• The US-focused and India-focused ETF generated the strongest gains in 2023, with the China-focused ETFs averaging the most declines. The gains of the US technology stocks which comprise a third of the S&P 500, and increased odds for a soft landing in the US Economy supported the US Indices, while India‘s robust economic performance and 6%+ growth rates supported its local stock market.
   
• The Gold ETF outperformed other assets in 2023. It gained 12% in SGD and 31% since 2019, with global uncertainty and risk boosting gold demand. The ETF ended the year at S$191.17 per unit, equivalent to ~0.094 ounces of gold. Physical gold prices also reached record highs in December 2023.
   
• In 2023, five new ETFs, all equities focused, launched on SGX. The two Asia focused ETFs included the iShares MSCI Asia ex Japan Climate Action ETF and the CSOP iEdge Southeast Asia+ TECH Index ETF. The two China focused ETFs included the CGS Fullgoal CSI 1000 ETF and CSOP Huatai-PineBridge SSE Dividend Index ETF, with the CGS Fullgoal Vietnam 30 Sector Cap ETF also listed.

2023 Performance Highlights

In 2023, the ETFs that focused on the US and India markets outperformed the other regions, while the ETFs that targeted the China market underperformed. The strong performance of the US and India ETFs was driven by two main factors: the resilience of the US technology sector, which accounted for about one-third of the S&P 500 index, and the high growth potential of the Indian economy, which is expanding by more than 6% annually. The focused China ETFs, on the other hand, suffered from the slowdown of the Chinese economy that affected some of its key sectors.

Different asset classes such as stocks, bonds, gold and REITs had varying returns in 2023, as measured by the ETFs that invest in them. The ETF that invests in gold was the best performer among the other classes, beating the collected returns of the other three asset classes. The SPDR Gold Shares delivered a 12% return in SGD terms last year, bringing its cumulative returns since the end of 2019 to 31%, or a 7% annualised return in SGD terms. The value of the gold ETF increases were largely attributed to the global uncertainty and risk that influenced the outlook of investors and businesses. The SPDR Gold Shares ETF USD counter ended 2023 at S$191.17 per unit. This ETF has a minimum trading size of one unit, which corresponds to ~0.094 ounces of Gold. The prices of physical gold also hit record highs in December 2023.

2023 ETF Launches

The year 2023 saw the introduction of five new exchange-traded funds (ETFs) on the Singapore Exchange (SGX), all of them focused on equities. Among these, two ETFs offered exposure to the Asian market, excluding Japan, with an emphasis on climate action and technology sectors. These were the iShares MSCI Asia ex Japan Climate Action ETF and the CSOP iEdge Southeast Asia+ TECH Index ETF. The other two ETFs targeted the Chinese market. The CGS Fullgoal CSI 1000 ETF aims to track the performance of the CSI 1000 Index, which consists of 1000 large and mid-cap companies listed on the Shanghai and Shenzhen stock exchanges. The CSOP Huatai-PineBridge SSE Dividend Index ETF seeks to provide investors with a stable income stream by investing in high-dividend-paying companies that are part of the SSE Dividend Index. Finally, the CGS Fullgoal Vietnam 30 Sector Cap ETF offers access to the Vietnamese equity market, by replicating the performance of the Vietnam 30 Sector Cap Index, which covers 30 leading companies across various sectors in Vietnam.

The MSCI AC Asia ex Japan Climate Action Index ETF ended 2023 with a S$618 million AUM, ranking with the sixth highest AUM among the SGX-listed ETFs. The Index measures the performance of companies that are leading their sector peers in terms of their climate transition readiness and actions, and selects the top 50% of companies in each GICS sector based on their transition risks, emission reduction targets and climate risk management. The iShares MSCI Asia ex Japan Climate Action ETF attracted seed investors such as Prudential, Temasek and Singlife.

Collectively, the five ETF debutants attracted S$765M in net inflows for 2023. The complete list of ETFs listed for trading on SGX are detailed below. Note the table does not include total expense ratios which can be found here.  

Source: SGX, Refinitiv (Data as of 31 Dec 2023)

2024 Market Outlook

The regional outlook for most of 2023 was influenced by several factors, such as the higher Fed Funds Rate of 5.25% to 5.50%, the global semiconductor sales and inventory contraction, and the property downturn in China. These factors also present potential inflection points in 2024 that could affect the market conditions. If the inflection points do not materialise, stocks and investors would likely continue to pursue strategies to optimize value and risk-to-returns. According to Goldman Sachs' Asset Management Outlook 2024, investors should adopt an active approach with more emphasis on diversification and risk management. The report also recommends an integrated approach to portfolio construction, where public and private investments can strategically complement each other.

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