There is an S&P500 ETF listed on the Singapore stock exchange with the code S27. However, it is well known on the forums that this is not the best choice if you want to invest in S&P500.
An influenzna recently posted (in support of the idea that S27 is 'good') that S27 has "no additional tax' as it is 'deducted at fund level'
The error is that the WHT is not deducted at the fund level. The word 'additional' is also misleading. The 30% WHT is a one-time deduction, whether deducted at the fund level, like Amundi Prime USA (a Luxembourg domiciled unit trust) or by the custodian, like when you buy S27 or even VOO. The word 'additional' seems to imply that the competitors to S27 have an 'additional' layer of tax, which they don't.
This is the copy of an actual investor's CDP statement that was posted in HWZ and its highly illustrative. This is a 2015 statement. I doubt the WHT tax treatment as changed since then:
(1) There is 30% withholding tax deducted from the gross amount(2) SGX charges a S$3.73+0$.26=$3.90 handling fee on the dividend. Even if you don't use CDP as a custodian, you may still be liable for this handling fee. This is shown in the FSMOne fees page which says they will 'pass through' the dividend handling fee to you.
There is therefore a very good reason why the usual recommendation for Singaporeans who want US exposure to buy Ireland Domiciled, London Listed, UCITS ETFs, in order to take advantage of the tax treaty that reduces WHT to 15%.
Alternatively, you can look at Synthetic ETFs that replicate the S&P500 like Invesco's SPXS or Amundi's LSPU (both listed on LSE). These have 0% WHT. I am vested in LSPU.
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How about S&P500 Unit Trusts?
Amundi Prime USA is a UCITS fund that invests in S&P500 via physical replication. It is domiciled in Luxembourg and therefore subject to 30% WHT. Unlike some influenzas who might simply be cutting and pasting from other erroneous sources, I actually checked the financial statements to confirm the level of WHT.
Does it mean that a UCITS S&P500 fund that is domiciled in Ireland will have a better WHT? For example, FSMOne offers to FSM+ members the UCITS unit trust Vanguard US 500 Stock Index Acc USD IE0002639775
Initially, I thought that this would be subject to 15% WHT just like their ETFs. But the wise people in HWZ told me this was incorrect. I checked the financial statements of the fund and HWZ was correct once again, the WHT for IE domiciled UCITS US funds is still 30%. Only ETFs get the 15% WHT.
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The influenza didn't mention that Amundi is sold in S$, making life a lot simpler for some investors.
One more advantage of Amundi Prime USA / Amundi Index MSCI World is that it is denominated in S$. This makes it extremely convenient for my less savvy elderly relatives to invest in. In fact, I have been recommending the Amundi funds to be less financially savvy relatives and friends as a long term investment. While the WHT is 30%, at current yields, this adds about 0.3% to costs which in the grand scheme of things, might be acceptable to some (better than stock picking individual SG REITs).
S27 is denominated in US$ which might be a hassle for some.
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US Estate Duty
S27 is US domiciled so it is subject to US Estate duty if you pass away. If you plan to hold it as a long term investment till your old age you need to take this into account. Their factsheet gives the ISIN which is US.
Ireland domiciled UCITS ETF are also subject to Ireland Estate duty which is currently zero.
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At the end of the day, it takes less than 10minutes to first open up the relevant financial statements to confirm the facts about withholding tax before publishing on the internet.
