Easier access to a wider range of investment funds, ETFs: MAS

Retail investors can expect easier access to a wider range of investment funds, including exchange-traded funds (ETFs), as fund managers are now able to reclassify funds which make limited use of derivatives as Excluded Investment Products (EIPs).

Investors will be able to invest in EIP-ETFs in a similar way as they do with SGX-listed shares. This enhancement is part of the Monetary Authority of Singapore's (MAS) broader effort to expand the range of simple, low-cost investment options available to retail investors.

"With the changes to the EIP definition, the total number of SGX-listed ETFs which are classified as EIPs could increase to about 20, accounting for over 80 per cent of assets under management by ETFs listed on SGX,'' Lee Boon Ngiap, Assistant Managing Director, Capital Markets, at MAS said on Wednesday.

"This provides retail investors convenient access to a broader range of relatively simple investment funds while maintaining sufficient safeguards for the more complex products," he added.

Previously, all investment funds which used derivatives were classified as Specified Investment Products (SIPs). SIPs are more complex products and can only be sold to retail investors with enhanced safeguards, including an assessment of these investors' investment knowledge or experience.

"MAS has taken on board industry feedback that funds which make limited use of derivatives are relatively less complex and should be made more accessible to retail investors,'' MAS said.

The central bank said these are funds which invest only in simple products such as shares or gold, but may use derivatives for efficient portfolio management including the hedging of risks.

"Fund managers will now be able to reclassify such investment funds as Excluded Investment Products (EIPs). Retail investors can then access these investment funds which have been reclassified as EIPs more easily as they will no longer need to be assessed on their investment knowledge or experience,'' MAS said.