Investments

A Guide To Exchange-Traded Funds (ETFs) In Singapore

Wonder why ETFs are so popular among investors in Singapore? Want to find out how to pursue your financial objectives through purchasing ETFs? Read ahead to find out what ETFs are and how you can kickstart your investment journey in Singapore.

Investing has become part and parcel of life in today’s society. More often than not, you find yourself wrapped up in conversations about popular stock prices in Singapore. But why do people spend so much time and energy on investing? Well, investments are necessary to outpace inflation and grow wealth in Singapore.

Have you heard of exchange-traded funds (ETFs)? It is a popular investment vehicle for novice and seasoned investors alike. If you are a newbie, investing in ETFs is a simple and cost-effective way to kick-start your investment journey in Singapore.

All You Need to Know About ETFs in Singapore

An exchange-traded fund (ETF) is a collection of securities that tracks a particular index, sector or commodity. It is a fund that holds multiple underlying assets. Listed on the stock exchange, ETFs are traded throughout the day. Examples of ETFs include stock ETFs, bond ETFs, commodity ETFs, sector-specific ETFs and country-specific ETFs.

Investors use ETFs to diversify their investment portfolio and gain exposure to different sectors. By investing in an ETF, investors have access to a range of companies within the fund. For example, the Straits Times Index (STI) ETF allows investors to gain exposure to leading companies in Singapore, such as Oversea-Chinese Banking Corporation Limited, United Overseas Bank Ltd. (Singapore), and Singapore Telecommunications Limited.

A Singaporean investor can potentially achieve a positive return from ETFs through dividends or a rise in the ETF market price. The value and stock price of an ETF investment is usually positively correlated

man holding cash money

Why Should You Invest in ETFs?

1. Diversify Your Investment Portfolio

Heard of the phrase, “Do not put all your eggs in one basket” before? Diversification is crucial to minimise the risk of loss. Exchange-traded funds help to diversify your investment portfolio as it typically covers major asset classes and sectors. Exposure to a wide variety of stocks and bonds helps prevent unwanted risk to your capital and maximise your returns. Hence, ETFs are a popular choice for diversification, as you prevent your investments from being too heavily weighted towards a single company or sector.

2. Ideal for Beginner Investors

New to investing? ETFs could be the perfect way for you to get started. Firstly, you do not need extensive knowledge of investments to begin. A seasoned investor needs to understand basic investment principles. It is necessary so that they can regularly rebalance their portfolio. However, an ETF investor does not need to rebalance the assets in the fund, as it is done for them. Secondly, it is ideal for young investors because you only require a relatively low capital amount to start investing. Lastly, purchasing an ETF allows you to own multiple shares in different companies through a single purchase. You save time researching and analysing companies to invest in, as it is done for you.

3. Flexible Trading for Singaporean Investors

ETFs offer more trading flexibility as they are traded like stocks. ETFs are priced based on what investors think the market value is. Hence, you can actively buy and sell shares throughout the day.

trade investor investments

Drawbacks of ETFs

1. Potential Market Risk

The stock market can be unpredictable. This means that stock prices in Singapore can fluctuate at any time. A common risk that investors face when buying exchange-traded funds is market risk. Market risk occurs when there are fluctuations in ETF prices. It happens when there is a rise and fall in the value of the underlying securities and assets.

2. Lack of Control Over ETF Investments

An investor does not have control over the securities and assets in an ETF. A Singaporean investor might like a particular stock in an ETF. However, if the index removes that stock, an investor has no say over what happens to the ETF.

Singapore Investor Money

How to Trade ETFs in Singapore

In Singapore, there are two common ways to trade exchange-traded funds – through a brokerage account or a regular savings plan.

Regular Savings Plans

Did you know that you can invest in ETFs through a regular savings plan? All you need to do is pay a fixed sum of money regularly. The deposited money will be invested in ETFs, REITs or blue-chip stocks.

Why are regular savings plans so popular among Singaporean investors? Regular savings plans manage market risk with dollar-cost averaging. Volatility is inherently present in financial markets. One way to mitigate volatility risk is through dollar-cost averaging. Dollar-cost averaging reduces volatility risk by lowering the overall cost of investing as you invest a fixed and regular sum of money, regardless of market conditions.

Regular Savings Plans in Singapore

Regular Savings PlanFeesCounters
DBS Invest-Saver0.50%-0.82%Nikko AM Singapore STI ETF, ABF Singapore Bond Index Fund, Nikko AM SGD Investment Grade Corporate Bond ETF, Nikko AM-Straits Trading Asia ex Japan REIT ETF
Saxo Regular Savings Plan0.25-0.75% service feeBlackRock Defensive RSP Portfolio, BlackRock Moderate RSP Portfolio, BlackRock Aggressive RSP Portfolio, LionGlobal Dynamic Growth: Asian Perspective RSP Portfolio
OCBC Blue Chip Investment Plan0.88% (for customers below 30 years old), otherwise 5%21 Counters including CapitaLand Limited, DBS Group Holdings Limited, Keppel Corporation Limited, Singapore Airlines Limited, United Overseas Bank Limited etc.

Brokerage Accounts in Singapore

Saxo Markets
PROMO: Win SGD 50,000 by investing/trading with Saxo
Consider this if you seek to invest in ETFs while minimising fees

Win SGD 50,000 toward your goals by investing/trading with SaxoWealthCare. Valid till 7 September 2022. T&Cs apply.
MarketClassicPlatinumVIP
Singapore0.15%0.12%0.10%
USUSD 0.02USD 0.15USD 0.01
Japan0.15%0.12%0.10%
HK0.15%0.12%0.10%
Australia0.10%0.07%0.05%
According to our research and analysis, Saxo Markets is not only the top broker for general online trading, but also the best for trading ETFs at a low cost. The platform has low fees, a user-friendly platform and access to more than 3,000 ETFs. Saxo charges less than half in commission fees compared to most of its competitors at just 0.15% commission on trades, with a minimum cost of S$25 for Singapore ETFs (USD 7 for US). The industry-leading broker has even lower commission fees for high volume traders. For example, investors with at least S$300,000 in their accounts receive preferred pricing.

Tiger Brokers
Consider this if you want the cheapest rates for both US & SG ETF trading

New customers receive 500 Tiger Coins, 60 commission free trades (within 180 days) card, and 1 Free APPLE share once you first deposit S$2,000 or more. Additionally receive a reward of 5 commission free trades when a friend registers account, S$88 stock voucher when a friend opens account with at least S$2,000, and 1 scratch card for every 3 friends who open an account.
MarketTiger Brokers FeeMin CommissionPlatform Fee
Singapore0.06%SGD 1.990.03% (min. SGD 1 per order)
US$0.01 per shareUSD 1.99 per orderUSD 0.005 (min USD 1 per order) (max 0.5% per order)
HK0.06%HKD 150.03% (min HKD 8 per order)
China0.06%RMB 150.03% (min CNH 8 per order)
Australia0.10%AUD 80.07% (min AUD 6 per order)
According to our research and analysis, Tiger Brokers has a comprehensive online trading platform with low fees, live prices for the US and Singapore, and access to major markets around the world. With real-time stock quotes, multilingual customer service that operates 24/7 and a user-friendly mobile app, Tiger Brokers is a good platform for both new and seasoned investors. Tiger Brokers stands out because of their low fees and all inclusive digital platform. Their commission costs of 0.03% overtakes Saxo Markets—which charges a commission fee of 0.08% with a minimum of S$5 per trade—as one of the cheapest providers in Singapore.

moomoo by FUTU
PROMO: Have a Kopi on moo daily: Get S$2* cashback every day in the month of August!
Consider this if if you want to trade stocks and ETFs in SG, US, and HK

New users who subscribe for Cash Plus of S$100 or above, and ensure that they hold positions of S$100 or above within 30 days, can get S$2 cash coupons every day
Marketmoomoo Brokers FeeMin CommissionPlatform Fee
Singapore0.03%SGD 0.990.03%(min. SGD 1.50)
USUSD 0.0049USD 1.99USD 0.005(min. USD 1)
HK0.03%HKD 3HKD 15
China A0.03%CHN 3-
moomoo by Futu has the lowest commission fees on the market and offers seamless access to financial products in Singapore, Hong Kong, and the US. With no minimum initial deposit and free access to market data, moomoo is a great choice for new and experienced traders alike. moomoo stands out for having one of the lowest commission fees on the market. Account-holders pay a commission fee of just 0.03% when trading Singapore and Hong Kong stocks, significantly lower than the 0.21-0.22% industry average. However, do note that a platform fee of 0.03% will also be applied on every trade, bringing the fee to 0.06% with a minimum of SGD 2.49 per order. Similarly, moomoo only charges US$0.0049 per share with a minimum of USD 0.99 for US stocks and ETFs. By comparison, many brokers charge between US$15-29 per trade for US stocks. moomoo has no minimum initial deposit, which means beginner investors can get access and start trading right away.

Syfe Trade
PROMO: Earn at least S$60 in cash credits and five free commission-free trades per month for the first 3 months
Consider this if you want to trade US stocks and ETFs at a flat rate

Earn S$60 cash credit when you deposit your first S$1,000 and execute your first trade
US Stocks & US ETFsCommission-Free Trades a month
Five free trades a month^USD0.99 flat fee^
After Introductory Offer
Two free trades a monthUSD1.49 fee
Syfe Trade has the lowest commission fees on the market for trading US stocks and ETFs.

For a start, the Singapore online brokerage is giving every investor five free trades per month, and thereafter a flat fee of USD 0.99 per trade, during its introductory offer which will end at the first quarter of 2022. Even after its introductory offer comes to an end, Syfe Trade remains extremely competitive by giving its investors two free trades per month, and a flat fee of USD 1.49 per trade.

stock exchange trade

Kickstart Your Investment Journey in Singapore Today

What are you waiting for? Grow your money by investing in exchange-traded funds through regular saving plans or brokerage accounts in Singapore. Do remember to conduct your due diligence before making any financial decisions. For example, you can look at historical data to see how the ETF performed against the index it tracks.

With the impending GST hike, there is no doubt that the cost of living will continue to rise. To keep up with inflation, you should start investing. Investing helps you grow your wealth and achieve financial goals. Be on the road to financial freedom today!

Christopher Wong

Christopher is a licensed financial adviser and a General Insurance Broker with PolicyPal. He has nine years of experience in the insurance industry with various notable companies including Chubb, AVA, AIA, NTUC Income, and more. Today, Christopher helps to oversee the insurance content on ValueChampion and bring business growth to PolicyPal.