Martin Lee @ Sg
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DBXT FTSE Vietnam ETF

Deutsche Bank has recently launched another ETF in Singapore. This is in addition to the four they launched earlier.

The DBXT FTSE Vietnam ETF tracks the FTSE Vietnam Index and started trading on SGX on 25th March 2009.

The ETF will be quoted in board lots of 10 units and priced in US$ with a minimum bid size of US$0.01.

Here’s a tip for buying ETFs that are based on stock markets overseas.

As we all know, most of the ETFs have market makers to provide liquidity to the ETF. The bid-offer spread they quote will depend very much on the liquidity of the underlying market. The more liquid the underlying market, the better the spread.

This implies that when the underlying market is closed, the spreads will be the worst. Therefore, one should always try to buy an ETF when the underlying market is open.

Using DBXT FTSE Vietnam ETF as an example, the Hanoi and Ho Chi Minh stock exchange is open from 9am to 11am daily (Yes, they only operate for 2 hours every day).

As Vietnam time is one hour behind us, this converts to 10am-12 pm Singapore time. In practice, the spreads of the DBXT FTSE Vietnam ETF should be the narrowest during this time.

Using a smiliar line of thinking, it goes to reason that we will never be able to get the best spreads for ETFs listed here that are based on the US market. When these ETFs are open for trading during SGX trading hours, the US market is always closed for trading!

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