Singapore Index Funds cost 1,500% more

Purchasers of index funds in Singapore deserve a fair shake.

As the least expensive form of mutual fund investment, there’s no management team of researchers to pay. An index simply tracks a market so it costs a miniscule amount of money to run an index. That said, plenty of uneducated investors pay high fees for these products. And the costs for indexes in Singapore might just be the highest in the world. Those costs are even more embarrassing, comparatively, now that the U.S. index fund company, Vanguard, has lowered its index fund costs even further: Vanguard Opens Gate to Lower Fees.

Smart Singaporean investors won’t pay 1,500% more for indexes than an American would.

So who’s trying to sell such pricey indexes? Have a look here to find out:  Beware the High Cost Index Funds




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Andrew Hallam

Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (Wiley 2011) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use.

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14 Responses

  1. Think I would run away from that investment or come up with a cheaper alternative elsewhere.

  2. @The Biz of Life

    Hey Biz,

    It also comes with a 2% front end load. I honestly don't know why anyone would buy anything like that.

  3. bee says:

    hey andrew, i live in singapore, what kind of index fund should i be looking at? And where do you suggest i get them?

  4. bee says:

    woah thanks andrew, i didn't know DBS vickers have these.

    by the way, i need some advice on what kind of index fund i should be getting. I don't know if my age matters, but i am coming 27 this year.

    Do you have any suggestions as to what i should be getting, or getting funds in order ??

    thanks a ton!

    Bee

  5. Hi Bee,

    You'll find the answer to your question in the link I provided: http://andrewhallam.com/2010/10/singaporeans-inve

  6. Edmond says:

    Hi Andrew,

    Question about investing monthly in ETFs or Index funds.

    As you mentioned Index Funds in Singapore are too expensive. What are the alternatives?

    Is it a good idea to invest monthly into ETFs? Are there additional fees due to investing more often.

    Should I do it quarterly instead?

    • Hi Edmond,

      You could invest with e-trade and pay just $9.99 per trade, giving you access to anything on the New York Stock exchange. They have an office in Singapore. You could also invest with Standard Chartered and pay even less, giving you access to New York, London and the Australian market. Keep in mind that with access to the New York market, you could buy a global ETF, or most specific country ETFs. Have a look through my posts at the top of my blog on investing for expats. There are plenty of options.

      Cheers,

      Andrew

      • Edmond says:

        Hi Andrew,

        So are you saying it is better to buy example, Vanguard Index Funds from Standard Charted than investing monthly into Singapore ETF's?

        My biggest concern, after reading your articles is to keep costs low on passive investments.

        • Where are you from Edmond? Are you Singaporean? If you are not American, you can't buy Vanguard indexes, but you can buy Vanguard ETFs through SC or DBS, or any number of other brokerages in Singapore. Like you, I also want to keep costs as low as possible. I may expense ratios that are about 0.10% on my ETFs, and I pay commission purchases of roughly 0.3% through DBS. You could pay even less through SC (in commission fees) but there is some (very slight) third party risk if SG goes down because the shares wouldn't be held within the central depository. It's not likely a big deal at all. But I have kept my money with DBS. Partly because I'm lazy. Keep in mind that even paying a 5% sales commission (keep in mind that I pay 0.3%) and having a low cost portfolio costing 0.2% in expense ratio costs is better than paying 0% commission, and having 1% in expense ratio costs. Sales commissions are a one time hit for each purchase. Expense ratio costs are forever, taking a given percentage of your total account value each and every year. It's the expense ratio charge you should be most concerned about.

          (admin edited post for clarification)

          • Edmond says:

            Wow, thanks, very informative Andrew.

            I am Singaporean and was worried about the costs with small frequent purchases of ETFs.

            Would it be better if I invested quarterly for example? What costs would that save?

            Just one last question though, what is SC?

            (admin edited post for clarification)

          • Sorry Edmond, I meant SC for Standard Chartered. They charge very low commissions and would be an excellent option for small, regular deposited sums. You could likely go heavier on the equity indexes (lighter or not at all on bonds) because you also have your CPF, which is much like a bond itself.

            Cheers,

            Andrew

  7. phyllis says:

    hi andrew, i wanted to buy vanguard etf thru std chartered but was concerned what if i pass away and what will happen to the etf?any us estate dutywhfor singapore citizen?

    • Hi Phyllis,

      From what I understand, there is a $5 million exemption on U.S. estate taxes. I don't, however, think you would have to pay anything unless you had more than $5 million with e-Trade, considering that it's a U.S. based company. With DBS or SCB, I don't think there's an issue. You may, however, want to check with an accountant to be sure.

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