Investing in Exchange Traded Funds

Hi Mr Tan,

1) What are the investment risks or disadvantages involved in U.S. Cross-Listed ETFs, listed in

http://www.sgx.com/psv/securities/etf/ETF_US_Cross-Listed.shtml

DIAMONDS®
SPDRs®
iShares S&P500 Index Fund
iShares MSCI Singapore (Free) Index Fund
iShares Dow Jones U.S. Technology Sector Index Fund

REPLY:
I am not aware of any special risk or disadvantages involved in the US Cross Listed ETFs.

In selecting an indexed fund, you want to look for a fund that is managed by a reputed fund manager, charges low fees and provide good service in accounting and execution.

You are taking the investment risk of the specific market. If you are investing for the long term, the risk will averaged out to give you an average return for the period.

2) There are more than 10 ETFs listed on SGX but why is it that you are only recommending STI-ETF. Since STI-ETF is only focused on Singapore, would it be better to invest in e.g. Lyxor ETF MSCI AC Asia-Pacific (covering Asia minus Japan?

REPLY
I recommend the STI ETF for people who are familiar with investing in Singapore stocks and wish to remain in Singapore currency exposure. If they are familiar with investing in Asia, the Lyxor ETF is suitable.

All indexed funds are suitable, if they cost is kept at a competitive level and the investment is for 10 years or longer.