Wednesday, 29 July 2015

STI ETF

Straits Times Index is a capitalisation-weighted stock market index. This index is used as a benchmark by many to have a quick understanding of how Singapore market is performing. It started from year 1966. It has 30 stocks components and it supposed to track the best 30 companies listed in Singapore stock exchange. The selections are based on their market capitalisations.



Let us take a look at the long term trend of the index:


The current STI index is 3,281.09 (at the time of writing). Here is the 1 year chart:


It has not reach the 10% dip of 3194.87 from the recent peak of 3549.85. To me, the market is doing well unless it has a more than 10% dip.

Let us look at STI ETF. Note: ETF is not Index Fund

Investors usually bought Straits Times Index Exchange Traded Fund (STI ETF) to ride on general Singapore market performance and avoid market timing. If you look at the components, it is heavy on the 3 local banks, which comprised 34.24% (as at writing) of the entire fund. Is it a good benchmark of Singapore stock market performance? However, this is the best we have now, and there isn't any perfect ETF to start with.

My preference is SPDR Straits Times Index ETF (ES3) because its performance is better.


STI ETF
SPDR STI ETF
NIKKO AM
Fund Size
$329.06 M
$91.25 M
Tracking Error
0.0297%
0.2%
Dividends Payout
2.76%
1.39% - 2.9%
NAV per Unit
$3.34
$3.3975
Expense Ratio
0.30%
0.42%

The current price for STI ETF is 3.35 (as at writing). Let assume I invested 1000 shares of STI ETF on January 2014 at 3.23, my returns will be around 9.95% per year (including dividends), after deducting the various commissions.The figure looks good.

Using the same method to calculate Nikko AM, the return is around 6.37% per year (including dividends), after deducting the various commissions.

However, please take note the performance varies from time to time. Your returns will also depend on the price you bought and the dividends declared for that year. Please do your due diligence before investing and my methods may not be your desired methods.

Are you feeling bearish or bullish?

Frugal Daddy

10 comments:

  1. I am feeling feverish... with the humid and hot weather... hahaha

    ReplyDelete
    Replies
    1. Hi Richard

      You must be so passionate that caused your feverish.

      Did you read my post or you only read the last sentence? Haha.

      Delete
  2. Let's see how patient the bear is. He appears to be quite eager for his turn on the stage. haha

    The SPDR STI ETF is a good option to participate in the Singapore stock market without spending too much time on researching individual companies.

    It should be also a good-enough solution to beat the majority of those actively managed (or mis-managed might be the better word for some of them) unit trusts available for the Singapore market. Especially if one takes the fees into equation.

    But Singapore is not representative of the world, despite some companies being geographical a bit diversified, ;-)
    That's why I do own many other ETFs covering other geographical regions of the world which do have better outlooks (demographics!).

    I do remind myself that GDP-growth is happening solely from these factors: Population growth or productivity improvements
    We all know where Singapore's strength lies.

    ReplyDelete
  3. Hi Andy

    Indeed, a more diversified international portfolio make better senses. However, currencies risk, higher custody and trading fees are cost to be considered.

    Good point! Thanks

    ReplyDelete
  4. Hi Frugal daddy,
    The present situation is a dream come true for proponents of Dollar cost averaging.
    whichever way the tide turns, they are ready for it & without losing any sleep some more.
    let me go & get my popcorn, the show is starting soon

    ReplyDelete
    Replies
    1. Hi GP Blogger

      This is a smart way to earn money if the proponents stay discipline and have proper asset allocation strategy to compliment with it.

      Remember to drink more water with your popcorn. *Warning, high sugar and salt content :)

      Delete
  5. FD,

    Agree that ETF is a very good instrument. Warrant Buffett says that earlier, so subconsciously even we know or do not know, does not matter, bcos Buffett says so! Just follow cannot be wrong... haha.

    Of course, investing in stocks can be a passion. Investing in individual stocks let us go in depth into a company and learn about businesses in different industries.

    The more varied, we invest, the more we learn about different businesses. This is one of the reasons why I like to invest in individual company rather than ETF.

    The passion over just making money.. sometimes.. haha.. of course making money is still paramount..

    ReplyDelete
  6. Hi Rolf

    Passion is good, but have to make sure investment returns are sound too. haha. I actually adopted both individual and ETF strategies. I will try to avoid any investment with less than 6% return a year, considering the risk I have to bear.

    Agree that learning about individual stocks are interesting, however, it is time consuming and not everyone have the technical skill and interest to do it. Luckily, we can refer to your blog for technical guidance. :)

    ReplyDelete
  7. Very interesting post including all important news along with the charts and Stock Signals. Traders can make good use of it.

    ReplyDelete
    Replies
    1. Hi Anas

      Thanks for visiting my humble blog. You have an impressive trading support service on your website.

      Delete