The Current Top 7 ETFs In Singapore
With COVID-19 and travel restrictions, most of us will not be travelling anytime soon.
Goodbye Japan travels, goodbye Europe trip, goodbye legit Korean food.
With no travelling, more people are taking a break via staycations (we have an awesome affordable guide here) or, putting their money into investments.
Yes, for those who are investing for your future, this article will help you.
Other than robo advisors such as StashAway, exchange-traded funds are one of the best investing options for more Singaporeans, and many use it to diversify their investment portfolio. Your dream job may not always be paying for those bills, especially if you want a savings account, an emergency fund, plus some extra money for travelling.
Read this guide to find out what exchange-traded funds are and how to invest in them wisely.
TLDR: Top Current ETFs To Consider
|ETF in Singapore||Best for||Expense ratio|
|SPDR STI ETF||STI tracking||0.3%|
|Nikko AM STI ETF||STI tracking||0.3%|
|ABF Singapore Bond Index Fund||Government bonds||0.25%|
|Phillip Sing Income ETF||Profitable dividend stocks||≤0.7%|
|Lion Phillip S-REIT ETF||High-yielding REITs||≤0.54%|
|SPDR S&P 500 ETF||Best 500 international companies||0.0945%|
|SPDR Gold Shares ETF||Gold||0.4%|
What Are ETFs? What Is The Definition Of ETF?
ETFs are exchange-traded funds. ETFs are investment funds that are traded on the stock market. The money you invest in is pooled with other investors and then invested based on the ETF’s investment objective.
1. SPDR STI ETF (SGX: ES3)
People who purchase ETFs don’t follow a “get rich quick” strategy. So, if you want to buy ETFs, too, keep that in mind.
Not tricking the system has its advantages:
Long-term profit and financial stability.
When choosing the best ETF for your needs, check the Straits Time Index (STI), which measures thirty of the largest SGX companies. That’s why it’s an accurate gauge of Singapore’s economy.
SPDR STI ETF is one of Singapore’s STI-rated ETF. The other one is Nikko AM STI ETF, but we’ll discuss it below.
SPDR STI ETF has a lengthy tradition on Singapore’s market since it was founded in 2002. Besides, its fund size is currently at $1,700m, so 3.42 times bigger than that of Nikko Am.
Its current expense ratio is 0.3%, which is pretty decent because that means SPDR STI ETF has more assets than expenses.
2. Nikko AM STI ETF (SGX: G3B)
Nikko AM STI ETF is a worthy contender in Singapore’s market since 2009. Its current fund size is $496m, which means it’s a successful company too.
Just like SPDR STI ETF, Nikko AM wants to mimic STI’s performance.
Surprisingly considering its age and size, Nikko AM performs very well. In fact, it has the same expense ratio as SPDR STI ETF, of just 0.3%.
Here’s the catch:
Nikko AM’s tracking isn’t as accurate as SPDR’s. Therefore, it can’t follow the STI as faithfully as SPDR. As a result, Nikko AM sometimes performs worse than the STI, while other times it performs better.
3. ABF Singapore Bond Index Fund (SGX: A35)
Bonds are like that boring middle-ages dad, whereas stocks are the hip uncle riding a motorcycle and letting you take sips of his beer. However, bonds, much like boring dads, are more reliable than stocks.
If you’re a beginner investor or simply don’t like to take many risks, bonds are an excellent choice.
It’s even better if you invest in government or government-related bonds. Singaporeans usually go for:
- Singapore Savings Bonds (SSB)
- Temasek Holdings Bond
- Temasek-linked Astrea IV and V Bonds
The disadvantage of buying these sorts of bonds is the waiting-and-watching game.
If you want to enjoy your life instead of stalking government bonds, invest with the ABF Singapore Bond Index Fund.
Although you won’t skyrocket your gains, you can group-buy more bonds from trustworthy sources. Plus, its expense ratio is 0.25%.
4. Phillip Sing Income ETF (SGX: OVQ)
Phillip Sing promises all Singaporeans their “regular dividend fix.”
If you want to increase your passive income with dividend stocks, you have to be smart about it. You need a diversified portfolio of best-rated SGX dividend stocks that can bring you a lot of money.
That’s where Phillip Sing comes in.
This ETF uses the Morningstar Singapore Index, which tracks the best thirty dividend stocks in Singapore. You can see many popular brands there: banks like DBS and UOB, plus Singtel and SATS.
Now you have access to all of them, with a standard yield of 5% paid biannually.
5. Lion Phillip S-REIT ETF (SGX: CLR)
Everybody knows that Singaporeans are passionate about real estate. Well, Lion Phillip S-REIT is an ETF that brings you the most profitable trusts on the island.
Here’s how that works: REITs grant you ownership rights along with other people to the properties in a specific portfolio. And that means you’re entitled to a piece of the rent, which comes as dividends.
Of course, you have to choose the best REITs to get more money. Plus, you have to diversify your portfolio to balance risks and be more successful.
Basically, you need lots of expertise in real estate and investment. That’s a problem if you’re a newbie investor.
Conversely, according to the Morningstar Index, Lion Phillip allows you to purchase some of the highest-yielding REITs in Singapore.
Plus, its current expense ratio is below 0.54%.
6. SPDR S&P 500 ETF (SGX: S27)
Ah, the S&P 500, it tracks the top 500 companies on the US market.
We talked a bit about asset diversification in this article, so you know never to put all your eggs in the same basket.
A reliable way of mitigating risks is investing in global stocks, not just local ones.
The right place to start is the SPDR S&P 500 ETF. This ETF comes with a teensy expense ratio of 0.0945% and features the best 500 companies in the world.
Although the S&P 500 is located in the US, you’ll find some international companies there as well.
7. SPDR Gold Shares ETF (SGX: O87)
Gold is an attractive investment, mostly as the grapevine always foretells of an upcoming stock market crash. With so many foreseen pandemics and the dangers of global warming, it’s no wonder that might actually happen.
You can buy gold in lots of forms: gold bars, bullions, certificates, and, of course, ETFs.
SPDR Gold Shares ETF follows the price of gold accurately, and it allows you to buy smaller amounts of gold.
These ETFs are tax-efficient and easy to trade with, plus their expense ratio is just 0.4%.
How Do I Start Investing In ETFs In Singapore?
If your investment knowledge is somewhere between zero and “I’m watching Billions,” you probably know companies share stocks and shares.
You can buy them at low prices and sell them when they cost more.
But you need lots of research for that.
That’s why index fund ETFs exist. You can buy more stocks that have a high exchange rating on the stock market, plus you’re diversifying your portfolio.
Here’s the problem:
There are lots of indices out there. We already discussed STI and S&P500, but each industry, region, and asset type has its own.
The solution is simple:
Sign up with expert and low-cost brokerages like SAXO or POEMS. The best part of these agencies is they don’t ask for a minimum sum, so you don’t have to invest all your savings in ETFs.
Should I Invest In ETFs?
ETFs are reliable investment opportunities for beginners because they’re low-risk and low-cost. The ETFs we discussed above are diversified, which means you’re not putting all your eggs in the same basket. Plus, you won’t need to do lots of research.
Warning: ETFs aren’t 100% sure, especially in the short-term.
Companies’ gains fluctuate according to the market, so the best ETFs guarantee slow and steady passive wins in the long-term. They’re like the average boring dad we told you about.
Careful, though; the cool uncle is more fun but can always bring you more trouble.