More products, more risks? South Korea’s leveraged ETF crisis has lessons for S’pore’s retail fund push

[SINGAPORE] Singapore’s push to broaden the range of investment products for retail investors could deepen markets, but South Korea’s recent experience with leveraged exchange-traded funds (ETFs) highlights the risks that Singapore will have to manage, observers said.

While the Republic is less prone to the concentrated retail speculation seen in South Korea – where wild market swings left retail investors bearing the brunt of losses – more sophisticated products will need to be accompanied by stronger investor education and safeguards, they said.

“Availability on the Singapore Exchange (SGX) should not be taken as an endorsement of suitability for retail investors – the two issues are quite separate,” said David Gerald, founder, president and CEO of the Securities Investors Association (Singapore).