An Exchange Traded Fund (ETF) is an open-ended investment fund listed and traded on stock exchanges (e.g. SGX and NYSE Arca), that generally aims to track the performance of an index.
What is an Index?
An index is formed by a basket of securities and is calculated by aggregating the value of the securities and expressing it against a base value. An index reflects the movement of an entire market. The index constituents are selected by the Index Provider from a list of securities which the index represents.
How Does an ETF Track an Index?
Some ETFs are created by full replication, ie. they invest directly in the underlying stocks. On the other hand, ETFs can also be created by synthetic replication through the use of some derivatives.
If the index rises by 10%, the price of the ETF is very likely to rise by 10%. For a short period of time, it is possible that the returns of an ETF are higher or lower than the returns of the underlying index. But generally in the long run, the returns of the ETF and the underlying index should be close.
What ETFs can I invest in?
At Maybank Kim Eng, you are able to trade ETFs listed in Singapore, Hong Kong, Malaysia and the USA. To find out which ETFs you can trade in, please consult your Trading Representatives.
Make Efficient Use of Funds
ETF units can be purchased at a lower cost compared to purchasing individual stocks, bonds or commodities to build a similar portfolio. The extent of diversification benefits depends on the constituents that make up the fund portfolio.
Get Access to a Wide Variety of Markets and Asset Classes
With ETFs, you can gain access to securities listed on stock exchanges outside your home country, as well as to commodities such as gold, in an efficient and convenient manner.
Access Free Real-Time ETF Prices
Real-time ETF price information is readily accessible on MKE trade's platform. With the transparency that ETFs offer, you can regularly monitor and have up-to-date information on your investments.
For US Exchange Traded Funds (ETFs) tools and resources, you can log in to MKE trade and access the US ETF Knowledge Centre.
In 2012, the Monetary Authority of Singapore (MAS) introduced guidelines for broking firms to provide safeguards to retail investors who wish to trade Specified Investment Products (SIPs). These products have complex features and risks that can be difficult to understand. Under these guidelines, both existing and new clients are required to be formally assessed by their broking firm for relevant knowledge and experience in trading Exchange Traded Funds (ETFs).
If you wish to qualify for ETF Trading, please visit any of our Customer Service Centres or Investor Centres to complete the Client Proficiency Assessment (CPA) Form. Alternatively, you may download the form here and mail it to:
Maybank Kim Eng Securities Pte Ltd
Client Services Department
150 Beach Road
#03-01 Gateway West
- a securities account with The Central Depository Pte Ltd (CDP)
- a trading account with Maybank Kim Eng Securities
Before you start purchasing ETF units, you should be aware of the following:
- The investment objective and strategy of the ETF;
- The information about the index/underlying asset that the ETF is tracking;
- The ETF's dividend policy;
- The fees and charges that will be borne by you as an investor;
- The channels through which trading information of the ETF will be disclosed;
- The information about the management company; and
- The risk associated with the ETF.
Transaction Fees and Charges
For brokerage/commission rates on online trades, click here.
For brokerage/commission rates on offline trades for foreign markets, please consult your Trading Representative.
Access free US Exchange Traded Funds (ETFs) tools and resources with US Knowledge Centre, available on MKE Trade.
|Overview of US ETFs Market||View at a glance the most popular ETFs by traded volume, and best and worst performing funds.|
|US ETFs Screener||Filter US ETFs based on your selected criteria. Criteria include 7 asset classes and more than 60 categories of ETFs.|
|US ETF Sectors||Filter US ETFs based on your selected criteria. Criteria include 7 asset classes and more than 60 categories of ETFs.View the performance of ETFs in popular US market sectors at different time durations.|
|ETFs Education||Find out the basics of ETFs trading. Get to know the different types of ETFs and the advantages and risks involved in trading ETFs.|
The US Knowledge Centre ("the Service") is provided by Orbis Systems, Inc. for general information purposes only. Maybank Investment Bank Berhad and its group of companies and/or Maybank Kim Eng Holdings Ltd and its group of companies (collectively, "Maybank Kim Eng") do not control nor manage the Service, and any client or user of the Service should not treat the Service as being endorsed or warranted by Maybank Kim Eng in any way. Clients and users of the Service are wholly and solely responsible for their own trading or investment decisions and cannot rely on the information provided in the Service as being accurate, complete or correct. Maybank Kim Eng cannot be held liable or responsible in any way for the consequences of clients/ users' trading or investment decisions, in using or relying on the Service, or otherwise, and clients/users of the Service may wish to consult professional advisers if they have any doubts or queries.System response and access times may vary due to market conditions, system performance and other factors.
As with all financial market investments, investing in ETFs carries a certain level of risk. Here are some risks to take note of before you start investing in ETFs.
Investors are exposed to market risk or volatility of the specific underlying assets which the ETF tracks. In unfavourable market conditions (e.g. market correction or economic crisis) when the general level of stock, bond or commodity prices decline, the value of ETFs will decline accordingly. Nonetheless, ETF investments will still deliver returns close to the underlying index, bonds or commodities.
The fund manager of the ETF may not be able to exactly replicate the performance of the underlying asset. This is known as 'tracking error'. Tracking errors may occur because the methods of sampling are not 100% accurate. In addition, factors such as management fees and timing differences may reduce the returns of the ETF relative to the index returns.
When the ETF is priced in one currency (e.g. US Dollar) and is different from the functional currency of the investor (e.g. Singapore Dollar), the investor is exposed to fluctuations in foreign exchange rates, which may increase or erode investment returns on the ETF.
Interest rate risk
The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between two rates, in the shape of the yield curve or in any other interest rate relationship.
Investors are exposed to counterparty risks of the Issuer/Manager of the ETFs. The insolvency or default of such counterparties may have an adverse impact on the investors' investments in the ETF.