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S&P500 Index Funds available in Singapore

Funds, Investments

Written by:

Alvin Chow

If you are a firm believer of the Random Walk Theory or the Efficient Market Hypothesis (EMH), you would want to invest in an index fund. Index funds have been widely available for a long time in US and Vanguard is the leading index fund provider. John Bogle who founded Vanguard is a strong believer that the Index is hard to beat in the long run. Thus, if you cannot beat the index, buy the whole index! Unlike US, Singapore has limited choices for investors who wants to invest in low cost index funds.

(read the updated S&P500 index funds for Singapore investors here)

Nonetheless, here are 3 options that you may like to explore.

Infinity U.S. 500 Stock Index Fund

Lion Capital has liaised with Vanguard to offer Infinity U.S. 500 Stock Index Fund which is a feeder fund in the Vanguard U.S. 500 Stock Index Fund. This gives Singaporeans a valuable chance to invest in Vanguard’s managed funds. P.S. US calls it mutual fund whereas in Singapore, it is known as Unit Trust.

  • Preliminary charge: 2%
  • Management Fee: 0.475% p.a.
  • Annual Management Charge (Mother Fund): 0.23 %
  • Annual Expense Ratio: 1.09%

There are 2 options if you want to buy S&P500 Index Fund through Singapore Stock Exchange (SGX). These funds are known as Exchange Traded Funds – They are funds yet conveniently traded like stocks:

SPDRs

SPDRs which conveniently known as spiders (due to its abbreviation) actually stands for Standard & Poor’s Depository Receipts. The counter that can be traded in SGX is actually cross-listed from American Stock Exchange (AMEX). This means that a Singaporean investor actually purchase the shares from US through SGX, and hold it in Central Depository (CDP), Singapore. Thus, it will be convenient for the investor as he do not need to have a US trading and holding account. The value of SPDRs shares is 1/10 of the S&P500 Index and is managed by PDR services, a subsidiary of AMEX.

  • Counter name: SPDRS 10US$
  • Board Lot Size: 10
  • Currency: USD
  • Total Expense Ratio: 0.10% p.a.
  • Transaction Costs: Prevailing brokerage commissions (abt 0.33% and min S$25)
    + Clearing fees of 0.05% of the contract value
    (subject to a maximum of SGD200);
    + Goods services tax of 7% on brokerage commissions and clearing fees.

iShares S&P 500

Very similar to the SPDRs, iShares S&P500 also tracks the S&P500 Index at approximately a value of 1/10 of the Index. The difference is that iShares S&P 500 is listed in New York Stock Exchange (NYSE) while SPDRs is listed in AMEX. In addition, iShares is managed by Barclays Global Investor while SPDRs is by PDR Services.

  • Counter name: IS S&P 500 10US$
  • Lot Size: 10
  • Currency: USD
  • Total Expense Ratio: 0.09% p.a.
  • Transaction Costs: Prevailing brokerage commissions (abt 0.33% and min S$25)
    + Clearing fees of 0.05% of the contract value
    (subject to a maximum of SGD200);
    + Goods services tax of 7% on brokerage commissions and clearing fees.

So which is the right choice? It really depends on your needs if you are choosing which of the above to invest in. ETFs will be convenient to buy and sell frequently if you are intending to trade short term as you can trade them like stocks. If you intend to buy a small amount on a regular basis, using the dollar-cost-averaing method, it is unwise to choose ETFs. This is because there will be cost of brokerage fees incurred each time you buy (a minimum of S$25, depends on your broker). In this case, it will be beneficial to look for institutions that have regular investment plans ($100/mth for Infinity U.S. 500 Stock Index Fund) as the charges will definitely be more reasonable. One such institution is Fundsupermart which has Regular Saving Plan (as they termed it) for regular contributors.

Disclaimer: The above viewpoint is strictly for information only and may not be suitable for your financial needs or goals. Please carry out more research or consult a qualified financial advisor to assist you. The Information is correct at the point of writing. The author, through this article, does not gain any monetary or other forms of benefit from any of the above mentioned institutions.

22 thoughts on “S&P500 Index Funds available in Singapore”

  1. Hi, thanks for writing this article. It really clarifies what ETFs we can invest in Singapore.
    Would also like to find out for SPDRs, you mentioned that it is sold in Board Lots of 10. May I know how much is that, is it 10,000 shares?

    Reply
  2. Hi penny, SGX has been introducing more ETFs lately so it is worthwhile to take a look at the following URL:

    http://www.sgx.com/wps/portal/marketplace/mp-en/products/securities_products/etfs

    The lot size is 10, which means 10 shares make one lot.
    Currently, SPDRs is traded at US$250. Hence, one lot will cost you 10 x US$250 = US$2500

    I do not recommend you to buy SPDRs since there is no volume on the SGX. It may be a problem selling them when you want to.

    Reply
  3. Hi, thanks for this article. I am looking to invest in either one of the ETF listed above. However, I am not really sure if there are hidden cost or conditions about these ETFs as I can’t find it online (e.g. any overseas taxes on Singaporean buyers?). If possible, could you explain? Or, even a link to the resource would be so helpful. Thank you.

    Reply
    • The ETFs are listed on SGX and in Singapore, dividends are taxed at corporate level (one-tier) and there are not tax on capital gains (when you buy and sell). However, if you are a trader and rely on the small but frequent capital gains for income, you will be liable for tax.

      The cost of owning the ETFs are
      1) brokerage fees
      2) GST
      3) Clearing Fees
      4) annual fund expense

      1 to 3 are incurred when you buy and sell.

      Reply
  4. Thanks for the info and the replies above. S&P 500 index seems to be a good choice for the long term investor. You mentioned that you do not recommend buying SPDRs since there is no volume on the SGX. So in that case if I want to invest in it regularly, and may want to sell off years later, would you recommend me getting from a site like Fundsupermart?

    What about through the Infinity U.S. 500 Stock Index Fund mentioned in your article? Is this Singapore based, and easy to liquidate later?

    Thanks.

    Reply
    • Hi ernie, I cannot make any recommendation. I can only share my perspective and it may not apply to your context.

      The older comments were made when I was less wise. Over the years, I learned that there are market makers hired to facilitate buy and sell transactions in the market.

      Hence, even though the volume is low, an investor can still buy and sell within the price range.

      One thing to note is how you are going to structure your portfolio. Are you buying only US stocks? Or would you want to add equities from other countries? How about bonds?

      Reply
  5. Hi there. .great blog you have here. .I have been learning about index funds ever since watching BOGLE’S videos on how in the long run a low fee index fund more often than not will beat those managed mutual funds..even saw a video by Buffet who suggested it for the investor who is starting out…I am 29 and have about $1500 a month spare which I would like to start to Invest in an sp500 index fund or via a similar etf. ..which would be the most cost efficient way for me to do it in Singapore while still retaining the low fees index funds are known for?

    Reply
  6. Thank you for your article.

    I have a similar question as Ernie above (Oct 29), but am quite unclear about your reply to him. What are your thoughts on investing in the S&P500 index through the Infinity U.S. 500 Stock Index Fund mentioned in your article? As this is a fund bought through Fundsupermart, will it faced the same difficulties of liquidation later, like through SGX?

    Also, what do you look for in an Index fact sheet to assess whether to invest or not?

    Reply
    • I won’t invest in the Infinity fund because the expense ratio is high at 0.92% per annum. There is also a 2% initial charge. A Vanguard S&P 500 ETF available in the U.S. stock exchange is the best option if you want to get exposure to the U.S. index.

      Some of the important things to look out for in an index fund:

      1) Cost – any initial sales charge, withdrawal penalties and costs, total expense ratio. You want this as low as possible.

      2) Underlying – what do the fund invest in order to replicate the index it is tracking? Avoid synthetic funds as they use futures contracts. A proper index funds should invest directly in stocks.

      3) Credibility – Is the issuer credible and trustworthy? Your money in the fund is as good as the promise given by the institution who operates it.

      Reply
  7. How do I go about investing in the vanguard S &P 500 ETF in Singapore? Is it possible to buy unit trusts if you cannot purchase the full Lot?

    Reply
  8. Hi, I understand that I will be subjected to a 30% withholding tax if I were to buy the S&P 500 ETF direct from the NYSE. Is there a cheaper way to invest in the S&P 500 ETF? I’ve been looking at 2 alternatives: S&P 500 on the LSE and SPDR S&P 500 on SGX. What is your take on the 3 options?

    Reply
    • The Singapore option is no longer possible from 2016 onwards because BlackRock is going to seek delisting in Dec 2015.

      An alternative is to consider the new Vanguard S&P 500 ETF listed in Hong Kong Stock Exchange.

      Reply
  9. Hi,

    Would like to ask about withholding tax if I buy directly via US stock markets. How does the taxation works? Also u mentioned that spdr is illiquid in sgx – I believe it is more liquid in the US? How about SPDR by SSGA?

    Reply
    • They will tax the dividends before distributing to you.

      U.S. ETFs definitely have greater liquidity than in Singapore. However, there is a market maker for ETFs, and this means that a financial institution who is a dealer for the ETF would buy and sell with you, provided the price is within the reasonable bid ask spread.

      Reply
  10. Hi Alvin great article and insightful replies. I am just starting out and I am very confused about everything in general. I would like to invest but is there s&p 500 in singapore? Can I invest in multiple stocks in the US from here without paying astronomical amount as fees and taxes? What are the laws in Singapore for tax? I am planning on doing the tradings online will it incur more cost? My head is all over the place and with so much information it is tough knowing what is the best choice. A perspective from your point would be awesome. Thank you.

    Reply
      • Hi, I too have been looking for an index fund tracking the S&P500 that is not an ETF, but none seem to be available in Singapore at the moment. I am current exploring US based options. My plan is to do dollar averaging. Unfortunately, none of the banks seem to offer a saving investment product for that.

        Reply
  11. Hi Alvin, do you plan updated article in 2020 about ETFs, buying Vanguard from SG or options and possible pro/con of buying in US ?

    Old article but insightful, now looking for up-to-date information/

    Reply
  12. Hi Alvin,

    I am comparing the SPDR S&P500 EFT: S27 and SPY.

    From what I understand, the S27 is listed on the SGX while SPY is listed on NYSE.

    What are the key differences between the 2?
    -Are capital gains taxed? By SG/US?
    -Are dividends taxed? By SG/US?

    As an SG investor, what should I consider when choosing between these 2 stocks?

    Reply

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