Top 5 most active ETFs turn in sizzling returns

The five most active exchange traded funds here last month have racked up sizzling total returns of 11.5 per cent on average so far this year, an SGX My Gateway report shows.
The five most active exchange traded funds here last month have racked up sizzling total returns of 11.5 per cent on average so far this year, an SGX My Gateway report shows. ST PHOTO: KUA CHEE SIONG

They chalk up 11.5% average total return; turnover surges 40.5% to $162m

The five most active exchange traded funds (ETFs) here last month have racked up sizzling total returns of 11.5 per cent on average so far this year, an SGX My Gateway report shows.

Investors pumped far more cash into the five than in May last year. The five are iShares MSCI India Index ETF, SPDR Gold Shares ETF, SPDR Straits Times Index ETF, db x-trackers MSCI Indonesia Index UCITS ETF and db x-trackers MSCI China Index UCITS ETF (DR).

ETFs are investment funds listed and traded intra-day on a bourse. Most aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets.

The report said that the five ETFs saw a 40.5 per cent year-on-year surge in turnover for May to $162 million, up from $115 million.

It also noted that they chalked up 19.5 per cent in total returns over the past year and 20.6 per cent in total returns over the last three years.

Of the five, the iShares MSCI India Index ETF saw most activity. The ETF - one of the four Indian ETFs listed on the SGX - tracks the MSCI India Index, which has generated returns of 17 per cent this year as at May 31 in Singdollar terms.

Indian stocks have been placed among the best performers in emerging market equities since the start of the year, with inflows from domestic and overseas investors, said the report. Equity fund inflows stand at about US$8 billion (S$11 billion), second only to China in Asia.

"Investors have been cheered by India's improving political stability and positive macroeconomic drivers such as the government's reform agenda, Goods and Services Tax bill, net inflows of foreign investments and the recently implemented laws pertaining to property developers," it added.

The next most active ETF was the SPDR Gold Shares ETF, which tracks the price of gold bullion less the trust's expenses. It generated a turnover of $42 million last month, bringing its total return to date this year to 4.5 per cent.

"Gold has historically been a haven asset, an alternative to the US dollar, and a hedge against geopolitical risks and rising inflation," said the report. "While a positive outlook for economic growth in the US and expectations of further increases in interest rates will cap gold prices, bullion will likely remain supported by lingering concerns over European politics as well as the uncertainty and lack of clarity that surrounds President (Donald) Trump's policies."

Taking third place was the SPDR Straits Times Index ETF, which saw turnover hitting $36 million in May, and registering total returns of 13.5 per cent as at the end of May.

It is one of two ETFs that track the local benchmark Straits Times Index (STI), which comprises the 30 largest and most liquid companies listed on the SGX.

The Trade and Industry Ministry last month reported a year-on-year jump in economic output of 2.7 per cent to $101.1 billion in the first quarter. The STI, seen as a benchmark for Singapore's economic performance, has also generated returns of 14.1 per cent so far this year.

A version of this article appeared in the print edition of The Straits Times on June 05, 2017, with the headline 'Top 5 most active ETFs turn in sizzling returns'. Print Edition | Subscribe