Amid bullion rally, gold ETF most active on SGX in first half of year

SPDR Gold Shares ETF clocked the highest average monthly turnover value - S$156.9 million - among exchange-traded funds (ETFs) listed on the Singapore Exchange (SGX) during the first six months of this year.

The fund, which is backed by physical gold and tracks the price of the yellow metal, also generated a year-to-date (YTD) total return of 16.2 per cent as at July 2 and had a global fund size of S$93.36 billion, SGX said in a market update on Thursday.

This comes as bullion prices have climbed this year, with skittish investors bolting for safety from the coronavirus pandemic and central banks implementing mammoth stimulus packages to cushion its economic impact. Stimulus tends to boost gold, which is seen as a hedge against inflation and currency debasement.

On Wednesday, bullion rallied past the technical US$1,800 per ounce threshold, scaling its highest in almost nine years. It held steady above this level on Thursday.

"SPDR Gold Shares ETF provides investors with an innovative, relatively cost-efficient and secure way to access the gold market," the Singapore bourse operator said.

"The fund aims to lower many barriers that prevent some investors from investing in bullion, including the logistics of buying, storing and insuring the commodity. In addition, certain pension funds and mutual funds do not or cannot hold physical commodities or the derivatives."

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

SPDR Gold Shares ETF tracks the London Bullion Market Association PM gold price, and the physical bullion is kept in the form of London Good Delivery bars.

The precious metal is viewed as a safe-haven asset, particularly when there is more market volatility. Widespread negative real rates and quantitative easing are also expected to continue to boost bullion's role as an investment haven, SGX noted.

Meanwhile, the total turnover value of ETFs listed on the Singapore bourse nearly tripled year on year to S$506 million in H1 2020 amid increased global market volatility from widespread Covid-19 lockdowns. This was a 196 per cent increase from S$171 million in H1 2019.

After SPDR Gold Shares ETF, the next four most traded during the first six months of this year were SPDR STI ETF, Lion-Phillip S-Reit ETF, Lyxor China Enterprise (HSCEI) UCITS ETF and Nikko AM Singapore STI ETF.

Together, the top five funds racked up an average monthly turnover ranging from S$18.9 million to S$156.9 million in the six months.

SPDR STI ETF, which generated the second-highest average monthly turnover of S$145.4 million, recorded a fund size of S$1.11 billion as at July 2, with year-to-date net inflows of S$442 million.

Its investment objective is to replicate as closely as possible, before expenses, the performance of the Straits Times Index (STI).

"With increased market volatility, more investors are using STI-tracking ETFs as a vehicle to gain instant exposure to Singapore's top 30 blue chips," SGX said on Thursday.

As for real estate investment trust (Reit) ETFs, they offer an alternative for investors seeking higher yields and stable income flows, as economic growth slows from the coronavirus pandemic and global interest rates continue falling, the bourse operator added.

Lion-Phillip S-Reit ETF generated the third-highest average monthly turnover of S$19.4 million in H1 2020.

As at June, Reit ETFs listed in Singapore recorded a combined fund size of S$424 million, with YTD net inflows of S$84 million.