The case for an iEdge Singapore Next 50 ETF

SINGAPORE makes it easy to buy its largest companies.

The Straits Times Index (STI) is accessible through multiple exchange-traded funds (ETFs), unit trusts and structured products. Yet for the next tier of listed companies, those sitting just outside the STI, there is no equivalent low-cost fund giving ordinary investors diversified exposure.

That gap is becoming harder to justify.

The Singapore Exchange launched the iEdge Singapore Next 50 Indices in September 2025, creating a rules-based benchmark for the 50 largest and most liquid mainboard companies outside the STI’s 30 constituents.

The methodology is publicly available. The index completed its first quarterly review in December, with the next scheduled in March 2026.

Anyone wanting diversified exposure to the Next 50 universe today must assemble it stock by stock, paying multiple commissions, accepting tracking error, and concentrating risk in whichever names they happen to recognise. A single ETF would offer one-ticket access to all 50 constituents.

The composition tells a different story from the STI.

Where the flagship index remains dominated by financials, the Next 50 tilts towards industrials, consumer names, healthcare, technology and a significant allocation to Singapore real estate investment trusts (Reits). It includes ComfortDelGro , iFast , Sheng Siong and Parkway Life Reit , alongside data centre trusts and shipping firms.

Constituents must meet minimum thresholds for market capitalisation and daily traded value. Together, they maintain a combined market value of around S$88 billion, with average daily turnover of about S$165 million.

This is not a speculative small-cap basket. It is a liquid, investable segment that currently has no dedicated ETF.

An ETF would not only serve investors. It could also improve conditions for the companies themselves. A listed fund that must buy and sell underlying stocks to meet creations and redemptions generates steady two-way flow.

For mid-cap counters, that additional liquidity can tighten spreads and raise visibility among global asset managers who might otherwise overlook Singapore’s smaller names.

The timing is favourable. Budget 2026 expanded the Equity Market Development Programme to S$6.5 billion, with S$3.95 billion already allocated to nine asset managers whose mandates channel capital into Singapore-listed equities, including small and mid-cap names.

Institutional investors were net buyers of about S$425 million of small and mid-cap stocks in the first eight months of 2025, while average daily turnover in the segment rose roughly 50 per cent over the same period.

Institutional capital is already moving. Retail investors remain on the sidelines without a simplified vehicle.

There is also a question of keeping pace with global practice. In the US and UK, mid-cap index funds such as those tracking the S&P MidCap 400 or the FTSE 250 are standard building blocks.

Most developed markets offer investors a domestic mid-cap ETF alongside their flagship large-cap product. Why not in Singapore, a global wealth hub?

Some will question whether demand is sufficient. Yet ETF adoption is often supply-led. Once a simple, low-cost vehicle exists, advisers and platforms incorporate it into model portfolios, and liquidity follows.

The analysis of Next 50 constituents is already happening across local research houses and investment portals. What investors lack is a way to act on it.

A Next 50 ETF need not compete with STI products. The STI will likely remain the core holding for many domestic investors, valued for its concentration in large, dividend-paying names. A mid-cap index fund would complement it by adding sector breadth and exposure to faster-growing companies.

Bringing such a product to market would require a sponsor with ETF experience willing to step forward and price it sensibly. Anchor commitments from institutions or government-linked entities could help the fund reach viable scale in its early years.

The building blocks are already in place. The index methodology exists. Capital has already been earmarked for this segment.

Many of today’s STI constituents were once mid-caps. The index that tracks the next generation already exists. The ETF that lets investors access it does not.

The writer is director of private wealth management at UOB Kay Hian. He writes a weekly newsletter on behavioural finance at appliedmindletter.com.

UOB Kay Hian is a constituent of the iEdge Singapore Next 50 Index. This commentary is based on the writer’s observation of Singapore’s equity market structure and does not constitute investment advice.