Singapore Exchange (SGX) Group is preparing itself for the listing of actively managed exchange traded funds (ETFs).
An actively managed ETF is constructed based on the manager’s investment expertise unlike a traditional ETF, which is usually passively managed and tracks an underlying index.
Active ETFs therefore present opportunities for investors to capitalise on potential market inefficiencies, adapt to changing economic environments and potentially generate alpha, says the group.
“The launch of new listing requirements for active ETFs is a strategic move to stay at the forefront of market trends and respond to the evolving needs of investors. SGX Group aims to provide a platform that not only encourages innovation in the asset management space but also empowers investors with more options. This new development will contribute to the vibrancy of our marketplace and reinforce SGX Group’s position as a hub for innovation and investor support in the global financial landscape,” says Serene Cai, the group’s head of securities trading.
According to SGX Group, ETF investing in Singapore has been popular among investors with assets under management (AUM) doubling since the end of 2019 to over $10 billion to date. The number of direct retail investors has also doubled over this period while AUM managed by robo advisors tripled to approximately $1 billion.
As of June 2023, active ETF listings recorded an aggregate fund size of US$659 billion ($878.05 billion) globally, and the number of global active ETF listings has increased fivefold to over 1,900 since December 2017. The AUM of active ETFs in Asia Pacific have also recorded a five-year annualised growth of 27%, riding on the rapid growth of ETF adoption in this region, adds the group.
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SGX Group has released a practice note at https://rulebook.sgx.com on Dec 4 which provides guidance on the exchange’s requirements for the listing of actively managed ETFs.
Shares in SGX closed $9.61 on Dec 1.
