SGX ETF market expands, investors cautioned on hidden costs
The Singapore Exchange's ETF market reached S$20 billion by end-June 2026, with recent listings offering exposure to major Asian and global markets.
SGX Expands ETF Offerings
The Singapore Exchange's (SGX) exchange-traded fund (ETF) market grew to over S$20 billion in assets by end-June 2026. Net inflows into the market rose 240% year-on-year in the second half of fiscal 2026. On 22 October 2026, iFast Xtrackers Ucits ETFs began trading, tracking indices such as MSCI Taiwan, Nikkei 225, MSCI Korea, and artificial intelligence (AI) and big data.
Other recent additions include Xtrackers funds for the S&P 500 and Nasdaq-100. A China-focused CGS-ICBC-CFETS Belt and Road Bond Index ETF also listed on 15 October 2026, providing access to yuan-denominated bonds in China's interbank market. Most new ETFs are eligible for Singapore's Supplementary Retirement Scheme (SRS).
Fees and Currency Risks for Returns
Despite trading in Singapore dollars, investors face currency risk from underlying assets priced in foreign currencies, such as US dollars, noted Jeremy Foo, StashAway's country manager for Singapore. Currency fluctuations can significantly affect returns when converted to Singapore dollars.
Foo also highlighted fee discrepancies: the iFast XBG ETF has a 0.63% annual total expense ratio, nearly double its underlying ETF's 0.35%. This cost difference could amount to over S$5,000 on a S$10,000 investment over 30 years, assuming a 7% annual return before fees. Trading costs can also increase due to wider bid-ask spreads when US markets are closed, Foo added.
Diversification and Asian Market Interest
Charu Chanana, chief investment strategist at Saxo Bank Singapore, advised investors to compare products across exchanges for better liquidity and lower trading costs. She noted that Irish-domiciled Ucits ETFs offer a 15% US dividend withholding tax rate, lower than the 30% for US-domiciled funds.
Gina Kim, Nordea Asset Management's portfolio manager for emerging market equities, stated that ETFs tracking major Asian indices have firm underlying fundamentals, despite regional market volatility in Q3 2026. These funds can help investors diversify their technology and AI exposure beyond the United States.
StashAway data showed investor holdings in Taiwan and South Korea ETFs increased 48% and 19% quarter-on-quarter in Q3, respectively, both seeing net inflows. Semiconductors were the third most popular asset class, chosen by 24% of investors.
Investor Considerations for Asia Portfolios
While Asian index ETFs offer diversification, Chanana cautioned that single-country and AI-focused ETFs carry high concentration and volatility risks. She suggested these are better suited as "satellite allocations" for investors with longer horizons, particularly when considering retirement investments via SRS.
Foo advised investors to analyse the total cost of ownership, including trading spreads, brokerage fees, foreign exchange conversion, and ongoing fund fees, rather than solely focusing on the ETF's trading currency. This comprehensive cost assessment is crucial for Singapore-based investors building broader Asia or global portfolios.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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