Weekly Highlights

Weekly Highlights 22 Sep: Is the retail investment landscape in Singapore a big joke?

#1 Retail investors in Singapore pay high fees compared to our US counterparts

Took the mainstream media long enough to give this issue its fair share of recognition. Banks in Singapore are not exactly incentivized to distribute low-cost index funds from Blackrock and Vanguard. Considering that Singapore loves to call itself the hub of everything from a medical hub, tourism hub, to a FINANCIAL hub and etc, the fact that investors are continuing getting screwed is a major slap in the face for the financial industry in Singapore.

Having said that, the rise of Robo-advisory in Singapore is certainly providing more options, cheaper options I should say, to the mom and pop investors.

https://www.straitstimes.com/business/banking/singapore-mutual-funds-charge-higher-fees-than-global-average-morningstar

https://www.businesstimes.com.sg/opinion/high-fund-expense-ratios-put-singapore-retail-investors-in-a-bind

 

#2 Oil has a big week

Oil prices jump almost 20% on Monday (16 Sept) after drone strikes on Saudi Arabian oil facilities. It seems that both the US and Saudi Arabia are blaming Iran for these attacks on the facilities.

https://www.reuters.com/article/us-global-oil/oil-surges-20-after-saudi-attack-softens-on-stockpile-hopes-idUSKBN1W00UG

https://www.bbc.com/news/world-us-canada-49777672

 

#3 US Federal Reserve cut rates

It is the second time this year the Federal Reserve cut interest rate. The current rate stands at 1.75% to 2.00%. Trump claimed that Powell had “no guts” and that the Federal Reserve should have acted faster. Federal Reserve continues to “procrastinate” its inflation target commitment.

The market seems to be quite muted to the rate cut. In fact, the S&P 500 Index ended lower on Friday (20 Sep) compared to the start of the week (16 Sep). Potentially due to trade wars. Or simply because the market has woken up to its drunken stupor? Nah, that can’t be it.

https://www.reuters.com/article/us-usa-fed/fed-cuts-rates-on-7-3-vote-gives-mixed-signals-on-next-move-idUSKBN1W32H7

https://www.bloomberg.com/news/articles/2019-09-19/asia-stocks-set-to-edge-higher-bond-yields-drift-markets-wrap

 

#5 Vegan ETF!

It’s pretty important to know what you are investing in.

Yes, you are investing in the vegan theme. But the top holdings include companies such as Apple, Facebook and Microsoft. That does not sound very vegan-ish. I am expecting companies such as Beyond Meat to be in the top holdings.

In fact, the top holdings look similar to the top holdings in the S&P 500 Index.

To be fair, the ETF tracks an index that excludes companies that

  • Harm animals
  • Involve in animal testing
  • Produce animal-derived produced
  • Are related to fossil use and production
  • Are related to military and defence
  • Are related to human rights abuses.

I guess not a lot of companies leftover after the above vetting process. Furthermore, there is not a lot of listed vegan companies in the US stock market.

https://www.cnbc.com/2019/09/17/a-vegan-etf-just-launched-and-its-holdings-may-surprise-you.html

https://www.etf.com/VEGN

 

#6 The ETF that pays you to invest, with a catch

This story is a bit late. Nevertheless, I find it very interesting. The ETF is known as the Salt Low truBeta US Market Fund (LSLT) and it is launched by Salt Financial, a relatively new issuer in the fund industry.

The main highlight: The said fund is paying investors 50 cents for every $1000 invested in the fund until the fund reaches $100 million in AUM. After reaching $100 million in AUM, the fund will charge an expense ratio of 0.29%.

Essentially, before the $100 million AUM milestone, you are getting paid to invest and the fund has a negative expense ratio.

Talk about an innovative marketing campaign. Salt is doing it right. Nevertheless, investors should approach this carefully. Afterall the fund is relatively new and the company is not as established as the big-name issuer such as Vanguard and Blackrock.

https://www.marketwatch.com/story/salt-financial-wins-approval-for-negative-fee-on-its-low-beta-etf-2019-05-14-1546303?mod=investing

https://www.saltfinancial.com

https://www.etf.com/LSLT

 

Have a good week ahead.

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