Should You Be Investing In A Singapore ETF?


The Singapore stock exchange bears a host of publicly traded companies. Some of them may be worth considering if you’re interested in diversifying your investment portfolio and if you want to expand into foreign markets. The overarching question remains, should you invest in a Singapore ETF? With 800 companies listed on the Singapore stock exchange, it would take a lot of time and effort to conduct the proper research to make an informed decision about whether or not to invest. A decent alternative is to invest in Singapore ETFs as means of gaining exposure to the market without direct investment in individual stocks. This caveat helps to spread the risk over a diverse collection of holdings within the fund that you choose for investment.

Benefits of investing in a Singapore ETF

According to Alvin Poh, one of the best strategies for investing in Singapore is to adopt a “lazy portfolio.” This term means that you don’t invest in individual stocks that require research and analysis. EFTs are the better alternative because the fund managers have done the work for you. Investing in Singapore EFTs saves you time, removes stress, and provides you with a solid return on your investment.

What is a Singapore ETF?

According to Money Smart, Singapore EFTs are index funds that track an index of the stock exchange, providing the investor with a diversified group of the stocks that have performed the best over some time. The Straits Times Index is Singapore’s version of the S&P 500 Index. It’s an index that tracks the top 30 companies on the SGX. The list of its holdings features mostly reliable blue-chip stocks.

Why you should consider investing in Singapore ETFs

CNBC’s report on Asian Markets revealed that Morgan Stanley is bullish on Asian markets. They dived to the bottom. The prospectus is for a healthy rebound to take place. They’ve already begun the upwards climb from the low brought on by extraneous factors affecting most sectors of the market, including the effects of the Corona Virus pandemic that hit the markets worldwide. Although there is still a degree of uncertainty, there is more movement in the markets. For investors, this could be a good thing.

What is the best Singapore ETFs to invest in for 2020?

New Academy of Finance speculates on the top four Singapore ETFs, for investors interested in creating a diverse investment portfolio. Each selection maintains a high daily trading volume of not less than $1 million.

1. SPDR Straits Times Index ETF

Ticker Symbol: ES3

SPDR STI ETF is one of the most popular Singapore ETFs because of its high daily trade value of more than $5 million. The fund tracks the Stratis Times Index with as many as 30 of the largest companies on SGX. The STI is a portfolio of diversified holdings across multiple industries within the market. The fund provides investors with exposure to several Singapore industries without direct investment in individual companies. The inception date of the SPDR STI ETF is 2002. The fund maintains the most liquidity of all other Singapore ETFs. The fund consists of 20 percent in holdings from the equity sector with diverse holdings in other areas of the industry that includes consumer staples, utilities, energy, and other cyclical companies. The expense ratio of SPDR STI is 0.30 percent.

2. ABF Singapore Bond Index Fund

Ticker Symbol: A35

The ABF Singapore Bond Index Fund is a fixed income ETF that is attractive because it provides a hedge against market sell-down. The fund consists of bonds issued by the Republic of Singapore, representing the highest percentage of its holding. Additional holdings include bonds issued on the Land Transport Authority of Singapore and the housing Development Board. Some of the highest yielding AAA-rated government bonds are made available to investors through this fund. A35 is a safer alternative within the equity markets. The bond portion of the portfolio is 20 percent of the fund. Since its inception, this fund has generated returns averaging 2.8 percent with higher returns of 3.2 percent for the yield to date figure, even amidst the COVID-19 market volatility. The expense ratio of the fund is a low 0.26 percent.

3. Lion Phillip S-Reit ETF

Ticker Symbol: CLR

Lion Phillip S-Reit ETF is a popular ETF due to its daily trade volume that exceeds $1 million. While not the largest, it is the most popular as it grants exposure to Singapore (SG-listed) REITs. It offers a positive correlation to stocks with the added benefit of a less impactful drawdown in the event of a market sell-off. This fund fits into an investment portfolio as a high-yielding source of passive income generation for long-term investing. Trends have shown a more positive STI index for the Lion Phillips S-REIT by as much as 5 percent in a downturn. This ETF is only available for purchase on the POEMS Share Builder Plan or through OCBC Blue Chip Investment Plan on RSP. Forty percent of the Lion Phillip S-REIT is weighted in the overall structure of the portfolio with a high ratio to provide a cash shield to guard against selling units in periods of price depression. The expense ratio for the Lion Phillip S-Reit ETF is 0.58 percent.

4. SPDR Gold Shares ETF

Ticker Symbol: O87

The SPDR Gold Shares ETF is a commodity-based ETF that has achieved safety amidst current market volatility. The fund purchases physical gold as a hedge against market sell-off as well as inflation. Twenty percent of the fund consists of SPDR Gold Shares. Investment in this fund is a choice that investors make when attempting to protect the portfolio from the impact of inflation. The expense ratio of the SPDR Gold Shares ETF is 0.40 percent, which is low compared to many other US ETFs.

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