETF market. The first change will see the board lot size of all SGX-listed ETFs reduced to 1 unit, supported in part by the significant growth in dollar cost averaging.

The trade size flexibility that is an essential aspect of dollar cost averaging, has also been enabled by tighter bid/offer quotes provided by market makers and investors in 2021. The top 10 traded ETFs in the first 11 months of 2021 saw an average year on year reduction of 33% in bid-ask spreads for top of order book and 28% average reduction in bid-ask spreads for market depth of S$50,000.

 

Source: SGX, Refinitiv, Bloomberg (Data as of 30 November 2021)

The second enhancement for the SGX-listed ETFs will see greater price flexibility in the placing of limit buy and sell orders with a change to the forced order range. The standard +/- 30 tick range above/below the last reference price for sell/buy limit orders will be revised to +/- 10% above/below the last reference price.    

Source: SGX, Refinitiv, Bloomberg (Data as of 30 November 2021)
¹Based on last traded price on 3-Dec-2021
 

Board lot size of ETFs listed on SGX will be reduced to 1 unit

Currently, Singapore-listed ETFs maintain different board lot sizes ranging from 5 units to 100 units. Effective, 17 January 2022, the board lot size of ALL ETFs listed on SGX will be reduced to 1 unit, providing added flexibility for portfolio management. For instance, based on a unit price of US$459.07 on 3 December, the SPDR S&P 500 US$ ETF (S27) is traded in multiples of US$4,590.70 based on a board lot size of 10 units. Effective 17 January 2022, the minimum trade size for SPDR S&P 500 US$ ETF will be traded in multiples of US$459.07 based on the NEW board lot size of 1 unit, assuming the 3 December unit price of US$459.07. This reduces the minimum trade size per board lot by as much as 90%. It also means that an investor who wishes to allocate US$12,000 into the ETF can purchase 26 units with a total value of US$11,935.82, instead of a less flexible purchase of 20 units at US$9,181.40 or 30 units at US$13,772.10.

Existing Forced Order Range of +/- 30 ticks will be revised to +/- 10%

The ‘forced order’ key provides an alert when the price of an order is beyond the forced order range. It is a pre-execution mechanism and does not block orders. Market participants can still 'force' an order through at a price which lies outside the forced order range through their respective brokers. This aspect of the order process is managed between the broker and investor. However, with this enhancement, investors can place limit orders within +/- 10% of last reference price without triggering the forced order key, as opposed to the current bounds of +/- 30 ticks from the last reference price.  This will see greater price flexibility in the placing of limit buy and sell orders.

For instance, assuming a price of S$3.00, the force order range for STI ETF (ES3) is 30 ticks which equates to +/- 1.0% from its last reference price. Effective 17 January 2022, the force order range for STI ETF will be +/- 10% from its last reference price. This will provide for flexibility in the placement of limit buy and sell orders to both investors and day traders.
 

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets. Each ETF gives investors access to the performance of the asset which comprises of the underlying index. Investing in the ETF is also less costly if one were to build a similar portfolio by buying the individual stocks. These portfolio products also provide exposure to international markets and asset classes that may be inaccessible to individual investors.

The 35 ETFs listed on SGX, sort by highest returns for the first 11 months of 2021 are tabled below.

Source: SGX, Refinitiv, Bloomberg (Data as of 30 November 2021)

^* New Listings in 2021
 

To find out more about ETFs, click here.