WHAT ARE ETFs

Exchange-traded funds (ETFs) are open-ended investment funds or unit trusts that are listed and traded on a stock exchange. They are typically designed with the objective to track the performance of a specific benchmark, such as a stock index. Investors can buy or sell units in ETFs at market prices any time during the trading hours on an exchange, just like how stocks of listed companies are transacted on the exchange.

WHY INVEST IN ETFs

EFFICIENCY

By investing in a single ETF, investors can gain access to a diversified portfolio of stocks or bonds that make up the underlying index. Fees and charges on ETFs are also generally lower than actively managed investment funds.

TRANSPARENCY

Most ETFs publish the full list of securities held by the ETFs on a daily basis, meaning investors always know exactly what they are investing in.




FLEXIBILITY

ETFs are used by investors as an asset allocation tool to gain exposure to broad asset classes when building investment portfolios. Because ETFs trade like stocks, investors can also time their entry or exit into the ETF on an intraday basis, and place limit orders with their brokers.

LIQUIDITY

Market makers provide liquidity for investors to enter or exit quickly.

HOW DO ETFs COMPARE WITH STOCKS AND UNIT TRUST

ETFs STOCKS UNIT TRUST
Diversification -
Sales charge brokerage fees apply brokerage fees apply 3 - 5 %
Management fees Less than 1% - 1 - 2% p.a.
Intra-day pricing & trading -
Trading flexibility -
Liquidity Intra-day Intra-day End-of-day
Cash settlement T+ 3 T+ 3 Upfront

EDUCATION SERIES

Learn all about ETFs in our four-part educational series published on the TODAY newspaper.
Click on each article to read it in full.



THE GROWTH OF ETFs



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FREQUENTLY ASKED QUESTIONS

Exchange-traded funds (ETF) are open-ended investment funds or unit trusts that are listed and traded on a stock exchange. They are typically designed with the objective to track the performance of a specific benchmark, such as a stock index. Investors can buy or sell units in ETFs at market prices any time during the trading hours on an exchange, just like how stocks of listed companies are transacted on the exchange.

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).

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