Published Date: 10 October 2006

Welcome address by Mr Kola Luu, Executive Director, Financial Markets Strategy Department, The Monetary Authority of Singapore, at the Lyxor ETF Launch, Singapore Recreation Club, 10 October 2006, 6:00 pm

Ladies and gentlemen,

1   I am delighted to be here with you this evening at the launch of Lyxor exchange-traded fund (ETF) suite.

2   ETFs, which aim to track the performance of an index and provide access to a wide variety of markets, are among the fastest growing asset classes in the investment funds industry.  Globally, ETFs are estimated to have assets under management of close to US$487 billion . In the first half of this year alone, 136 ETFs were launched worldwide, of which 65 were outside the United States. This compares to 119 launches for the whole of last year.

3   The reasons for this growth are attributable to the very nature of the product itself. ETFs are relatively more transparent and accessible to investors than traditional unit trusts.

4   As passive listed indexed funds tracking stock indices and commodity prices, ETFs allow fund managers and fund sponsors to gain exposure to "beta".  By extracting "beta" from ETF, fund managers and sponsors can then attempt to outperform the market by investing its remaining assets in alternative investments, should they choose to.

5   In addition, ETF is an alternative investment for both institutional and retail investors due to its secondary market liquidity and competitive cost structures.

6   The ETFs also contribute to the sophistication of our structured products market.  Singapore is a leading financial centre in asset management, private banking and wealth management.  The continued introduction of innovative investment products such as ETFs will provide additional investment options not only for our retail market, but also this pool of institutional and high net worth investors.  It is for these various reasons that make ETFs such an exciting development in our markets. 

7   In the last few months, we have witnessed the launch of a few landmark ETFs in Singapore.  There are currently 9 ETFs listed on the Singapore Exchange (SGX). With a few more up in the pipeline, the number of ETF in Singapore will increase to 12 by the end of this month .

8   On 15 June, the MSCI India ETF made its debut.  It was the first Indian index-linked ETF to be launched in the world.  This listing enhances the level of interest in Indian financial products as well as ETF products amongst Singapore investors.  With the Indian economy growing at over 8% per annum in the foreseeable future, investors' interest in the fund is strong and the outstanding MSCI India ETF has since grown significantly with performance exceeding 37%.

9   Last month, the FTSE/ASEAN 40 ETF commenced trading on SGX.  It was also the first ASEAN index-linked ETF in the world, which provides a unique opportunity for investors to gain exposure to ASEAN as an asset class.

10   In fact, the World Gold Council will be listing its GOLD ETF in Singapore tomorrow, its first listing destination in Asia after the hugely successful debut in the US.  The selection of Singapore as the location for its Asian listing is a testament to Singapore's strategic position in capturing investors' interest from the ASEAN region, China, India and the Middle-East.

11   I understand that Lyxor Asset Management is the market leader in Europe and offers one of the most diversified range of ETFs.   Therefore, it is with excitement that we welcome the launch of Lyxor ETFs in Singapore today.  The addition of Lyxor ETFs will complement the diversity of products available in Singapore.  With the addition of a China and a pan-Asian ETF on SGX on 19 October, SGX will be able to offer a full suite of unique product offerings that cover the entire region.

12   Such a platform will allow investors the opportunity to access the key Asian markets, execute different strategies and better diversify their investment portfolios.  In this respect, I look forward to hearing from the experts in the house on the key features of the products and its investment opportunities.

13   On that note, I would like to congratulate Lyxor Asset Management on the inaugural launch of its ETF suite in Singapore.  We certainly look forward to the success of this venture and the creation of more innovative investment products from Lyxor Asset Management to add to our market's vibrancy.

14   Thank you and have an enjoyable evening.