It is now about the right time to start casting doubt on the STI ETF. At this time, a lot of my fellow bloggers have started to integrate the STI ETF into their primary strategies and it would be useful to consider counter-arguments against using the STI ETF as a primary tool to extract market returns from the SGX counters.

Before I start, active managers have waged a media campaign against ETFs for quite a while now and you can easily find such articles all over the web. When I criticise ETF strategies, I am not suggesting that we regress and begin looking at expensive active management funds again. No sane investor should tolerate high management expenses only to have unit trust managers try to replicate the STI ETF to minimise their career risks.

a) If everyone invests in the STI ETF, the market will fail.

The primary argument against …