The Phillip SING Income ETF debuted in 29oct2018.
It invest into Singapore shares on
a diversified approach and gets you a 5% dividend yield.
For the last week of trading, volume has been really thin.
Hence, there has been a buy and sell spread.
Below is a snapshot of the quiet intraday movement of this ETF.
STI did well from 29Oct2018 to 11Nov2018 (point of writing because banks share prices recovered) and gained about 2%+. The Phillip SING Income ETF on the other hand did only about 1% gain in the same period.
Don't jump to conclusions too quickly on a short term performance, let's just examine why...
What is in the Phillip SING Income ETF
Unlike the STI ETF which buys the biggest companies listed in SG, the Phillip SING Income ETF selects and invests for you based on some factors.
Their composite factor scores to examine which company to invest for you comprises the
1) quantitative moat score (kind of how operationally stable the business is)
2) financial health factor (kind of how financially stable the business is)
3) trailing 12-month dividend yield (which is how much dividend the company pays).
This is a "Smart Beta approach". Click here to read more.
In short, Banks are 31%, REITS are 24% and telcos are 17% of the ETF.
Remaining allocation of about 28% and below is the full listing of holdings.
Each selection is capped at 10 percent to ensure that the concentration of a single security is not excessive. This is different from the STI ETF which is purely based on market size.
The ETF will have a management fee of 0.4% per year, with the expense ratio capped at 0.7%.
How I think of Phillip SING Income ETF vs STI ETF
Firstly, you would see 17 different companies invested from the list above.
They are all the names from SIA engineering onwards to Silverlake Axis Ltd.
I counted out... there will be an investment of at least 20% into these companies which is good. There's no point being a market cap index tracker.
Secondly, the Phillip SING Income ETF has substantially more allocation into REITS.
This explains the higher dividend ratio. But will it do well in a rising interest rate environment?
Dividends of Phillip SING Income ETF vs Lion-Phillip S-REIT ETF
The management fee for both ETF is about the same.
It pays closer to a 5.8% dividend yield which is about 1% more than the Phillip SING Income ETF
That's because allocations are fully to Singapore REITS.
And because they have a waiver on taxes for their dividends.
For the Lion-Phillip S-REIT ETF, dividends would be paid semi-annually at the manager’s discretion.
But you are expected to received dividends every June and December for the Phillip SING Income ETF.
Some key thoughts
I'll continue to track the Phillip SING Income ETF, especially on whether they can get a dividend waiver in future.
Other blogs to read more on this ETF are
I do like the Smart Beta approach and it is also used in the LionGlobal Disruptive Innovation Fund that I've suggested for private clients before.
If you are interested, click on the video below to learn more. Any comments, do leave in the sections below too.