OREANDA-NEWS. Volatility continued to roil regional equity markets this week amidst mixed signals over the timing of the Federal Reserve’s first interest rate hike since 2006. Richmond Fed President Jeffrey Lacker and San Francisco Fed President John Williams have made hawkish comments to the media – Lacker noted a rate increase at the October meeting is possible, while Williams views October as a live event for the Fed’s lift-off.

Meanwhile, the US economy has seen a mixed performance – the most recent weekly jobless claims figure came in near decade lows, signalling tight labour market conditions, but American manufacturing shrank in September, as a stronger US dollar and faltering global demand led to the slowest pace of orders since November 2012.

With the US economy recovering and the Fed moving closer to a rate hike, gold is set for its longest run of quarterly losses since 1997,  as the metal loses its attractiveness as a store of value.

Earlier this week, India’s central bank cut interest rates by a larger-than-expected 50 basis points, exceeding economists’ estimate of a 25 basis-point reduction. The Reserve Bank of India’s aggressive move caught the market by surprise, spurring a rally in Indian stocks. Pressure had been mounting for the central bank to boost growth after inflation hit a record low of 3.6% in August due to falling commodity prices.

Markets remain on edge over concerns that China could suffer a hard landing. While China’s official factory output data has stabilised around a three-year low, a gauge of industrial profits in the world’s second-largest economy fell most in at least four years, a report showed earlier this week.

Singapore’s five most active Exchange Traded Funds (ETFs) in the third quarter of this year were iShares MSCI India Index ETF, SPDR® Gold Shares, SPDR® Straits Times Index ETF, db x-trackers MSCI AC Asia Ex Japan Index UCITS ETF and db x-trackers CSI 300 UCITS ETF.

These five most active ETFs averaged a 1.7% decline in the month of September, taking their one-year and three-year total returns to a decline of 4.5% and 0.6% respectively. In comparison, the iShares MSCI World ETF and iShares MSCI ACWI ETF experienced declines of 3.6% and 3.4% in the month of September respectively. Among the five ETFs, three posted gains and two registered declines.

The five ETFs track a range of indices including the price of gold, stock indexes in India, Singapore, China as well as a regional index. The above-mentioned ETFs saw a 17.3% YoY increase in turnover for the quarter, up from S$435.4 million in the third quarter of 2014 to S$517.2 million in the third quarter of this year. This brings the total 12-month turnover to S$1.8 billion.

The SPDR® Straits Times Index ETF is currently trading at S$2.81, its lowest level since June 2012. The benchmark Straits Times Index has fallen more than 1% over the past week (25 September to 1 October), see-sawing between an intraday high of 2,841.89 (25 September) and an intraday low of 2,740.36 (29 September) over the period.

The five most active ETFs in September 2015 are detailed below and sorted by 3Q 2015 turnover.

Name Stock Code Price 3Q Turnover 2015 ($) 3Q Turnover 2014 ($) 12M Turnover ($)
iShares MSCI India Index ETF I98 6.94 181,053,825  192,642,810  666,995,423
SPDR® Gold Shares O87 106.20 138,519,150  176,154,864  512,140,847
SPDR® Straits Times Index ETF ES3 2.85 119,301,770  39,345,250  383,530,903
db x-trackers MSCI AC Asia Ex Japan Index UCITS ETF IH1 31.13 47,712,593  18,658,392  166,090,298
db x-trackers CSI 300 UCITS ETF KT4 8.68 30,582,196  8,583,372  117,373,977

Source: SGX (data as of 30 September 2015)

Name Stock Code Total Return Sept 2015 Total return 12M 3 Year Total Return Annualised 3 Year Total Return 30 day Volatility
iShares MSCI India Index ETF I98 0.6 -6.7 2.7 9.5 28.4
SPDR® Gold Shares O87 -2.1 -9.5 -14.9 -38.4 11.9
SPDR® Straits Times Index ETF ES3 -4.0 -11.6 -0.5 -0.5 19.7
db x-trackers MSCI AC Asia Ex Japan Index UCITS ETF IH1 -0.4 -12.2 -0.4 -0.1 29.9
db x-trackers CSI 300 UCITS ETF KT4 -2.7 17.6 8.2 26.7 53.3
Average   -1.7 -4.5 -1.0 -0.6 28.6

Source: SGX (data as of 30 September 2015)

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets.

Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors.