Easier Access to Simpler Funds for Retail InvestorsSingapore, 29 April 2015…
Monetary Authority of Singapore
From today, retail investors can expect easier access to a wider range of investment funds, including exchange-traded funds (ETFs)1. This enhancement is part of the Monetary Authority of Singapore’s (MAS) broader effort to expand the range of simple, low-cost investment options available to retail investors.
Previously, all investment funds which used derivatives were classified as Specified Investment Products (SIPs). SIPs are more complex products and can only be sold to retail investors with enhanced safeguards, including an assessment of these investors’ investment knowledge or experience.
MAS has taken on board industry feedback that funds which make limited use of derivatives are relatively less complex and should be made more accessible to retail investors. These are funds which invest only in simple products such as shares or gold, but may use derivatives for efficient portfolio management including the hedging of risks. Fund managers will now be able to reclassify such investment funds as Excluded Investment Products (EIPs). Retail investors can then access these investment funds which have been reclassified as EIPs more easily as they will no longer need to be assessed on their investment knowledge or experience.
Investors can check the Singapore Exchange (SGX) website or ask their brokers for a list of SGX-listed ETFs that are classified as EIPs. Investors will be able to invest in EIP-ETFs in a similar way as they do with SGX-listed shares. For other unlisted investment funds that are classified as EIPs, investors can check with their brokers or financial advisers.
Mr Lee Boon Ngiap, Assistant Managing Director, Capital Markets, MAS, said, “With the changes to the EIP definition, the total number of SGX-listed ETFs which are classified as EIPs could increase to about 20, accounting for over 80% of assets under management by ETFs listed on SGX. This provides retail investors convenient access to a broader range of relatively simple investment funds while maintaining sufficient safeguards for the more complex products.”
The amended MAS Notices can be found at the following links: Notice on the Sale of Investment Products
and Notice on Recommendations on Investment Products [FAA-N16]. Details of when investment funds are considered to have limited use of derivatives can be found in Annex 1 of the respective MAS Notices.
1 In addition to ETFs, “investment funds” include unlisted collective investment schemes (CIS) and investment-linked policy sub-funds.