SINGAPORE – Singapore investors can soon diversify their portfolios beyond the Straits Times Index (STI) with a new exchange-traded fund (ETF) that gives them exposure to small- and mid-cap (SMID) stocks listed on the Singapore Exchange (SGX).
Announced on Aug 6, the CGS Fullgoal Singapore Next 50 Active ETF by financial services firm CGS International Securities Singapore is the first ETF benchmarked to the iEdge Singapore Next 50 Index.
The Next 50 Index, one of two indices launched by SGX in September 2025, tracks the 50 largest eligible Singapore-listed companies after the 30 that make up the Straits Times Index. Each company’s weighting is based on the market value of shares available for public trading.
Healthcare, technology, and materials and energy are some of the sectors that feature prominently on the Next 50, but are not represented on the STI.
CGS International said the new ETF will be the first product offering investors exposure to Singapore’s SMID segment in a single SGX-traded instrument.
Currently there are only two active ETFs on SGX – Lion-Nomura Japan and LionGlobal Short Duration Bond Fund – both of which do not focus solely on Singapore equities.
Unlike passive ETFs that aim to replicate the performance of a specific market index that is tracked automatically, active ETFs are managed by professional portfolio managers who make decisions about asset allocation, stock selection and timing.
They are designed to outperform the market to deliver potentially higher returns, while passive ETFs operate on a buy-and-hold principle based on the belief that consistently outperforming the market over the long term is challenging.
The ETF will hold between 30 and 50 stocks, with its portfolio reviewed and adjusted monthly. At least 80 per cent will be invested in companies from the Next 50 Index, while up to 20 per cent may be placed in other SGX-listed stocks that score most favourably under its investment model.
The initial offer period opens on Aug 6 at $1 per share and ends on Aug 26. It is expected to list on the SGX mainboard on Sept 3 under the stock code Q50.
CGS International’s group head of asset management James Ong said that most Singapore portfolios mirror the STI, which is concentrated on the banks, and the new fund complements those holdings, giving investors a disciplined way to expand beyond the blue chips.
“We are bringing together the well-designed iEdge Singapore Next 50 Index developed by SGX with an established multi-factor strategy and manager. It reflects how we think about product development: identifying where investors are underserved and building institutional quality solutions for them.”
Ong told The Straits Times that the ETF builds on the momentum from the Equity Market Development Programme (EQDP), which was launched in 2025 to boost liquidity, research and investor participation in Singapore’s stock market.
He noted that since the launch of the EQDP, daily trading liquidity for small-cap stocks on the SGX has grown substantially over the last 12 months.
However, stocks in the Next 50 Index receive considerably less research coverage than the blue chips on the STI. The typical Next 50 company is followed by six analysts, compared with 16 for an STI constituent, while 11 of the 50 companies are covered by no more than three analysts.
An active fund would be more suitable for this under-researched space, Ong said.
Ong said the new ETF was designed as a “satellite” product to complement the “STI core”, and it would be most appealing to investors who already own STI stocks.
He added that analysts’ consensus target prices imply potential returns of about 5 per cent for STI stocks, compared with around 21 per cent for Next 50 stocks.
With the new ETF, CGS is therefore targeting investors who have substantial exposure to the STI and want to diversify into the broader Singapore market, he noted.
“This product is primarily not geared towards investors who do not own STI stocks.”
Ong added coverage of the Next 50 companies in an ETF is a natural next step for the Singapore market. Major indexes that track small- and mid-cap stocks, such as the FTSE 250, China’s CSI 1000 and India’s NIFTY Next 50, have all spawned numerous ETFs that have attracted huge investor interest.
“It’s high time that we have a product that covers the SMID segment,” he said, adding that without sufficient investor interest and trading activity in this segment, it will be difficult for these companies to grow into the next generation of blue chips.”
With the Monetary Authority of Singapore’s Grant for Equity Market Singapore (GEMS) scheme helping to support listings and strengthen coverage for pre- and post-IPO research, Ong believes the new ETF will also pave the way for more ETFs tracking the Next 50 index.
“You can’t have only one product covering the segment, if there are new players coming in, it means the market is growing,” he said.
“Hopefully the new product will be part of the ecosystem that we are building and make it more sustainable.”
SGX Group’s head of global financial markets Ng Yao Loong said the launch of the ETF is an “encouraging milestone” for the Next 50 index, which provides a transparent benchmark for the growing SMID segment, and the broader development of Singapore’s stock market.
“As investor interest in the segment continues to build, products linked to the index can help investors better capitalise on the spectrum of opportunities in our stock market.”
The new ETF is built on an active management model, scrutinising stocks on behalf of investors through a six-factor quantitative model: valuation, growth, earnings surprise, analyst sentiment, earnings quality, and the market.
It will be based on a model built by Chinese asset management company Fullgoal Asset Management (Hong Kong), who will be CGS International’s non-discretionary investment advisor. It has had a track record in China’s markets since 2009.
Fullgoal’s model scores and ranks every stock tracked by the ETF on six factors: valuation, expected growth, earnings guidance and net profit surprise, analyst sentiment, earnings quality, and market turnover and liquidity.
CGS International said this allows the fund to “capture opportunities within the broader market, seeking to maximise risk-adjusted excess return versus the iEdge Singapore Next 50 Index, within defined risk limits.”
Fullgoal has deployed the same framework for four of its qualitative enhanced index funds across China A-shares, MSCI and Hong Kong Stock Connect mandates.
Deputy general manager and chief investment officer Li Xiaowei said: “Fullgoal’s quantitative investment team has refined its multi-factor framework across market cycles for over 16 years, and we believe these principles are robust and transferable across different market environments.
“Partnering with CGS International allows us to bring institutional-grade quantitative research to a broader base of investors and reflects our long-term commitment to Asia’s capital markets.”
