• With the Ukraine Crisis weighing global equity markets since 23 Feb, the SPDR Goldshares ETF has seen the most turnover of the ETFs listed for trading in Singapore. The SPDR Goldshares ETF has gained 8% in SGD terms since 23 Feb, and currently comprises 11% of the S$12.9 billion AUM that is invested across the 36 ETFs.
   
• The 8.4% gain in the price of Gold has more than offset the 5.8% decline in the STI since 23 Feb. SGX lists for trading two ETFs that track the STI – the SPDR Straits Times Index ETF and the Nikko AM Singapore STI ETF which are majority weighed to the Bank Sector, with the Sector among the weaker Global stocks since 23 Feb.  
   
• The 36 ETFs have seen close to S$700 million of net inflows in the 2022 year to 4 March, mostly attributed to the iShares USD Asia High Yield Bond Index ETF. The Nikko AM - StraitsTrading MSCI China Electric Vehicles and Future Mobility ETF which debuted in Jan, and the Lion-Phillip S-REIT ETF have seen the next highest net inflows.

Last night, spot Gold closed above US$2,000/oz., and at US$2,045/oz. at the Asia close today, spot Gold was trading within 2% of the August 2020 all-time high at US$2,072/oz. This gain was on the back of US President Biden announcing embargos on Russian energy exports, while both the LBMA and CME have now announced suspensions for the use of Russian gold and silver in contract delivery.

In Singapore, the SPDR Gold ETF (stock code: O87 / GSD) has been the most traded ETF by turnover over the past 10 sessions, with the unit price gaining 8.4% in SGD terms, as the unit price of the ETF inclined from US$176.78 to US$189.11. The price of gold bullion maintains low correlations to most other asset classes. The World Gold Council maintain that that including assets with a low correlation to each other assists portfolio managers to reduce overall portfolio risk. As a simple educative example, an evenly balanced portfolio of three ETFs that each track the price of Gold, the STI and performance of Singapore Government Bonds averaged annualised total returns of 4.9% over the past five years, with calendar year average total returns ranging from -1.5% in 2018 to +10.2% in 2019. Following the microstructure changes implemented in January this year, investors can trade the SPDR Gold ETF in single unit, with per trade value at around S$260 when trading via its SGD counter (stock code: GSD)

Of the suite of 36 ETFs, the SPDR STI ETF has seen the next highest turnover during the Ukraine Crisis. While the STI ETFs began the year among the strongest performing ETFs, the effect of the Ukraine crises on the pace for rate hikes in the US has weighed bank stocks. In the two weeks around mid-Feb, expectations for the upcoming FOMC interest rate hikes became very hawkish, with ~60% expectations on 14-15 Feb for a 50 basis points (bps) hike at the 16 March FOMC. The new bout of global economic uncertainty demonstrated by the pick-up market volatility has seen these hawkish expectations reduced to no expectations for a 50 bps hike at the 16 Mar FOMC, with majority expectations now at a 25 bps hike. Bank stocks maintain positive correlations in their net interest income to US interest rates, with the STI’s biggest heavyweight, DBS Group Holdings, maintaining a few weeks back that the bank maintained net interest income sensitivity of S$18 million to S$20 million per basis point of USD rates. While globally listed banks make up more than less 10% of global market capitalisation, they make up more than 40% of the STI weight. Thus, the impact of DBS Group Holdings, Oversea-Chinese Banking Corporation and United Overseas Bank averaging 10% declines since 23 Feb has impacted the STI much more than global Indices have been impacted by global bank stocks declining 9%.

The five strongest performing ETFs listed in Singapore in the 2022 year through to the end of last week included the Phillip MSCI Singapore Daily (-1X) Inverse Product, SPDR Goldshares ETF, the Xtrackers MSCI Indonesia Swap UCITS ETF, the Principal FTSE ASEAN40 ETF and the Principal S&P APAC Dividend ETF. Meanwhile, the least performing of the ETF suite included the Phillip MSCI Singapore Daily (2x) Leveraged Product, the Lion-OCBC Securities Hang Seng TECH ETF, the NikkoAM-StraitsTrading MSCI China Electric Vehicles And Future Mobility ETF, the iShares USD Asia High Yield Bond Index ETF and the Lyxor MSCI China ESG Leaders Extra (DR) UCITS ETF.

Combined the 36 ETFs also booked close to S$700 million of net inflows in the 2022 year to 4 March, mostly attributed to the iShares USD Asia High Yield Bond Index ETF. The NikkoAM-StraitsTrading MSCI China Electric Vehicles and Future Mobility ETF which debuted in January, and the Lion-Phillip S-REIT ETF have seen the next highest net inflows in the 2022 year through to 4 March.

The 36 ETFs listed on SGX, sort by highest inflows in the 2022 year to 4 March are tabled below.

 Source: SGX, Refinitiv, Bloomberg (Data as of 4 March 2022) **Leveraged or Inverse Product.

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.

For more on ETFs, click here.