Martin Lee @ Sg
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DBS STI ETF Started Trading

DBS STI ETF started trading yesterday.

According to the notice filed by DBS, 2,411,410 units were created at an issue price of $1.62 per unit. This works out to a total fund size of about $3.9 million.

It looks that the amount of funds raised is quite small. As the fund has a minimum trustee fee of $48k per year, this means the expense ratio would exceed 1% (at the current fund size).

Unless DBS can get more institutional interest into this fund, the small fund size will most likely mean it will be a loss making ETF for them.

As a comparison, Streettracks STI ETF has 256 million units in circulation with a fund size of almost $400 million.

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6 comments
CoG says 10 years ago

Hi lioninvestor,

Ok I realized how newb that qn was.. did some googling
and found out the trustee is HSBC. But I still don’t understand
what the trustee is. What role does it play? How does the fees
to the trustee affect us?

Reply
    lioninvestor says 10 years ago

    Hi CoG,

    The trustee holds cash and underlying shares of the ETF for the benefit of the beneficiary.

    The fee paid is from the NAV of the ETF, so the higher the fee, the worse off it is for the ETF investors.

    Reply
      CoG says 10 years ago

      Oh ok. thks.
      So in other words the total fees for the DBS ETF can be said to be
      0.28% as compared to 0.3% for streetTRACKS right?

      I have another qn, would there be a difference in liquidity or would the market maker always ensure liquidity especially in times when there is no willing third party ?

      Reply
CoG says 10 years ago

Hi lioninvestor,

what does the trustee fee refer to? Izit the amt they pay
shareholders like us?

Reply
kay says 10 years ago

Hi,

That’s a great insight. I didn’t really notice that the expense ratio would exceed 1% due to the small fund size.

Kay

Reply
    lioninvestor says 10 years ago

    Saw from the latest notice that they have 25 million units in circulation. So not as bad now.

    Reply
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