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ETF Turnover Up 85% On-Year in Last Five Months

ETF turnover up 85% on-year in last five months

Turnover for exchange traded funds (ETFs) grew 85 per cent on-year in the last five months, according to the Singapore Exchange (SGX).

And most recently, ETFs have accounted for 10 to 15 per cent of overall trading volume on the exchange – reaching 92 million units in the month of May.

Investment firms like BlackRock are seeing tremendous potential for such passive income investments in Asia and has launched two more ETFs on the SGX on Thursday.

The SGX saw over a billion dollars worth of ETFs changing hands in the month of May, according to its monthly statistics released on Thursday – signalling investors’ gradual acceptance and understanding the benefits of ETFs.

“If you take three years ago, we may be trading S$2 million of ETFs a day but that has easily gone up by almost 20-fold to S$40 million to S$50 million a day,” said Chew Sutat, Head of Securities, SGX.

SGX said it will continue to focus on educating the market about ETFs and expanding its product offerings for passive investments.

To this end, two new ETFs on Asian fixed income were launched on the exchange.

BlackRock’s two new ETFs – iShares Barclays Capital Asia Local Currency Bond Index ETF and iShares J.P. Morgan USD Asia Credit Bond Index ETF – are said to be the first to provide multi-market Asian bonds coverage on the exchange.

“These products are particularly unique in the ETF space in that they offer exposure to the corporate debt issuer as well as the sovereign issuers, in comparison to the other products that are here in Singapore,” said Catherine Barker, Director and Head of iShares Southeast Asia, BlackRock.

The products will trade in US dollars, and are expected to provide up to 4 per cent yield per annum. The ETFs will also allow retail and institutional investors an entry into hard-to-access asset classes.

BlackRock said the Asian bond market has grown dramatically as more funds flow into emerging markets.

“There is a general belief in the ongoing growth of Asia and the strength of Asian markets, and the strength of Asian bond markets in particular. We see that demand and we are looking to provide options for investors to access that,” said Nick Good, MD and Head of iShares, Asia Pacific, BlackRock.

“We are looking international equity ETFs more deeply, particularly here in Asia, where there is tremendous demand for exposure to Asian countries. Equally, we see demand for more extensive fixed income, commodities and currencies right across the asset classes,” he added.

The addition of the two new ETFs brings the number of listed ETFs on the exchange to 84 in total, with more coming on stream.

Adapted from CNA (By: Millet Enriquez)

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