Discover why Active ETF launches are struggling to take off in Singapore!

In the fast-paced world of exchange-traded funds (ETFs), Singapore is taking its time to warm up to active ETFs. Despite the green light from regulators nine months ago, only one product has hit the market. So, what’s holding back the momentum, and what does the future hold for active ETFs in the city-state?

1. Delays in Launches: While Singapore approved active ETF listings last December, only one product has launched so far. The conservative investment culture of local investors is partly to blame for the slow adoption.
2. Industry Insight: According to industry experts, Singapore’s ETF ecosystem and infrastructure need more development to spark interest in active ETFs. Factors like entry points, investment scale, target audience, and success rates of existing products are being evaluated.
3. Rising Interest: Lion Global Investors broke the ice in January by launching the first active ETF in Singapore, in collaboration with Nomura Asset Management. The Lion Global ETF raised an initial S$37 million and now stands at S$49.2 million in assets.
4. Comparative Analysis: Comparing with Hong Kong’s 28 active ETFs, Singapore still has a long way to go in embracing actively managed funds. Asset managers like Chen Wang from CSOP Asset Management suggest that market appetite and regulatory requirements play a significant role in product launches.
5. Investor Education: The lack of familiarity among Singaporean investors regarding active ETFs is another hurdle. CSOP AM’s Wang emphasizes the need for investor education to differentiate between active and passive funds, and to highlight the benefits of active ETFs over mutual funds.
6. Market Dynamics: Despite record outflows in locally listed ETFs in Singapore, experts like Evonne Gan of Broadridge believe that interest in active ETFs will grow. The Singapore Exchange (SGX) is actively engaging with issuers to bridge the gap between mutual funds and ETFs.

In conclusion, Singapore’s foray into active ETFs is still in its early stages, with challenges to overcome. The road ahead involves educating investors, improving market infrastructure, and fostering interest among asset managers and regulators. As the market matures, active ETFs have the potential to carve a niche in Singapore’s investment landscape.