Exchange-traded funds are gaining traction among Singaporeans, with six in ten individual investors in the city-state holding ETFs in their portfolio, a new survey finds. That’s a much higher percentage than in the United States (45%), Australia (45%) and Japan (48%).
The majority of investors in Singapore (82%) agreed that ETFs have improved the overall performance of their portfolios, and 78% said ETFs have made them better investors, according to the 2024 ETF Impact Survey by State Street Global Advisors, the asset management business of State Street Corporation.
The survey was based on interviews with 254 individual investors and 50 institutional investors in Singapore in April 2024.
Investors in the city-state see the diversification benefits as the top reason for holding ETFs, followed by flexibility in trading and lower cost.
“With three-quarters of millennials in Singapore saying they have recommended ETFs to other investors, younger investors see more reasons to use ETFs,” says Anna Paglia, chief business officer at State Street Global Advisors.
“However, for Boomers with ETFs, 88% agreed that ETFs have improved their overall investment performance and have more liquidity than other investment products, therefore they can respond more rapidly to market changes.”
Millennial investors in Singapore have the highest utilization of ETFs (67%), compared with Gen X (56%) and Boomers (48%).
The survey also finds a gender difference in ETF adoption. Among individual investors, 63% of males invest in ETFs while only 56% of females have ETFs in their portfolios. More males think ETFs have improved their investment performance and provide more liquidity than other investment vehicles.
Last year State Street Global Advisors marked the 30th anniversary of the first-ever US-listed ETF. Launched on January 22 1993 on the New York Stock Exchange, the SPDR S&P 500 ETF Trust was listed on the Singapore Stock Exchange on May 4 2001, providing Singaporean investors with access to the world’s largest economy.
Investor optimism
According to the survey, Singaporeans are also more optimistic now about their own finances and the country’s economy. Eighteen months ago, 68% of respondents were optimistic about their personal financial outlook. Investor optimism has increased significantly this year, with 79% of respondents saying they are now optimistic.
“Behind the optimism, Singapore individual investors are concerned about inflation, tax policy change and whether they are saving enough for retirement,” says Jermyn Wong, head of intermediary for Southeast Asia at State Street Global Advisors.
“It is important for Singaporeans to plan for their financial future. With over 50 ETFs listed in Singapore, investors can access various asset classes in a transparent, cost-effective and tax-efficient manner. Singaporeans can also invest in ETFs through the supplementary retirement scheme (SRS) which is eligible for tax relief.”
Individual investors in Singapore are most positive about the economic outlook. According to the survey, 59% are optimistic about their country’s economic outlook in the next 12 months, a higher percentage than in the US (32%), Australia (30%) and Japan (26%).
There are also generational differences: millennials (64%) and Gen X (68%) are significantly more optimistic than boomers (27%) in Singapore when it comes to the economy.
Similar to individual investors, institutional investors in Singapore are also more optimistic about their country’s economic outlook than their peers.
