SINGAPORE (Oct 15): In the relentless hunt for yield, local retail investors sometimes veer towards risky stocks, says Jeffrey Lee, managing director and chief investment officer (CIO) of Phillip Capital Management. Stocks may appear to have generous yields only because they are trading at depressed prices, which in turn result from poor fundamentals. “The common man’s problem is that very often, [he] looks for juicy yield and ends up with a dud,” remarks Lee at a recent media briefing.

Phillip Capital is looking to avoid the “dividend trap” with a new equity exchange-traded fund (ETF). The Phillip SING Income ETF will be listed on the Mainboard of the Singapore Exchange on Oct 29. It fully replicates the Morningstar Singapore Yield Focus Index (MSYFI), which comprises 30 stocks listed on SGX selected for high yield and sustainable earnings. The management fee is set at 0.4% a year, with the total expense ratio capped at 0.7%.

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