More products, more risks? South Korea’s leveraged ETF experience offers lessons for Singapore’s retail fund push
MAS in July had proposed a more flexible framework that could allow retail investors to access new fund types
Singapore’s drive to introduce a wider array of investment products for retail investors may lead to greater market depth, but it also brings potential risks, according to experts. South Korea's recent experience with leveraged exchange-traded funds (ETFs) serves as a cautionary tale for Singapore, which has historically been less susceptible to concentrated retail speculation compared to its Korean counterpart.
While the Republic is less vulnerable to the kind of wild market swings experienced in South Korea that left retail investors reeling, introducing more complex products will require robust investor education and protective measures. David Gerald, founder, president, and CEO of the Securities Investors Association (Singapore), cautioned that merely having products listed on the Singapore Exchange (SGX) does not guarantee their suitability for retail investors; these are two distinct concerns.
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