SGX Group gearing up to list active ETFs

SINGAPORE: In a strategic move to align with evolving market trends and cater to the changing needs of investors, the Singapore Exchange Group, SGX is gearing up for the listing of active ETFs (exchange-traded funds), The Edge Singapore reports.

Unlike traditional ETFs, actively managed ETFs are constructed based on the manager’s investment expertise rather than passively tracking an underlying index. This approach allows investors to capitalise on market inefficiencies, adapt to dynamic economic environments, and potentially generate alpha, according to SGX Group.

Serene Cai, the group’s Head of Securities Trading, highlighted the significance of the move, stating, ” The launch of new listing requirements for active ETFs is a strategic move to stay at the forefront of market trends and respond to the evolving needs of investors. SGX Group aims to provide a platform that not only encourages innovation in the asset management space but also empowers investors with more options. This new development will contribute to the vibrancy of our marketplace and reinforce SGX Group’s position as a hub for innovation and investor support in the global financial landscape.”

The decision comes at a time when ETF investing in Singapore has witnessed substantial growth, with assets under management (AUM) doubling since the end of 2019, currently exceeding S$10 billion. Over the same period, the number of direct retail investors has doubled, and AUM managed by robo-advisors has tripled, reaching approximately S$1 billion.

As of June 2023, global active ETF listings have recorded an aggregate fund size of S$878.05 billion (US$659 billion), marking a significant increase since Dec 2017, with the number of listings increasing fivefold to over 1,900. In the Asia Pacific region, the AUM of active ETFs has experienced a five-year annualised growth of 27%, riding on the rapid adoption of ETFs.

To guide market participants through the listing process, SGX Group released a practice note on Dec 4. The note, available at https://rulebook.sgx.com, outlines the exchange’s requirements for listing actively managed ETFs, offering transparency and clarity to potential issuers.

In conjunction with this development, SGX’s closing price on Dec 4 was S$9.63. /TISG