I GOT several inquiries from readers on exchange traded funds, following my small change column last Sunday. This is my reply.
Exchange traded funds (ETF) – the vanilla type at least – are made up of baskets of stocks which closely mirror widely-watched stock indexes such as Singapore's Straits Times Index and Hong Kong's Hang Seng benchmark.
Many readers want to know where they can buy the STI ETF which tracks the STI.
Well, it is listed on the Singapore Exchange. As I write, it is up two cents at $2.75 with 472,000 shares traded. STI is up 5.74 points at 2,674.3. This means that the STI ETF is traded at a small premium to the index.
I've mentioned the volume traded so far to dispel any misconception that the STI ETF is thinly traded. For retail investors, there should be a sufficient number of shares traded each day to ensure that they can easily get in and out of the counter.
One thing good about the STI ETF is the low management fee involved - about 0.2 per cent of the value of the assets in the funds. In contrast, a conventional unit trust will charge you anywhere between 1 per cent and 5 per cent of the value of the assets for the pleasure of managing them on your behalf.
Some readers confuse the STI ETF with the multitude of STI warrants displayed on the screen.
With the STI ETF, you actually get to “own” a basket of blue-chips such as SIA, DBS and UOB. You will also get an annual dividend payout. The latest dividend yield works out to 4.4 per cent – far higher than what banks are paying. You can also use CPF or SRS monies to buy into the STI ETF.
However, with STI warrants, what you get is an option contract. An option does not confer ownership on the underlying assets. Instead, what it offers is a bet on whether the price of the asset goes up or down. If it goes up, you walk away with a prize, but if it goes down, you may end up losing everything.
I hope this article helps to clear the air on STI ETF.
Enclosed below is a page from Shareinvestor.com which gives salient features on STI ETF:
| STI ETF STI ETF | ||||
| Last 2.750 |
Change +0.020 |
High 2.850 |
Open 2.730 |
Cumulative Volume 472,000 |
| Percent Change +0.7% |
Low 2.730 |
Yesterday's Close 2.730 |
Cumulative Value 1,306,010 |
|
| Remarks | Buy Volume 17,000 |
Buy Price 2.740 |
Sell Price 2.760 |
Sell Volume 252,000 |
| Fundamentals | ||
| EPS ($) a - |
Rolling EPS ($) e - |
NAV ($) b 1.6060 |
| PE - |
Rolling PE f - |
Price / NAV b 1.712 |
| Dividend ($) d 0.120000 |
52 Weeks High 2.750 |
Cash Value ($) g - |
| Dividend Yield (%) d 4.364 |
52 Weeks Low 1.490 |
Price / Cash Value g - |
| Issued & Paid-up Shares c 260,000,000 |
Par Value ($) n.a. |
Market Cap (M) 715.000 |
| Stock Categories ETF |
||
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