Phillip Capital has launched the Phillip SING Income ETF (SINGINC SP) on Singapore Exchange, providing investors with access to a diversified basket of quality high-income Singapore stocks.
The fund provides exposure to 30 high dividend stocks with attractive quality characteristics.
The fund tracks the Morningstar Singapore Yield Focus Index which consists of 30 blue-chip constituents listed locally from sectors including financials, telecommunications, real estate and industrials.
The index methodology targets companies with both strong fundamentals and attractive yields, thereby seeking to avoid potential dividend traps – high-yielding companies that subsequently cut or eliminate their dividend payments.
Large-, mid-, and small-capitalization stocks are eligible for inclusion with securities selected on the basis of three equally weighted criteria: quality, financial health, and dividend yield.
Quality is defined by the Morningstar Quantitative Moat Rating. Firms with ‘wide moats’ are likely to earn above average returns on capital and contain some competitive edge that prevents these returns from quickly eroding. The Moat Rating is determined by a proprietary algorithm designed to predict the Economic Moat rating a Morningstar analyst would assign to the stock.
Financial health is defined by Morningstar’s Distance to Default. This metric measures the firm’s solvency levels through a combination of market and company-specific analysis, in which company liabilities are viewed as a call option on the value of assets. In this case, a default is expected to occur if liabilities (the strike price) outweigh the firm’s assets.
For yield, the methodology looks at a company’s trailing 12-month dividend yield.
Stocks are assigned a composite score based on these indicators, and the top 30 are included in the index. Index constituents are weighted primarily by their composite score with an individual cap of 10%. Liquidity considerations also come into play: if a stock’s average daily trading volume is low, it receives a lower weight in the index than its score may suggest. Reconstitution and rebalancing occur on a semi-annual basis in June and December.
The fund comes with a management fee of 0.45%. It has received strong investor interest, garnering assets under management of S$68 million ($50m) following its initial subscription period.
Jeffrey Lee, Managing Director and Chief Investment Officer at Phillip Capital Management, commented, ”We are pleased with the successful launch of the Phillip SING Income ETF, our third ETF. It has received overwhelming support from the investing public as it offers regular and significant income. This launch further solidifies our strong position in the Singapore ETF space and we will continue to explore investment solutions to meet the needs of our investors.”
Phillip Capital offers a range of income-focused solutions including the Phillip SGX APAC Dividend Leaders REIT ETF and the Lion-Phillip S-REIT ETF, providing exposure to real estate investment trusts listed in Asia Pacific ex-Japan and on Singapore Exchange respectively.
The new launch brings the total number of ETFs listed on SGX to 53.
Chan Kum Kong, Head of Research and Products, SGX, said, “We are delighted to welcome Phillip SING Income ETF on SGX, boosting the ETF shelf in Singapore managed by Phillip Capital. ETFs are gaining popularity, with SGX-listed ETF AUM growing by 17% to S$4.5 billion last year. The number of direct ETF holders have doubled in the last three years, while the number of investors purchasing ETFs via regular savings programmes is also steadily increasing.”