Building a Diversified Portfolio: The Role of ETFs
Building a Diversified Portfolio: The Role of ETFs
Understanding Exchange-Traded Funds (ETFs) in Building a Diversified Portfolio
Starting your investment journey can be an exciting step towards building your financial future, even if you’re starting small. Exchange-traded Funds (ETFs) are a popular investment option that can provide diversification opportunities. ETFs allow you to spread your investments across multiple assets, which can help reduce concentration risks. They can also be a relatively cost-effective way to invest. If you're considering investing in ETFs, it's essential to understand the product features and risks involved.
To start, what are ETFs?
ETFs are investment funds traded on stock exchanges. They typically track a specific index, a sector or a basket of stocks centred around an investment theme. An ETF pools money from multiple investors to purchase a collection of assets, such as stocks, bonds or commodities. Most ETFs track the performance of a specific index or sector, like the S&P 500 or the technology sector, which means that they aim to match the performance of that particular index or sector.
Benefits of ETFs
ETFs can allow you to diversify your portfolio by enabling you to have exposure to a wide range of assets through a single investment. For instance, if you invest in an ETF that tracks the S&P 5001, you gain exposure to all the companies in that index without the need to purchase each stock individually.
ETFs may also generally incur lower fees compared to actively managed investment funds as they tend to be more passively managed.
Here is a table with some possible advantages of investing in ETFs:
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Main risks of investing in ETFs
The main risks of investing in ETFs are similar to those of a basket of stocks. Such risks include the price movements of the underlying assets within the ETF’s composition. As with any investment, it's essential to carefully evaluate your financial goals, risk tolerance, and market conditions before buying an ETF to ensure it aligns with your investment strategy.
ETFs at a Glance
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Types of ETFs1
Listed below are some types of ETFs and examples of each:
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Which ETFs are right for your investment portfolio?
Choosing the right ETFs depends on factors such as your investment goals, risk tolerance, time horizon, and financial knowledge. Here are some factors to consider when selecting an ETF:
- Define Your investment objectives: Are you looking for capital appreciation, regular income, diversification or a particular thematic focus? Defining your objectives is an important first step in deciding which ETF is right for your portfolio.
- Examine the ETF's investment focus: This involves studying the asset class (equity, bonds, commodities, etc.), geographical exposure, sector or industry, and market capitalisation among others.
- Analyse the ETF’s characteristics: Study characteristics such as the ETF’s expense ratio, tracking performance compared to its benchmark index, liquidity and dividend yield.
- Evaluate the underlying index (where applicable): Understand how the index is constructed (market-cap weighted, equal-weighted or other methodologies), the number and types of securities it tracks, and its performance relative to other indices.
- Research the fund’s performance: Study the ETF’s historical performance compared to similar ETFs, assess its volatility and how the ETF performs in different market conditions. Do, however, note that past performance is not necessarily indicative of future performance.
- Consider the ETF’s size and age: Analyse the ETFs Assets Under Management (AUM). Additionally, checking the ETF's inception date can provide insight into its longevity. These factors can help you better understand the ETF's characteristics and make a more informed investment decision.
- Assess the ETF provider: A reputable provider can help to ensure that the ETF is well-managed and that its interests are aligned with those of its investors. Additionally, consider the provider's experience and expertise in managing ETFs, as well as its ability to adapt to changing market conditions.
- Understand the tax implications: Depending on your location, some ETFs may potentially offer tax advantages. Check if the ETF reinvests dividends (accumulating) or distributes them (distributing).
- Review the ETF’s risk profile: Evaluate the diversification of the ETF and consider currency risks when investing in foreign ETFs. Some ETFs, such as leverage or inverse ETFs, have significantly higher risks and are only suitable for advanced investors with a higher risk appetite.
- Align ETFs with overall investment strategy: Consider if you prefer more passive investments or active management on your part.
Lion-OCBC Securities Series of ETFs1
In partnership with Lion Global Investors, OCBC Securities has helped to launch a suite of Lion-OCBC Securities ETFs that cater to both traditional and thematic investment strategies.
| Investment Focus | Benchmark | Achievements | ||
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| Lion-OCBC Securities APAC Financials Dividend Plus ETF1 | ||||
| This ETF is the world's first focusing on Asia-Pacific's top 30 financial services companies, aiming to leverage the region's economic growth and financial sector strengths. It provides investors with quarterly dividends. | Tracks the iEdge APAC Financials Dividend Plus Index. | Awarded “Top New ETF by AUM” in 2024 by SGX and ‘Best New ETF in Asia Asset Management Best of the Best Award 2025’ by Asia Asset Management. Source: ETF market highlights 4Q 2024, SGX Asia Asset Management, 2025 |
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| Lion-OCBC Securities Singapore Low Carbon ETF1 | ||||
| Designed for sustainability-focused investors, it aims to provide exposure to 40 Singapore companies with lower carbon footprints across sectors like real estate, financials and technology. | Tracks the iEdge-OCBC Singapore Low Carbon Select 40 Capped Index. | Based on SGX statistics, this ETF was the 2nd best performing China equities ETF in 2023 and best performing China equities ETF in 2024 based on total returns. Source: ETF market highlights 4Q 2024, SGX Asia Asset Management, 2025 |
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| Lion-OCBC Securities China Leaders ETF1 | ||||
| Offers access to China's leading companies across sectors such as financials, IT and consumer staples. | Tracks the Hang Seng Stock Connect China 80 Index. | Based on SGX statistics, this ETF was the 2nd best performing China equities ETF in 2023 and best performing China equities ETF in 2024 based on total returns. Source: ETF market highlights 4Q 2023, SGX ETF market highlights 4Q 2024, SGX |
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| Lion-OCBC Securities Hang Seng TECH Index ETF1 | ||||
| Taps into China's technology boom, aiming to feature 30 of the largest tech firms in Hong Kong with high exposure to innovation and growth in sectors like e-commerce, AI and FinTech. | Tracks the Hang Seng TECH Index. |
Based on SGX statistics, the ETF was the best performing China equities ETF in 2023 and 2nd best performing China equities ETF in 2024 based on total returns. It was also the top traded equities ETF in 2024. Source: ETF market highlights 4Q 2023, SGX ETF market highlights 4Q 2024, SGX |
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Trading ETFs on iOCBC
The iOCBC trading platform is a comprehensive tool for investors looking to trade ETFs with ease. It offers access to a wide variety of ETFs across multiple sectors, themes and geographies, and is suitable for both new and experienced investors.
Why Use iOCBC for Your Trading?
- Diversification: Provides access to trade 15 online global exchanges, comprising Singapore and 14 foreign markets
- Accessibility: Streamlined platform with expert-backed tools simplifies your trading experience.
- Expert Support: Assigned Trading Representatives ensure personalised assistance, making it ideal for investors requiring human support.
- Insights & Analytics: Comprehensive market insights help investors make data-driven decisions.
- User-Friendly Platform: Intuitive design for easy navigation and smooth transactions
- Award-winning interface: Recognised as the Best Mobile Trading Platform and Most Innovative Trading Platform for three consecutive years from 2022-2025 by Global Banking and Finance
- Advanced Tools & Insights:
- A.I. Oscar: Generates personalised stock ideas based on an user's trading history with OCBC Securities and their basic demographic data.
- StockReports+: You will get access to financial reports, company valuations, and other information for more informed decision-making through a paid subscription
- News & Analysis: You will receive updates from MT Newswires, a trusted financial news provider.
- TradingView: A tool that includes:
- Up to 10 years of historical data.
- 50+ drawing tools for custom charting.
- Over 100 technical analysis indicators for identifying market trends.
- Profitability Calculator: Calculate your profitability using iOCBC's built-in calculator.
These iOCBC features equip investors with the resources to navigate the ETF market confidently and build their investment portfolio.
Start your trading journey today
ETFs present a powerful option to build a diversified portfolio. With the iOCBC platform, you have a reliable, efficient and user-friendly partner to turn your investment plans into action. Explore a wide range of ETF options spanning geographies and sectors, making portfolio diversification easier and more accessible than ever before.
Recognised by Euromoney as the Best Securities House in Singapore in 2023 and 2024, OCBC Securities is dedicated to providing you with top-tier services. Whether you’re diving into ETFs or trading other securities, our advanced tools, expert insights and personalised support ensure you’re well-equipped in today’s fast-paced markets.
Don’t wait—start investing with OCBC Securities today and take the first step towards making more informed trading decisions.
Important notes
1The capital markets products referenced are for information purposes only and do not constitute any recommendation to buy or sell any capital markets products. Trading in capital market products and borrowing to finance the trading transactions (including, but not limited to leveraged trading or gearing) can be very risky, and you may lose all or more than the amount invested or deposited. Where necessary, please seek advice from an independent financial adviser regarding the suitability of any trade or investment product taking into account your investment objectives, financial situation or particular needs before making a commitment to trade or purchase the investment product. This advertisement has not been reviewed by the Monetary Authority of Singapore. The information provided herein is a compilation or summary of materials and data based from external sources available to OCBC Securities Private Limited (“OSPL”), and does not represent OSPL’s view on the matters mentioned. Whilst we have taken all reasonable care to ensure that the information contained in this advertisement or publication is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness, and you should not act on it without first independently verifying its contents. If you choose not to seek independent financial advice, please consider whether the trade or product in question is suitable for you. You should consider carefully and exercise caution in making any trading decision whether or not you have received advice from any financial adviser. You should also read the relevant prospectus and/or profile statement (a copy of which may be obtained from the relevant fund manager or any of its approved distributors), prior to any trading or investment decision. In relation to collective investment schemes, the value of the units and the income accruing therefrom, if any, may rise or fall. Past performance, yields and payments, as well as any prediction, projection, or forecast are not necessarily indicative of the future or likely performance, yields and payments. For funds that are listed on an approved exchange, investors are not allowed to redeem their units in those funds with the manager, except under certain specified conditions. The listing of the units of those funds on any approved exchange does not guarantee a liquid market for the units. No representation or warranty whatsoever (including without limitation any representation or warranty as to accuracy, usefulness, adequacy, timeliness or completeness) in respect of any information (including without limitation any statement, figures, opinion, view or estimate) provided herein is given by OSPL and it should not be relied upon as such. OSPL does not undertake an obligation to update the information or to correct any inaccuracy that may become apparent at a later time. OSPL shall not be responsible for any loss or damage howsoever arising, directly or indirectly, as a result of any person acting on any information provided herein. The information provided herein is intended for general circulation/discussion purposes only and may not be published or circulated in whole or in part without our written consent. All trademarks, registered trademarks, product names and company names or logos mentioned herein are the property of their respective owners, and you agree that you will not do anything to infringe or prejudice those rights. Reference to any products, services, processes or other information, does not constitute or imply endorsement, sponsorship or recommendation thereof by OSPL. Past performance is not necessarily indicative of future performance.
Open an account to start trading ETFs
Online application using Myinfo*
For individual customers who are 21 years and above.
*SGX listed securities will be custodised with OCBC Securities for trading accounts opened via MyInfo.
Offline and corporate application at a branch or via mail
For individual customers who are 18 to 20 years old, foreigners who do not have Myinfo and corporate customers.