Hi Mr. Tan,
I read your blog. You said that it might be better to buy into ETF such as STI ETF to reduce expenses and upfront loading. Recently, there has been a number of Lyxor ETFs listed on SGX and they are denominated in USD. What is your opinion of such ETFs, in particular that the exchange rate risk of such ETFs seemed particularly high in current market?
REPLY
The Lyxor ETFs are denominated in USD for the purpose of trading only. The underlying risk depends on the asset class that the fund is invested in, and is not affected by the traded currency. For example, if the USD weakens and the underlying fund is performing well, the unit price denominated in USD will increase to compensate for it.
I am not familiar with the Lyxor ETFs, but if they are widely diversified, invested in good quality stocks (i.e. non speculative) and have low expense ratios, then these ETFs are suitable for long term investors.
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