UOB Asset Management Secures SGX Waivers for Ping An FTSE ASEAN Dividend Index ETF

Date: 7 January 2025
Issuer: UOB Asset Management Ltd

Key Developments Investors Must Know

UOB Asset Management Ltd, manager of the UOBAM Ping An FTSE ASEAN Dividend Index ETF (the “Sub-Fund”), has announced a series of important waivers granted by the Singapore Exchange Securities Trading Limited (SGX-ST). These waivers pertain to compliance with specific rules under the SGX-ST Listing Manual for the Sub-Fund, which is a sub-fund within United ETF Series 2 (the “Fund”).

1. Waiver of Minimum Asset Size Requirement

• Rule 404(1)(a): Normally, Singapore Dollar-denominated investment funds must have a minimum asset size of S\$20 million. The SGX-ST has granted the Sub-Fund a waiver due to the unpredictability of the amount to be raised during the initial offer period. This is conditional upon appointing at least one designated market maker to ensure liquidity for trading the ETF units.
• Potential Impact: This flexibility could affect initial liquidity and valuation, especially if the fund launches with a smaller asset base than typical ETFs. Investors should monitor trading volumes and bid-ask spreads during the early trading period.

2. Waiver on Investment Restrictions in Related Companies

• Rule 404(3)(a): The Sub-Fund is permitted to invest over the usual 10% limit in companies related to its substantial shareholders, investment managers, or management companies, as long as it complies with the Code on Collective Investment Schemes (“Code”).
• Potential Impact: This increases the flexibility of the fund’s investment universe but could raise concerns about conflicts of interest and concentration risk. Investors should review the fund’s holdings and disclosures for transparency and governance.

3. Waiver on Changing Investment Objectives and Policies

• Rules 404(4) & 617: The Sub-Fund may change its investment objectives and policies within the first three years without a special resolution of unitholders, but only in cases where regulatory changes or non-material adjustments are necessary. For material changes, unitholders’ approval via special resolution will still be required.
• Potential Impact: Investors should be aware the fund could change its strategy or its tracking index in response to regulatory changes or market conditions. This introduces an element of uncertainty regarding future fund direction.

4. Waiver on Financial Reporting Deadlines

• Rules 705(1), 705(3)(b), 705(4): The Sub-Fund will publish annual and semi-annual accounts on the manager’s website within three and two months of the financial period end, respectively, instead of the shorter SGX-ST deadlines. Announcements will also be made via SGXNET within these timelines.
• Potential Impact: Investors should anticipate a different reporting schedule than typical listed entities, which may affect the timeliness of financial updates.

5. Waiver on Weekly Net Tangible Assets Announcement

• Rule 748(1): The Sub-Fund will announce its net asset value (NAV) per unit for each dealing day on the Manager’s website by the next business day and make a weekly NAV announcement via SGXNET. The waiver is because the fund has no tangible assets, only financial assets.
• Potential Impact: Investors can expect more frequent NAV updates online but only weekly updates on SGXNET. This could influence price discovery and transparency.

6. Waiver on Unitholder Approval for Change of Investment Manager

• Rule 748(4): Under the Fund’s Trust Deed, the Trustee can remove the Manager without unitholder approval in certain circumstances, such as liquidation, cessation of business, regulatory issues, or failure to perform obligations. The Manager may also retire voluntarily in favor of a qualified replacement. The waiver is subject to prior notifications to investors via SGXNET and to the Authority, and unitholder approval will be sought for appointing a new manager when required.
• Potential Impact: This empowers the Trustee and the Authority to act swiftly to safeguard investors’ interests, especially in crisis situations, but reduces direct unitholder control over management changes.

Summary for Investors

The waivers granted by SGX-ST provide UOBAM Ping An FTSE ASEAN Dividend Index ETF with greater operational flexibility but also introduce new risks and considerations for investors. Key areas to monitor include fund liquidity, portfolio concentration, potential changes in investment strategy, timing of financial disclosures, and governance in manager replacement.

These waivers and changes may affect the ETF’s operations, investor confidence, and ultimately its market valuation. Investors should stay vigilant for announcements and review fund disclosures regularly.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should consult their stockbroker, bank manager, solicitor, professional accountant, or other independent advisers before making any financial decisions. The Singapore Exchange Securities Trading Limited takes no responsibility for the accuracy of any statements or opinions in this article.

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