Another two ETFs linked to the MSCI Singapore Investable Market Index and the MSCI Asia Pacific Ex Japan Index were also launched at the same time.

MSCI Pakistan IM (ISIN LU0659579147)

The index is a free float-adjusted market capitalisation weighted index reflecting the performance of large, mid, and small capitalisation companies in Pakistan.

All-in fee: 0.85% p.a.
SGX Code: O9D

MSCI Bangladesh IM (ISIN LU0659579220)

The index is a free float-adjusted market capitalisation weighted index reflecting the performance of large, mid, and small capitalisation companies in Bangladesh.

All-in fee: 0.85%
SGX Code:O9C

MSCI Singapore IM (ISIN LU0659578842)

The index is a free float-adjusted market capitalisation weighted index reflecting the performance of large, mid, and small capitalisation companies in Singapore.

All-in fee: 0.50%
SGX Code: O9A

MSCI AC Asia Pacific Ex Japan IM (ISIN LU0659578925)

The index is a free float-adjusted market capitalisation weighted index reflecting the equity market performance of the developed and emerging markets in the Asia Pacific ex Japan region. According to the MSCI index methodology the Index is designed to measure the performance of equity securities in the top 85% of the free float-adjusted market capitalisation of the equity securities listed on stock exchanges in the following 12 developed and emerging market countries: Australia, China, Hong Kong, India, Indonesia, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, and Thailand.

All-in fee: 0.50%
SGX Code: O9B

With the addition of these four ETFs, SGX now has a total of 88 listed ETFs.

To leave your comments, please go to : Pakistan and Bangladesh ETFs launched by Deutsche Bank db X-trackers

How a swap-based ETF works is that instead of investing into the underlying market, the ETF will hold some other securities and then enter into a swap agreement whereby another party agrees to deliver the index returns to the ETF in exchange for the returns of the underlying securities that the ETF is holding.

In this way, investors of the ETF will be ensured of a return that has very little tracking error of the actual index returns.

The disadvantage of a swap-based ETF is that the investor has exposure to the swap counterparty. If the swap counterparty is unable to deliver on its promise, the investor might be stuck with the returns of the securities that the ETF is holding. In some cases, these holdings might have nothing to do with the index it is supposed to track. There might even be significant losses if the securities have dropped in value or are not easily redeemed.

If the swap counterparty goes bust, you can also expect delays in untangling the whole mess.

To make it easier for investors to differentiate between the two types of ETFs, SGX has mandated that all those ETFs that are synthetically replicated have a “X” inside the exchange name.

But this X in the name could be difficult to spot because the X might not be so apparent or might look like part of the counter name.

For example, Lyxor World 10US$X@ was shown as simply LYX MSCI World inside one of the stock trading platform that I’ve checked. (LYX would like like a short form for Lyxor) Similarly for DBXT MSKorea 10US$X@ which was shown as DBX MSCI Korean.

More than 80% of the ETFs listed on SGX are synthetically replicated.

But there are other risks that many investors might not be fully aware of, nor (in my opinion) are they properly compensated for this addition risks that they are exposed to.

More on this in my next post, Counterparty Risks in Synthetic ETFs.

To leave your comments, please go to : The Dangers of Synthetic ETFs

As the product is hedged in SGD, an investor will be able to get exposure to any full potential upside (or downside) in percentage terms of the underlying gold (net of fees).

If you are not familiar with Exchange Traded Commodities (ETC), you can refer to this guide:

ETC Brochure by London Stock Exchange

But before you even consider investing in such a product, you should know the difference between a ETF, ETP and ETC and understand the risks behind them.

What is the Difference between an ETF and an ETP? (Part 1)

The Difference between an ETF and an ETP (Part 2)

Understanding Exchange-Traded Commodities & Notes

Features of Gold ETC hedged in SGD

• Linked to the spot performance of gold (less fees)
• Forex Hedged – Daily Forex hedged to minimize the SGD/USD exchange rate risk
• Backed by gold
• Liquid – Traded in USD in London with Deutsche Bank as the dedicated market maker
• Transparent – NAV published daily

Management fee: 0.29% p.a.
FX hedging fee: 0.40% p.a.
Bloomberg/Reuters Code: XGLI LN / XGLI.L
Trading Currency: USD

The product factsheet can be found here: db Physical Gold SGD Hedged ETC

To leave your comments, please go to : Gold SGD Hedged Exchange Traded Commodities and its Risks

The court rejected the bank’s argument that even a high school graduate could calculate the formula of the swap. According to the court, it wasn’t sufficient to explain the steps of the mathematical operation unless the banks also explained the risks clearly.

The bank was told to compensate some 541,074 Euros plus interest to one of its customers.

As an adviser to customers, the bank had a duty to find out the level of risk they were ready to take on. This should not be assumed based on previous dealings.

The court also said that the bank could not rely on the customer’s professional qualifications such as a degree in economics.

“This judgment seems to confirm that bank must act in the interest of the client, irrespective of how sophisticated the client is. It defeats the premise of caveat emptor.”

This interpretation is quite different from Singapore based on what had happened from the Minibond incident. Back then, investors defined as “vulnerable investors” (elderly and lowly educated) had a chance of getting back their full principal whereas it was almost impossible for the other investors.

Deutsche Bank Loses First German High Court Case Over Swaps (Bloomberg)

To leave your comments, please go to : Deutsche Bank Loses German Court Case Over Investor Losses

This call warrant allows investors to take a long exposure to the price of Apply shares.

Counter name : Apple DB ECW110718
Strike price : US$400
Expiry : 18th July 2011
Entitlement Ratio : 50

At the time of posting, the price of Apply is about US$337 while the bid/ask price of the warrants is about $0.36.

This means an implied volatility of about 36%, premium of 22% and breakeven price of around US$414.

All the technical information and warrants calculator/simulator to work out the numbers can be found at the DB Apple Warrant page.

Actually, it’s a pretty good page as it allows you to calculate the geek for any warrants in Singapore.

I haven’t done any comparison yet but I suspect the warrants would be more expensive compared to buying the Apple options directly from the US market. For one thing, Apple shares are not traded during SGX trading hours, which will make it difficult for Deutsche to price the warrants correctly.

Did a quick check also and saw that interest has been quite muted with none of the warrants traded this morning.

To leave your comments, please go to : Apple Warrants on SGX