POSB yesterday announced the launch of MyHome Fund, a fund that allows investors to gain exposure to Singapore bonds and equities by investing into two Exchange Traded Funds (ETFs) – DBS Singapore STI ETF and ABF Singapore Bond Index Fund.
MyHomeFund is a mid to long term investment and there are currently two portfolios to choose from:
- HomeSteady which has a 80% allocation to ABF Singapore Bond Index and 20% allocation to DBS Singapore STI ETF
- HomeBalanced which has a 50% allocation to ABF Singapore Bond Index and 50% allocation to DBS Singapore STI ETF
The newspapers reported another Growth portfolio with a 80% equity – 20% bond allocation but I couldn’t find it in the announcement or the product brochure. Perhaps the Growth portfolio has been postponed.
Investments into MyHome Fund starts from a minimum of $1000. The initial sales charge is 3% (ST incorrectly reported it as 0.3%) and there is an annual management fee of 0.5%. Application can be done using cash or SRS via POSB branches, ATMs or internet banking.
The MyHome Fund could be an option for investors who wants to invest passively into the Singapore market on a regular basis.
The pre-defined allocation percentages means that you do not even have to bother about rebalancing the portfolio yourself. This is something that you would need to do if you were to construct your own ETF portfolio by buying the ETFs directly.
The fact that DBS is the manager of DSB STI ETF also means that there could be cost savings when it invests into the STI ETF.
With ETFs gaining popularity over traditional Unit Trust because of their low cost structure, I will not be surprised to see the launch of more low cost passively managed funds that uses ETFs as their investment vehicles.
This is good news for the retail investor. Personally, I would also like to see more low cost index funds being bought to the Singapore market. An index fund that charges you 0.5% p.a. that tracks the STI would likely to be more cost effective than one that charges you 0.5% p.a. to buy into a STI ETF (which charges you another layer of fees).
The options for that are rather limited now.
The brochure for MyHomeFund can be downloaded here: