NIKKO AM SINGAPORE STI ETF

The Nikko AM Singapore STI ETF is an exchange traded fund that tracks, as closely as possible, the performance of the Straits Times Index (STI), by substantially investing its assets in the constituent stocks of the STI in the same weightings as reflected in the STI.

The STI is a market value weighted index comprising the top 30 main-board listed companies based on their market capitalisation on the Singapore Exchange (SGX-ST).

The Nikko AM Singapore STI ETF can be traded in a lot size of 100 units. The smaller lot size means that investors can better customise the investment amount according to their own investment requirements.

The Fund aims to pay distributions on Units from dividends received from the underlying shares. However the ability of the Fund to pay distributions on the Units is dependent on the dividends declared and paid by the companies whose shares are held by the Fund and the level of fees and expenses payable by the Fund.

The Net Asset Value (NAV) reflects the value of Nikko AM Singapore STI ETF’s assets. It is calculated on a per Unit basis by dividing the total Net Asset Value of Nikko AM Singapore STI ETF by the number of Units outstanding.

The NAV of Nikko AM Singapore STI ETF will be calculated after the close of trading on SGX-ST at the end of each dealing day. The NAV price will be published on the 2nd business day after the relevant dealing day.

Please refer to the Prospectus for more information.

Investors can obtain more information on Nikko AM Singapore STI ETF through participating dealers or download the prospectus of Nikko AM Singapore STI ETF from this website www.nikkoam.com.sg.
Investors may also call our Intermediaries Hotline at 1800 535 8025 (Nikko Asset Management Asia Limited).

Market Risk - As the Nikko AM Singapore STI ETF tracks the performance of the STI, investors in the Fund will be exposed to the price fluctuations of the Units due to a number of factors, including, without limitation, the price fluctuations of the constituent stocks within the STI.

Liquidity Risk - Although units in the Fund are listed on the SGX-ST, investors should be aware that there can be no assurance that active trading markets for units will develop, nor is there a certain basis for predicting the actual price levels at, or volumes in, which units may trade.

Tracking Error Risk - Changes in the NAV of the Fund are unlikely to replicate exactly changes in the STI due to factors such as fees and expenses of the Fund, liquidity of the market and changes to the Index.

Nikko Asset Management Asia Limited.

HSBC Institutional Trust Services (Singapore) Limited.

What are the manager's and trustee's annual fees in managing Nikko AM Singapore STI ETF?

Nikko AM Singapore STI ETF is listed on the Singapore Exchange (SGX-ST).

The Fund was first traded on the Singapore Stock Exchange on 25 February 2009.

Investors may wish to contact their respective stockbrokers to buy or sell units in the Nikko AM Singapore STI ETF.

Investors can purchase and sell the units in the Fund in the same way as they can purchase and sell shares on SGX-ST during trading hours through their stockbroker or their online stock trading facility.

A typical investor dealing on the SGX-ST will not bear any costs related to the creation and redemption of Units. However, investors will need to pay brokers' commissions, clearing fees and other costs associated with dealing on the SGX-ST. These amounts are subject to the investor's individual agreement with, and paid directly by the investor to, the investor’s broker, the CDP and other service providers (including but not limited to CPF agent banks) of the investor.

Please refer to the Prospectus for more information.

Presently, the Fund is included under the CPFIS - Ordinary Account and has been classified by the CPF Board under the Higher Risk - Narrowly Focused - Country Singapore.

ABF SINGAPORE BOND INDEX FUND

Presently, the Fund is included under the CPFIS - Ordinary Account and has been classified by the CPF Board under the Low to Medium Risk - Narrowly Focused - Country Singapore. The Fund is included under SRS.

No. Unlike a listed company, this Fund will not have any shareholders' meeting. Under very special circumstances, the Fund will call for an Extraordinary Meeting if there is a need to:

  • Modify or alter the provisions contained in the Trust Deed.
  • Increase maximum management and trustee fee.
  • Permit other types of fees.
  • Terminate the fund.

The price of ABF Singapore Bond Index Fund is market driven but in general it should be close to the NAV of the Fund which is published daily.

They are different because:

  1. The unit price of ABF Singapore Bond Index Fund can be obtained from the Singapore Exchange, whereas the NAV of a typical unit trust is calculated and published by the fund manager.
  2. After the IPO period, investors would buy/sell in the secondary market via the exchange rather than subscribing to new units. In this instance, subscription of new units would be more applicable to the institutional investors. However, in a unit trust, new units are issued from the fund manager.
  3. Pricing for normal UTs are based on forward pricing whereas the trading price for this Fund is transparent and is listed on every business day on the exchange.
  4. The ABF Singapore Bond Index Fund has no front end load, but a unit trust typically charges 3 - 5% sales charge.
  5. For unit trusts, dividends are generally automatically reinvested net of fees into the unit trust. For the ABF Singapore Bond Index Fund, dividends are paid annually in cash.

No, the cooling period has been waived for this Fund.

The historical annualised volatility of the ABF Singapore Bond Index Fund over the last five years (as of 31 March 2015) is about 3 % per annum.

Indicative yield to maturity means the yield or rate of return anticipated if the bonds are held till maturity. This yield however does not stay stable throughout and it will fluctuate daily according to market conditions. It does not take into consideration annual management and trustee fees. This yield is not guaranteed as well.

The product is listed on the Singapore Exchange and is traded like any stock. Buying and selling is possible through any participating dealers and they include DBS Vickers, Philips Securities, Deutsche Bank AG and CIMB Securities. This list will be expanded as more participating dealers sign on.

Five criteria are used to select the index constituents:

  • Bond type.
  • Rating requirements and issuer classification.
  • Bond life at issuance.
  • Time to maturity.
  • Amount outstanding.

In addition, the number of bonds from a quasi-sovereign issuer is limited to 5. The index is likely to have 35 issues in total.

The Fund presently has holdings in mainly Singapore government bonds (about 90%) and 10% in quasi-Singapore government bonds such as PSA, HDB and Singapore Power+. See Factsheet for details.

+ ABF Singapore Bond Index Fund Holdings as of 30 April 2015

When using an indexing or any other benchmarking strategy, the amount by which the performance of the portfolio differs from that of the benchmark is the tracking error. In reality, no indexing strategy can perfectly match the performance of the index or benchmark, and the tracking error quantifies the degree to which the strategy differed from the index or benchmark. When selecting an ETF, usually, one of the criteria is to select an ETF with the lowest tracking error.

The iBoxx ABF Singapore Bond Index is an indicator of investment returns of debt obligations denominated in Singapore dollars issued or guaranteed by the government of Singapore (or any other Asian government of People's Republic of China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore or Thailand, collectively (the "Asian Governments")), by an agency or instrumentality of the Singapore government (or any other Asian Government), by a Singapore government (or any other Asian Government) sponsored entity or a quasi-Singapore government (or any other Asian Government) entity and Singapore dollar denominated debt obligations issued by supranational financial institutions.

Currently, the iBoxx ABF Singapore Bond Index comprises only of bonds denominated in Singapore dollars issued by the government of Singapore (e.g. bonds issued by MAS) and Singapore government agencies (e.g. bonds issued by HDB, LTA). The Fund may in the future invest in bonds denominated in Singapore dollars issued by other Asian Government, agencies of other Asian Government, or other quasi-Asian Government entities if the composition of the iBoxx ABF Singapore Bond Index includes such bonds. In that event, the credit risk of the investments of the Fund may be different from its credit risk now.

For new units:
Duties and charges imposed by the Fund is chargeable at up to a maximum of 0.5% of the Fund's NAV, but currently, we charge 0.25%.

The duties and charges imposed by the Fund will be waived for creation of less than 10 million units, but this applies to market makers (OCBC Bank & DBS Vickers for now) only. Participating dealers may charge a handling fee of 0.03%.

Assuming that the NAV of the Fund on Dealing Day on September 2005 is $1.00 and an investor subscribes for 50,000 new units. The fees and charges are:
Duties and charges (payable to the Fund) - 25 bps (or 0.25%) x $50,000 = $125
Handling fees, payable to Participating Dealers - 3 bps (or 0.03%) x $50,000 = $15
Total Fees payable: $140

For trading of existing units:
Trading existing units can be done in board lots of 1,000 units. Clearing fees (charged by SGX) are chargeable at 0.05% of transaction value, subject to a maximum of $200. Investors also bear brokerage fees charged by their stockbrokers.

Assuming that investor bought 1000 units at $1.00. The fees and charges are:
Clearing fee - 5 bps (or 0.05%) x $1,000 = $0.50
Brokerage fee payable to stockbroker, in this case, we assume 30 bps (or 0.30%) x $1,000 = $3
Total Fees payable: $3.50
Total investment outlay for 1,000 units: $1,000 + $3 .50 = $1,003.50

Assuming that the investor sells 1,000 units at $1.00 on SGX. The fees and charges are:
Clearing fee - 5 bps (or 0.05%) x $10,000 = $0.50
Brokerage fee payable to stockbroker, we assume 30 bps (or 0.30%) x $1,000 = $3
Total Fees payable: $3.50
Investor will received $1,000 - $3.50 = $996.50

For dealing on the SGX-ST:
A typical investor dealing on the SGX-ST will not bear any costs related to the creation and redemption of Units. However, investors will need to pay brokers' commissions, clearing fees and other costs associated with dealing on the SGX-ST. These amounts are subject to the investor's individual agreement with, and paid directly by the investor to, the investor’s broker, the CDP and other service providers (including but not limited to CPF agent banks ) of the investor.

Please note:Handling fees will be charged for only creation of new units and this fee is charged by participating dealers for the handing over of the new units to the registrar.
Brokerage fee is charged by stockbrokers for the transaction of units on SGX, i.e. buying and selling of existing units.
Investors who wish to subscribe for new units must go through the participating dealers.

Investors can trade units in the Fund (in board lots of 100 units) with cash in the same way as stocks are bought or sold on the Singapore Exchange through their stockbroker. For subscription of new units, a minimum of 50,000 units is required. For new units, investors need to go through the participating dealers. There is no need to open a separate trading account with their broker for the Fund.

For trading of existing units on SGX, investors may trade with any SGX stockbrokernot mentioned here. For creation of new units into the Fund, investors need to go through the authorised participating dealers.

Retail investors if they trade, will be likely to trade the existing units. Only when new units are created via subscription into the Fund will the fund size grow. This is targeted mostly at institutional investors.

Trading existing units can be done in board lots of 100 units, whereas new units require a minimum subscription of 50,000. This is required to reduce the tracking error.

The Fund was first traded on the Singapore Stock Exchange on 31 August 2005.

Currently, the manager's management fee is 0.15% per annum of the Fund's NAV. Based on the prospectus, the management fee may be varied up to 0.15% per annum of the Fund's NAV.

The current trustee fee is 0.05% per annum of the Fund’s NAV. Based on the prospectus, the trustee fee may be varied up to 0.15% per annum of the Fund's NAV.