Retail investors in Singapore are more likely to hold exchange-traded funds (ETF) than their counterparts in the US, Australia and Japan, according to a recent survey. Singaporeans cite diversification benefits, flexibility in trading and lower cost as reasons for their faith in ETFs.
This is according to State Street Global Advisors’ 2024 ETF Impact Survey, which interviewed 254 retail investors and 50 institutional investors in Singapore in April.
The survey results, released on July 22, claim that six in 10 retail investors in Singapore surveyed hold ETFs in their portfolio, higher than investors in the US (45%), Australia (45%) and Japan (48%).
The majority of investors in Singapore (82%) agreed that ETFs have improved the overall performance of their portfolios, and 78% of Singapore retail investors said ETFs have made them better investors.
Among age groups, millennials here are the most likely to hold ETFs in their portfolios, with baby boomers the least likely to do so.
“With three-quarters of millennials in Singapore saying they have recommended ETFs to other investors, younger investors see more reasons to use ETFs,” says Anna Paglia, chief business officer at State Street Global Advisors, the asset management business of State Street Corporation.
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She adds: “However, for boomers with ETFs, 88% agreed that ETFs have improved their overall investment performance and have more liquidity than other investment products, therefore they can respond more rapidly to market changes.”
The survey also found a gender difference in ETF adoption — 63% of male retail investors in Singapore invest in ETFs, while only 56% of female investors hold ETFs in their portfolios.
In addition, more male investors think ETFs have improved their investment performance and provide more liquidity than other investment vehicles.
S’pore investors most optimistic
The survey also claims investor optimism has grown among Singapore’s investors, both in their own finances and the country’s economy.
Investor optimism surrounding personal financial outlooks stood at 79%, a significant increase from 68% recorded 18 months ago in a prior survey.
Behind the optimism, however, Singapore’s retail investors are concerned about inflation, tax policy changes and whether they are saving enough for retirement, says Jermyn Wong, head of Intermediary South East Asia at State Street Global Advisors
“With over 50 ETFs listed in Singapore, investors can access various asset classes in a transparent, cost-effective and tax-efficient manner. Singaporeans can also invest in ETFs through the supplementary retirement scheme (SRS), which is eligible for tax relief,” adds Wong.
According to the survey, retail investors in Singapore are most positive on their country’s economic outlook, with 59% upbeat on Singapore’s economic outlook over the next 12 months.
This is greater than investors in the US (32%), Australia (30%) and Japan (26%) respectively.
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S’pore investors still bullish on S&P 500
Perhaps underscoring their belief in ETFs, Singapore’s retail investors believe the S&P 500’s bull run still has legs to go further. The index has risen 16% year-to-date and more than 20% over the past year.
According to the survey, about half (44%) of retail investors in Singapore believe the index will be up this year and only 17% think it will go down.
“Our bias for growth stocks remains in place for the second half of the year. We see opportunities in the S&P 500 as it tends to lean towards large US growth stocks,” says Paglia.
Last year marked the 30th anniversary of the first-ever US-listed ETF, which was launched on Jan 22, 1993 on the New York Stock Exchange (NYSE).
Following this, the Standard and Poor's Depositary Receipts (SPDR) S&P 500 ETF Trust was listed on the Singapore Exchange S68 (SGX) on May 4, 2001, providing Singaporean investors with access to the world’s largest economy.
