Nikko unveils Singapore's first local dollar corporate bond ETF

Nikko unveils Singapore’s first local dollar corporate bond ETF

26 July 2018
Category: News, Asia, Global, Singapore
By Asia Asset Management

Nikko Asset Management Asia (Nikko AM Asia), the Singapore subsidiary of Japan’s Nikko Asset Management, is launching what it says is the first corporate bond exchange-traded fund (ETF) in the city state denominated in the Singapore dollar (SGD).

This is the Japanese asset manager’s fourth passive product in Singapore, and it’s aimed at diversifying the company’s suite of ETF offerings.

The new Nikko AM SGD Investment Grade Corporate Bond ETF is designed to mimic the iBoxx SGD Non-Sovereigns Large Cap Investment Grade Index, Nikko AM Asia says in a statement on July 23.

It will track statutory board and investment grade corporate bonds across various sectors, including the Housing Development Board, Temasek Financial and Land Transport Authority.

“With this fund, we expand our repertoire of ETFs, but more importantly, we widen the asset options and tools available to investors,” Eleanor Seet, president of Nikko AM Asia, says in the statement. “Diversification is an important part of investing and what we bring to investors with this ETF are diversification and accessibility at a relatively low cost.”

The management fee for the fund is 0.15% per annum.

The initial offer period is until August 17, and the ETF is scheduled to be listed on the Singapore Exchange (SGX) on August 27.

Nikko AM Asia currently manages three other Singapore-listed index funds and ETFs with total assets under management (AUM) of approximately S$1.2 billion (US$879.4 million), according to figures from Nikko AM’s website. The company introduced its first index fund in the city state in 2005.

“We believe that a well-developed domestic bond market will benefit both institutional and retail investors in Singapore and the region,” Ms. Seet says. “Building on the ABF Singapore Bond Index Fund launched in 2005, this (new) ETF creates greater and ease of access to SGD-denominated bonds and encourages participation in the Singapore bond market.”

There were 80 ETFs and exchange-traded products listed in Singapore with total AUM of US$3.27 billion at the end of June, according to data from SGX.

Nikko Asset Management had global AUM of approximately $220.1 billion as at March 31, 2018.


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