POSB Invest-Saver

Your first taste of Singapore blue chips from just S$100 a month!

Frequently Asked Questions on POSB Invest-Saver (Regular Savings Plan (”RSP”) for an Exchange Traded Fund (“ETF”))


i)POSB Invest-Saver

  1. What is a RSP for an ETF?
    An RSP enables you to buy units of an ETF through a disciplined approach by investing fixed investment amounts regularly each month. It allows you to accumulate a portfolio for yourself at a potentially reduced cost, without the need to start with a huge initial capital.

  2. What are the merits of using an RSP to invest in an ETF?
    By contributing a fixed investment amount monthly, over a period of time, your average cost of investing in an ETF may be lower than the average price of investing in the ETF over the same period. This investment method is called ‘dollar-cost averaging’. It can help hedge against market volatility by avoiding the pitfalls of market timing as it does not require you to speculate the ‘right’ time to invest as compared to investing at one go. Through this disciplined method, you can build up a portfolio overtime at a potentially lower average cost as you will be buying more units when prices are low and lesser units when prices are high.

    Example:

    Monthly Investment Purchase price Units bought
    S$100 S$1.20 83.3
    S$100 S$1.50 66.6
    S$100 S$1.35 74.0
    S$100 S$0.95 105.2
    S$100 S$1.10 90.9
    S$500 (total) S$6.10 420

    Average cost per unit (S$500/420 units) = S$1.19
    Average price per unit (S$6.10/5) = S$1.22

    Note: The above is meant for illustration purpose only.
     
  3. What is POSB Invest-Saver?
    It is a RSP that allows you to invest a fixed sum via a monthly GIRO deduction. Through POSB Invest-Saver, you can invest in either the Nikko AM Singapore STI ETF or the ABF Singapore Bond Index Fund, or both.

    When you invest in the Nikko AM Singapore STI ETF, you are investing in Singapore’s top 30 companies (based on market capitalisation) including Singapore Exchange Ltd, Singapore Airlines Ltd and Singapore Press Holdings Ltd. Collectively, they are known as Singapore’s blue chip companies and their performance is represented by the Straits Times Index (“STI”). The constituents of the STI are reviewed every half-yearly.

    When you invest in the ABF Singapore Bond Index Fund, you are investing in a basket of high- quality bonds mostly issued by the Singapore government or government-linked bodies such as the Land Transport Authority and Housing & Development Board.


  4. Why should I consider POSB Invest-Saver?
    It provides a relatively simple and lower cost approach to investing in the stock or bond market. Retail investors may want to start investing but may not have huge initial capital or the discipline to do so. Furthermore, they may not have easy access to research reports, or the time and know-how to interpret such reports.
     
  5. What are the benefits of POSB Invest-Saver?
    1. You can start investing without having to begin with significant capital. The minimum investment is an affordable S$100 a month into either the Nikko AM Singapore STI ETF or the ABF Singapore Bond Index Fund.
    2. Pay a low sales charge of 1% for the Nikko AM Singapore STI ETF or 0.5% for the ABF Singapore Bond Index Fund on the amount invested each month. There are no other administration or platform charges involved.
    3. No exit or redemption charges. However, please note that this may be subject to change.
    4. Convenience - Easy access through iBanking for both the ETFs or ATM subscription and redemption at all our ATMs for the Nikko AM Singapore STI ETF.
    5. Transparency - The holdings in the underlying Nikko AM Singapore STI ETF and ABF Singapore Bond Index Fund are featured in their factsheets so you know exactly what stocks and bonds you hold.
    6. Benefit from the effects of compounding - The earlier you invest, the greater your opportunity to grow your wealth.
  6. What should I consider before investing through POSB Invest-Saver?
    1. Ensure you have sufficient savings and liquidity.
    2. Understand the risks and fees of the underlying ETF(s)
    3. Willing to accept that your principal amount may be at risk including the possible loss of the principal amount invested as these are not capital guaranteed products.
    4. Sufficient monies to maintain your monthly contributions over the medium to long-term.

ii) Understanding ETFs

  1. What are ETFs?
    They are open-ended funds that:
    • are traded on the stock exchange
    • can be bought and sold through brokers or selected financial institutions
    An ETF’s objective is to produce a return that tracks or replicates a specific index. They are passively managed by ETF fund managers and do not try to outperform the underlying index. Hence, an ETF has fees and charges that are usually lower than those of actively managed investment funds. By investing in an ETF, you can gain exposure indirectly to the underlying stocks or bonds in the index without having to spend more money buying actual lots of these stocks or bond issues.
     
  2. What is the Nikko AM Singapore STI ETF?
    The Nikko AM Singapore STI ETF is an exchange traded fund managed by Nikko Asset Management Asia Ltd that tracks, as closely as possible, the performance of the Straits Times Index (“STI”) by substantially investing its assets in the constituent stocks of the STI in the same weightings as reflected in the STI.

    The STI is a market value weighted index comprising the top 30 main-board listed companies based on their market capitalisation on the Singapore Stock Exchange. By investing in the Nikko AM Singapore STI ETF, you can gain exposure to the STI without having to buy all the direct component stocks on the STI.
     
  3. What is the ABF Singapore Bond Index Fund?
    The ABF Singapore Bond Index Fund is the first bond exchange traded fund launched in Singapore and managed by Nikko Asset Management Asia Ltd that tracks, as closely as possible, the iBoxx ABF Singapore Bond Index.

    The iBoxx ABF Singapore Bond Index is an indicator of investment returns of SGD denominated debt obligations issued or guaranteed by the Singapore government (or any other Asian government), a Singapore government (or any other Asian government) agency, quasi-Singapore government (or any other Asian government) entity, or supranational financial institutions.
     
  4. Where are the Nikko AM Singapore STI ETF and the ABF Singapore Bond Index Fund listed?
    Both ETFs are listed on the Singapore Stock Exchange.
     
  5. What are some of the potential risks I face when I invest in the Nikko AM Singapore STI ETF or the ABF Singapore Bond Index Fund?
    The Nikko AM Singapore STI ETF carries significant risks as it is a narrowly focused fund that invests solely in equities listed on the Straits Times Index (“STI”). Some of the key risks include:
    • Market Risk - As the Nikko AM Singapore STI ETF tracks the performance of the STI, investors will be exposed to the price fluctuations of the units due to a number of factors, including, without limitation, the price fluctuations of the constituent stocks within the STI.
    • Liquidity Risk - Although units in the Nikko AM Singapore STI ETF are listed on the SGX-ST, investors should be aware that there can be no assurance that active trading markets for units will develop, nor is there a certain basis for predicting the actual price levels at or volumes in which units may trade.
    • Tracking Error Risk - Changes in the price of the Nikko AM Singapore STI ETF are unlikely to replicate exactly the changes in the STI due to factors such as fees and expenses of the Nikko AM Singapore STI ETF, liquidity of the market and changes to the STI.

    Some of the key risks of the ABF Singapore Bond Index Fund include:

    • Tracking error risk - Changes in the NAV of the ABF Singapore Bond Index Fund are unlikely to replicate exactly the changes in the iBoxx ABF Singapore Bond Index due to various factors. The ABF Singapore Bond Index Fund’s returns may therefore deviate from those of the iBoxx ABF Singapore Bond Index.
    • Risk Associated with the Investment Strategy of the ABF Singapore Bond Index Fund/Lack of discretion by Manager to adapt to market - Unlike many conventional unit trusts, the ABF Singapore Bond Index Fund is not actively managed. Therefore, it will not adjust the composition of its portfolio except in order to seek to closely correspond to the duration and total return of the iBoxx ABF Singapore Bond Index. The ABF Singapore Bond Index Fund does not try to “beat” the market it tracks and does not seek temporary defensive positions when markets decline or is judged to be overvalued. Accordingly, a fall in the iBoxx ABF Singapore Bond Index may result in a corresponding fall in the NAV of the ABF Singapore Bond Index Fund.
    • Emerging market risk – The ABF Singapore Bond Index Fund may invest in securities issued by certain Asian Governments whose economies are considered to be emerging markets which are subject to special risks associated with foreign investment in such markets.

    Note: This list is not exhaustive. Please refer to the respective ETFs’ offering documents for the full list of risks.

  6. Will the Nikko AM Singapore STI ETF and ABF Singapore Bond Index Fund pay any dividends?
    The Nikko AM Singapore STI ETF aims to pay dividends received from the underlying shares on a semi-annual basis and the ABF Singapore Bond Index Fund aims to pay dividends on an annual basis. However, dividends are not guaranteed and the ability of the respective ETFs to pay dividends will be dependent on the dividends declared by the underlying stocks or bonds held by the respective ETFs and the level of fees and expenses payable for the respective ETFs.
     

iii) Subscription, Redemption and Termination of the POSB Invest-Saver

  1. How do I start an investment through POSB Invest-Saver?
    You can do so by following these steps:
    • Step 1: Log onto your iBanking account
    • Step 2: Click on "Investment & Trading" >> "Exchange Traded Fund Regular Savings Plan” >> “Setup Exchange Traded Fund Regular Savings Plan”
    • Step 3: Select the Exchange Traded Fund of choice and key in your intended monthly investment amount
    • Step 4: You are required to click on the hyperlinks to read the Prospectus and Product Highlights Sheet carefully which contain details of the ETF that you had selected
    • Step 5: You are also required to click on the hyperlink to the Terms and Conditions Governing Investment in Funds and tick the checkbox before you continue with the application.
    • Step 6: Confirm & submit your order

    You can also invest through POSB Invest-Saver for the Nikko AM Singapore STI ETF at any of our ATMS by following these steps:
    • Step 1: Insert your ATM/Debit card and enter your PIN. Go to service menu
    • Step 2: Select the option "Regular Savings Plan for Exchange Traded Fund (RSP ETF)"
    • Step 3: Select the option "RSP Set up/Change of subscription amount"
    • Step 4: Read the T&Cs. You may obtain the full Terms & Conditions Governing Investment in Funds from our branches or from www.posb.com.sg/investsaver.
    • Step 5: Confirm that you agree to accept the Terms by clicking on the “Continue” button on the screen
    • Step 6: Select your Tax Status and key in your intended monthly investment amount
    • Step 7: You will receive an ATM receipt confirming your application.

    Upon successful setup, the Bank will send you a confirmation letter to inform you that your investment into the POSB Invest-Saver is set up and when the first deduction will take place.
     
  2. What will be the purchase price of the ETF that I have invested through POSB Invest-Saver?

    Your purchase price would be based on the average subscription price on the Business Day following the day your account is debited, or such other day determined by the Bank in good faith and in a commercially reasonable manner.

    The average subscription price is calculated by dividing the total cost of purchasing the units of the respective ETF by the total quantity of units purchased on that day by the Bank for the respective ETF. All customers will be provided with the same average subscription price.
     
  3. Where can I obtain a copy of the respective ETFs’ offering documents?
    You can obtain a copy of the respective ETFs’ prospectus and product highlights sheet from www.posb.com.sg/investsaver or from any of our branches.
     
  4. What does the subscription confirmation look like?

    Assuming you had chosen into the Nikko AM Singapore STI ETF through POSB Invest-Saver:

    Monthly Subscription Amount Sales charge of 1% Net Investment Amount for POSB Invest-Saver Assume Average Purchase Price on 12th Number of Units
    S$300 S$3 S$297 S$3.27 90.82


    However, as only round figures can be issued for the Nikko AM Singapore STI ETF, the cost and sales charge of the residual units of 0.82 units will be refunded to you.

    Example:

    Residual Units Value of residual units based on Average Purchase Price on 12th Sales charge (1%) on value of residual units Total amount refunded to you
    0.82 S$2.68 S$0.0268 S$2.70


    Note: The above is meant for illustration purpose only.
     
  5. What is the sales charge levied for investing in the Nikko AM Singapore STI ETF through POSB Invest-Saver?
    A sales charge of 1% will be deducted from your investment amount into the Nikko AM Singapore STI ETF every month. However, as we are only able to accept round figures, we will refund the 1% sales charge based on the value of the residual units (if any). Please refer to Question 4 above for an illustration.
     
  6. What is the sales charge levied for investing in the ABF Singapore Bond Index Fund through POSB Invest-Saver?
    A sales charge of 0.5% will be deducted from your investment amount into the ABF Singapore Bond Index Fund every month. However, as we are only able to accept round figures, we will refund the 0.5% sales charge based on the value of the residual units (if any). Please refer to Question 4 above for an illustration.
     
  7. When will my account be debited?
    If you had chosen to invest in the Nikko AM Singapore STI ETF through POSB Invest-Saver, the monthly debiting from your savings/current account will be on the 12th of every month (or the next business day if the 12th is a non-business day). And if you had chosen to invest in the ABF Singapore Bond Index Fund through POSB Invest-Saver, the monthly debiting from your savings/current account will be on the 24th of each month (or the next business day if the 24th is a non-business day). Please note that the respective debiting date is subject to change.
     
  8. Will I receive regular statements? Can I check my holdings via iBanking?
    Yes, you will receive quarterly statements from the Bank. If you have an iBanking account with us, you may also log on to view your latest holdings and market value of your holdings in ETF(s) that you have invested into.
  9. Can I change my monthly investment amount?
    You can change your monthly investment amount for the ABF Singapore Bond Index Fund and/or Nikko AM Singapore STI ETF through iBanking by following these steps:

    • Step 1: Log onto your iBanking account
    • Step 2: Click on "Investment & Trading" >> " Exchange Traded Fund Regular Savings Plan >> “Setup Exchange Traded Fund Regular Savings Plan”
    • Step 3: Select the Exchange Traded Fund of choice and enter the new monthly investment amount
    • Step 4: You are required to click on the hyperlinks to read the Prospectus and Product Highlights Sheet carefully which contain details of the ETF that you had selected
    • Step 5: You are required to click on the hyperlink to the Terms and Conditions Governing Investment in Funds and tick the checkbox before you continue with the application
    • Step 6: Confirm & submit your order


    You can also change your monthly investment amount for the Nikko AM Singapore STI ETF via any of our ATMs by following these steps:

    • Step 1: Insert your ATM/Debit card and enter your PIN. Go to service menu
    • Step 2: Select the option "Regular Savings Plan Exchange Traded Fund (RSP ETF)"
    • Step 3: Select the option “RSP Set up/Change of investment amount”
    • Step 4: Enter the new monthly investment amount that you wish to change to and confirm
    • Step 5: You will receive an ATM receipt confirming your action.
       
    The Bank will send you a confirmation letter to confirm when the change to your investment amount will start taking effect.
  10. How do I redeem my holdings in the POSB Invest-Saver?
    You can redeem your holdings for the ABF Singapore Bond Index Fund and/or Nikko AM Singapore STI ETF through iBanking by following these steps:
    • Step 1: Log onto your iBanking account
    • Step 2: Click on "Investment & Trading" >> “Exchange Traded Fund Regular Savings Plan” >> "Redeem Exchange Traded Fund by Cash"
    • Step 3: Select the Exchange Traded Fund that you wish to redeem and click on the “Continue” button
    • Step 4: Input the number of units to redeem and select the account to credit your redemption proceeds.
    • Step 5: Confirm and submit your order


    You can also redeem your holdings for the Nikko AM Singapore STI ETF at any of our ATMs by following these steps:

    • Step 1: Insert your ATM/Debit card and enter your PIN. Go to service menu
    • Step 2: Select the option “Regular Savings Plan Exchange Traded Fund (RSP ETF)”
    • Step 3: Select the option “Redemption of ETF”
    • Step 4: You will receive an ATM receipt confirming your action. The redemption amount will be credited to your designated debiting account.
    The Bank will send you a confirmation advice to confirm the amount of your redemption proceeds.
  11. What will be my redemption price of the ETF that I have invested through POSB Invest-Saver?
    Your redemption price would be based on the average redemption price on the Business Day following your redemption instruction, or such other day determined by the Bank in good faith and in a commercially reasonable manner.

    The average redemption price is calculated by dividing the total proceeds from the units sold by the total quantity of units sold, based on the aggregated orders of all customers who sell their units of the respective ETFs on the particular redemption date. All customers who redeem the respective ETFs will be accorded the same average redemption price.
     
  12. When will my account be credited with the redemption proceeds?
    Your account will be credited within T+7 business days from the date you submit your redemption request.
     
  13. How do I terminate my POSB Invest-Saver?
    You can terminate your POSB Invest-Saver through iBanking by following these steps:
    • Step 1: Log onto your iBanking account
    • Step 2: Click on "Investment & Trading" >> “Exchange Traded Fund Regular Savings Plan” >> "View/Delete Regular Savings Plan"
    • Step 3: Select the regular savings plan that you wish to terminate and click on the “Submit” button


    You can also terminate your monthly subscription into the Nikko AM Singapore STI ETF through POSB Invest-Saver at any of our ATMs by following these steps:

    • Step 1: Insert your ATM/Debit card and enter your PIN. Go to service menu
    • Step 2: Select the option "Regular Savings Plan Exchange Traded Fund (RSP ETF)"
    • Step 3: Select the option "Termination of RSP"
    • Step 4: Confirm your termination request by clicking on the "continue" button


    The Bank will send you a confirmation letter to confirm that your request to terminate has been effected.
  14. Can I still hold my units in the ETF(s) even after the termination of my RSP?
    Yes, you can hold on to your units in the respective ETF even if you have terminated your RSP. Should you decide to subscribe to the POSB Invest-Saver again, you can do so.
     

Others

  1. Who can invest in ETF(s) through POSB Invest-Saver?
    You will be eligible if:
    1. You are at least 18 years of age at the date of application
    2. You are not a US Person (as defined in the Terms and Conditions Governing Investment in Funds)

  2. What will happen if there are insufficient funds in my current or savings account?
    The deduction will not be successful if you have insufficient funds in your current or savings account. If there are 2 consecutive unsuccessful RSP deductions, we reserve the right to terminate your subscription for the ETF(s) through POSB Invest-Saver. Please ensure you have sufficient funds for deduction before the 12th of every month (or next business day should the 12th be a non-business day) for the Nikko AM Singapore STI ETF, and/or the 24th of every month (or the next business day should the 24th of every month be a non-business day) for the ABF Singapore Bond Index Fund.
     
  3. What happens to the dividends that are paid out on the underlying shares in the Nikko AM Singapore STI ETF?
    Monies from dividends, cash offers, rights issue and other corporate actions will be credited into your designated DBS/POSB debiting account.
     
  4. What happens to the coupons that are paid out on the underlying bonds in the ABF Singapore Bond Index Fund?
    Coupons will be credited into your designated DBS/POSB debiting account.
     
  5. Can I subscribe to POSB Invest-Saver if I have a joint-alternate savings / current account with the Bank?
    You can subscribe to POSB Invest-Saver if you have a joint-alternate current or savings account with us. However, POSB Invest-Saver will be in the sole name of the applicant.


Important Notice:

POSB Invest-Saver is not included under the CPF Investment Scheme and Supplementary Retirement Scheme. Investment in the POSB Invest-Saver is by cash only.

Nikko AM Singapore STI ETF and ABF Singapore Bond Index Fund are collective investment schemes that are managed by Nikko Asset Management Asia Limited.

This publication is for general circulation only and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person. The value of the units and the income accruing to the units purchased, if any, may fall or rise. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment. Investors should seek advice from a financial adviser regarding the suitability of the investment product, taking into account the specific investment objective, financial situation or particular needs of each person before making a commitment to purchase the investment product. If you do not wish to seek financial advice, please consider carefully whether the product is suitable for you. Investors should read the relevant product’s offer documents (including the prospectus and Product Highlights Sheet, if any), available at our branches and website, before deciding to subscribe for or purchase any product.

* Promotion is valid till 30 September 2014 for the first S$500. Sales charge is applicable to the investment amount in excess of the first S$500 and on the subsequent deductions after the promotion ends. Terms and conditions apply. We reserve the right to amend the terms and conditions of this offer without notice.