To The Moon

Speaker: Ong Xun Xiang, Head of ETFs at Lion Global Investors, unpacks what “low carbon” actually means inside an index, how the Lion-OCBC Securities Singapore Low Carbon ETF differs from a plain Singapore index ETF, and why it pays to look at performance across several years.

[About the Speaker] Ong Xun Xiang is Head of ETFs at Lion Global Investors, where he is responsible for building and commercialising the firm’s ETF business, including speaking at ETF events to share investment and industry knowledge with the public. He has worked across asset management, private banking and fintech. Before joining Lion Global Investors, he was a Capital Markets Assistant Vice-President at ADDX (formerly iSTOX), a MAS-licensed digital securities platform, and earlier an Assistant Vice-President in BNP Paribas Wealth Management’s Key Client Group, where he helped originate and manage private market investment opportunities for ultra-high-net-worth individuals. He holds a Bachelor of Accountancy from Nanyang Technological University and is a Chartered Financial Analyst (CFA), Chartered Alternative Investment Analyst (CAIA), Chartered Accountant (Singapore) and ASEAN CPA charterholder.

[The Hook] Xun Xiang joked that “low” does not sound like a flattering word in an investment product’s name. His point was that “low” here describes carbon intensity, not returns, and that investors should look at what the index screens for, how it is built, and how it has performed. This is Part 3 of 4 from the seminar “Diversifying for Changing Markets: Financials, Bonds and Singapore’s Green Leaders”, held at the Tiger Brokers office on 27 October 2026.

[The Backdrop: Singapore’s Net Zero Commitment]

• Singapore accounts for only about 0.1% of global emissions, yet has committed to net zero by 2050, which it describes as a stretch target given limited options to deploy renewable energy at scale.

• On 10 February 2025, Singapore committed to cut greenhouse gas emissions to between 45 and 50 million tonnes by 2035, down from around 60 million tonnes in 2030.

• Why it matters to investors: the Economic Development Board’s chairman has said sustainability concerns will shape Singapore’s priorities in attracting investment, meaning companies here are expected to move towards a lower carbon footprint.

[How the Index Is Built]

The ETF tracks the iEdge-OCBC Singapore Low Carbon Select 40 Capped Index. In plain terms, it starts with Singapore companies and removes the ones that score worst on carbon, then weights what remains.

• Eligible universe: companies domiciled or incorporated in Singapore that pass a set of relaxed liquidity criteria, with carbon intensity data from Sustainalytics.

• Bottom-performer exclusions: within each sector, a maximum of 10% of companies with the highest carbon intensity (greenhouse gas emissions per unit of revenue) are removed, and companies with fossil fuel involvement are screened out.

• The final index: the top 40 companies by free-float market capitalisation (REITs and business trusts included), weighted with a tilt towards lower carbon intensity.

Learning point: what changed in March 2025. The index methodology was enhanced as of the close of 21 March 2025, and the ETF has tracked the updated index since.

• The number of constituents went from 50 to 40, and the single-security weight cap from 7% to 8%.

• Permitted fossil fuel involvement went from up to 4.9% to 0%. Palm oil exclusions and norms-based screening (excluding sectors such as alcohol, gambling, tobacco, adult entertainment, defence and cannabis) were added.

• Carbon emissions considered moved from Scope 1 and 2 to Scope 1, 2 and 3. Generally, Scope 1 covers a company’s direct emissions, Scope 2 its purchased energy, and Scope 3 the wider value chain.

• Weighting moved from plain free-float market cap to a carbon-intensity “Z-score” tilt on top of free-float market cap.

On the slide’s measure of weighted average carbon intensity (WACI), the Low Carbon Select 40 index scored 28.7 as of September 2026, compared with 67.9 for the Straits Times Index and 132.6 for the MSCI Singapore Free Gross Return Index. Lower means a lower carbon intensity.

[How It Differs From a Plain Singapore Index]

Xun Xiang pointed out that Singapore’s main index is heavily weighted to banks. In the sector breakdown, finance is 67% of the Straits Times Index and 58% of the MSCI Singapore index, versus 36% in the Low Carbon Select 40 index. The rest is spread across REITs (16%), industrials (11%), consumer services (9%), telecommunications (9%), consumer non-cyclicals (8%) and technology (6%).

The country-of-listing slide shows another difference: 79.0% of the Low Carbon index is listed in Singapore, with 12.4% listed in the US and 8.6% in Hong Kong, whereas the Straits Times Index is 100% Singapore-listed. In the top holdings, the three local banks ( $UOB(U11.SI)$, $OCBC Bank(O39.SI)$ and $DBS(D05.SI)$, each about 8% to 9%) sit alongside $Singtel(Z74.SI)$, $Sea Ltd(SE)$ and $Trip.com Group Limited(TCOM)$ (each above 7%), SGX, ST Engineering and others. The speaker’s framing: you still get Singapore, plus broader sector and regional diversification.

[Performance: A Multi-Year Look]

The slide compares the ETF with other Singapore-focused ETFs (all total returns, SGD, as of 30 September 2026). The ETF was listed on 28 April 2022.

• 2023: 5.8% for the Low Carbon ETF, ahead of the SPDR STI ETF (4.2%), Amova Singapore STI ETF (4.3%) and Xtrackers MSCI Singapore UCITS ETF (3.1%). Per SGX data, it was the best-performing Singapore equities ETF that year.

• 2024: 27.6%, second best among Singapore equities ETFs (the Xtrackers ETF led with 29.9%).

• 2025: 26.2%, behind the two STI ETFs (27.5% and 28.1%) but ahead of the Xtrackers ETF (22.7%).

• 2026 YTD: 7.9%, behind the STI ETFs (25.8% and 26.2%) and the Xtrackers ETF (18.1%).

• Annualised since inception: 13.3%, versus 16.5%, 16.8% and 15.3% for the three comparison ETFs.

Learning point: a strategy that tilts away from the biggest index weights will not behave like the index. Over some periods it can lead, and over others it can trail. That is why looking at several calendar years, rather than a single headline ranking, gives a fuller picture. The slide’s own caveat applies too: past performance is not indicative of the future.

[Income and Key Facts]

• Tickers: ESG (SGD) and ESU (USD). The ticker itself is a handy reminder of the sustainability theme.

• Costs: management fee 0.40% p.a.; total expense ratio 0.53% p.a. as of 30 June 2026. The TER is the broader measure of ongoing costs, so it is worth comparing alongside the headline management fee.

• Dividends: 12-month dividend yield of 5.02% as of 30 September 2026 (the dividend amount or rate is not guaranteed). Distributions are semi-annual, declared in June and December at the manager’s discretion. Xun Xiang noted that special distributions have also been paid in some past years; none is guaranteed.

• Rebalancing: the index is reviewed and rebalanced semi-annually in March and September by the index provider, Singapore Exchange. Single-stock weights are capped at 8% (market cap below US$200 billion) or 10% (US$200 billion and above).

[Key Takeaways]

• “Low carbon” is a screening rule, not a return forecast. It describes how companies are selected and weighted.

• Methodology matters, and it changes. The March 2025 update tightened fossil fuel exclusions and broadened the carbon measure to Scope 1, 2 and 3.

• Tilting away from the index changes the mix. Less bank weight and some non-Singapore listings mean a different risk and return profile from a plain Singapore index ETF.

• Judge performance over several periods. The ETF led in 2023, was second in 2024, and trailed the STI ETFs in 2025 and 2026 YTD.

[Call to Action 🎯]

1. Compare the top 10 holdings of this ETF with a Straits Times Index ETF. Which names are different, and why might a carbon screen have excluded or reduced them?

2. Look up the management fee and the total expense ratio of two Singapore equity ETFs and note the difference.

3. Drop a comment: would an environmental screen change how you choose an index ETF, and why?

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