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Singapore’s Lion Global to join ETF party

Lion Global Investors (LGI) is expected to list its first ETF on the Singapore Exchange on 30 October.

Capital continues to flow in ETFs listed in Asia-Pacific. Overall, ETF assets in the region (ex-Japan) rose by $21bn year to end-July, reaching a record $147bn, according to data from ETFGI.

The amount of assets gathered during the period is higher than 2016’s full-year new assets of $11bn.

Firms no doubt see opportunity to launch passive instruments. The application for Lion Global’s first ETF was made with the SGX on 7 July. The firm has received a letter of eligibility from the bourse for the listing and quotation for the ETF’s units on the main board, according to the fund’s prospectus.

The ETF is still pending authorisation, according to MAS records.

The Lion-Phillip S-REIT ETF will replicate the performance of the Morningstar Singapore REIT Yield Focus Index. The index is compiled and calculated by Morningstar and is designed to screen for high-yielding REITs.

The ETF will also be the first to track the index, according to data from SGX. Currently, there are two REIT ETFs, both tracking the performance of different indices weighted with Asia-Pacific (ex-Japan) REITs.

According to the prospectus, LGI’s ETF is suitable for investors seeking capital growth and regular income in the form of dividends. However, it notes that such dividend distributions are not guaranteed and are made at the firm’s discretion.

FSA sought more information from LGI, but the firm was not able to provide more details.

Index funds

Although this is the first ETF that the firm is expected to launch, it has been managing three index funds focused on the European, global and US markets, according to records from the MAS. In total, LGI has 35 MAS-authorised funds that invest in the US, European, Asia-Pacific and global markets.

The sub-manager of the ETF is Phillip Capital Management, according to the prospectus. Phillip Capital also manages one ETF in Singapore, which is the Phillip SGX APAC Dividend Leaders REIT ETF.

In total, there are 69 listed ETFs managed by nine asset managers in the Lion City as of the end of August, according to SGX records.

This year, only two ETFs have been launched in Singapore: the NikkoAM-Straits Trading Asia ex-Japan REIT ETF and the One Stoxx Asean Select Dividend Index Fund. The latter is the first ETF that has been approved under the Asean Collective Investment Scheme, the cross-border fund passporting framework that connects Singapore, Malaysia, and Thailand.

LGI, which is a member of the Oversea-Chinese Banking Corporation (OCBC) Group, managed around $32.8bn as of the end of June.

Lion Global index funds vs their indices over three years

 Source FE. Indices and fund NAVs are in US dollars.

Part of the Mark Allen Group.