Thursday, September 1, 2011

Low default risk in ETF

Dear Mr. Tan
I am a retiree. I intend to buy STI ETFs with my savings instead of buying annuities.I would also like your advice on what happens if we put our life savings into ETFs and the company behind it goes bust. Are there any other ETFs worth considering now?

REPLY
The ETF is a trust fund invested in the top 30 companies in the SGX. The fund manager is DBS or State Street. If they go bust, another fund manager will take over to manage the underlying assets (shares of SGX). The risk is very small and it is safer than investing in any single share.