POSB to launch ETF-based funds
Charissa Yong
(Taken from the Straits Times on 5th August 2009)
POSB is launching funds that let investors buy into two local exchange traded funds (ETFs).
ETFs are investment vehicles that can be bought and sold like a share. They diversify risk by buying a basket of stocks on an exchange, instead of buying only an individual stock.
POSB's MyHome Fund buys into the DBS STI ETF, which buys Singapore shares. Its ABF Singapore Bond Index fund invests in Singapore Government bonds.
Customers have three choices with POSB.
They can choose the HomeSteady portfolio, which invests 80 per cent in the ABF index and 20 per cent in the STI ETF, or the HomeBalanced portfolio, which invests 50 per cent in both.
The third portfolio, HomeGrowth, invests 20 per cent in the ABF index and 80 per cent in the STI ETF.
'It's the first fund that packages two ETFs together in this manner and the first fund in Singapore to buy solely into ETFs,' said Mr Rajan Raju, head of the DBS consumer banking group.
'We can offer the full range of portfolios to choose from, depending on an individual's risk appetite.'
He said the fund enables Singaporeans to invest in the country's growth and success while being easy to understand.
MyHome Fund can be bought into at 52 POSB branches, more than 900 ATMs and via Internet banking. The annual management fee is 0.5 per cent and the initial sales charge is 0.3 per cent. Investments start from $1,000.
A key aspect of the fund is its long-term perspective, said POSB's managing director of consumer banking, Mr Davy Wee.
'Singaporeans have been well-trained to save but not that well-positioned for retirement.
'This fund would encourage Singaporeans to take a longer-term perspective instead of just saving on an everyday basis,' said Mr Wee.
The chief executive of DBS Asset Management, Ms Deborah Ho, added: 'It's a start at providing a long-term wealth accumulation solution.'
Wednesday, August 5
POSB to launch ETF-based funds
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Kay
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Wednesday, August 05, 2009
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it's a fund of funds, what a cool way to fool people to rob them off additional expenses!
ReplyDeletehi all n kay,
ReplyDeleteWat's everybody's view on this? The new POSB ETFs cost:
- initial sales charge is 0.3%
- annual management fee is 0.5%
If buy thr POEMS, management fees for STI ETF is 0.3% currently. Do u think that this new POSB plan is cheaper than philips SBP?
Newbie
Hi all,
ReplyDeleteThe main attraction of this fund is that it will automatically rebalance your proportion of equities and bonds if my understanding is correct. That means that this fund will be less volatile and this is suitable for those who cannot withstand a huge temporary drop in their investments. For those who watched their stock portfolio dropped by a percentage of 50% or even more during this current bear market, I'm sure you know what I'm taking about. In a bear market, the bonds will provide cushion to equities which will be depressed while in a bull market whereas in a bull market and vice versa.
The Straits Times has reported the initial sales charge wrongly. It is actually 3% and this is rather high in my opinion. In my opinion, the additional 0.2% in annual management fee in return for an automatic rebalance of your portfolio to the correct proportion is worth it. It is not so much of whether the POSB plan is cheaper than the Philips SBP but whether you can cope with the different types of volatility for both plans.
Hi all,
ReplyDeleteI'm in a dilemma in how to invest, single premium ILPs or POSB ETFs.
Can someone advise me which to buy from these 2 options?
I understand that the charges are as follows:
1) POSB ETFs - 3% (inital sales charge) and 0.5% annual management fee
2) Single premium ILP eg NTUC Flexi-Link Plan -
Bid offer spread of 3%
Distribution cost of $127 based on $5k initial investment - is this a one time cost?
Mortality fee FOC
Commission of 1.5% on $5k initial investment
Expense ratio - I'm not sure
Thank you.
Hi Augustine,
ReplyDeleteILPs have a different financial objective since they cover insurance too whereas ETFs are for investments. Thus the comparison between the 2 products that you have suggested is not that meaningful actually.
Kay
It's kind of surprising that not all banks are integrated with stock and other transactions as an integral part of their business, though perhaps they have their reasons. There's so much convergence that there's no logistical reason to need more than one account.
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