Which ETFs Singapore Offer The Best Returns In 2018? A Comparison Table

Singapore economy was an on a roll in 2017, expanding at an impressive rate. The trend seems to have picked up pace in the first quarter as the GDP grew by 4.3%, compared to 3.6% as of Q1 2017. A strong growth trajectory provides a clear insight of what investors should expect in the stock market this year.

Exchange Traded Funds have emerged as exciting investment vehicles for gaining exposure to Singapore’s robust growing economy. ETFs offer exposure to investments not easily accessible through other investment products.

Singapore ETFs are quite varied with open-ended investments, designed to keep track of the performance of commodities, indexes assets as well as bonds. They are easy to access as they are listed and traded in the regulated Singapore Stock Exchange.

The Straits Times Index rallied by more than 20% as the stock market bull peaked. Given that it is not possible to buy the index, which is a reflection of the country’s broader stock market, ETFs mimicking the index appear to be the only way of gaining exposure into the booming stock market.

Top Singapore ETFs racked up sizzling returns of more than 10% as they benefited on more people turning to the stock market in pursuit of shareholder value. The ETFs also experienced an increase in capital inflows, thanks to an increase in disposable income as the country’s economy continued to grow at an impressive rate.

Simply put, an ETF tries to mimic the performance of an underlying index such as the Straits Times index.

Below are some of the top ETFs worthy of any investment portfolio in 2018.

 

SPDR STI ETF

SPDR STI ETF is one of the most sought-after ETFs in Singapore given its track record when it comes to returns. The ETF is designed for passive investors looking for a reliable stream of income. It is also for people who are just getting started into the world of investing.

The best investments in this world are in companies that one understands really well. That is what SPDR STI ETF is precisely all about. The ETF tracks the performance of the Straits Times Index, which lists 30 of the most prominent companies in Singapore.

Given that the ETF tracks the performance of the STI index, it provides investors with exposure to some of the biggest companies in Singapore. DBS OBC, Singtel, and CapitaLand are some of the companies stock’s that feature prominently in the STI index of which investors are usually guaranteed exposure to, on investing in the SPDR STI ETF.

Investing in SPDR STI ETF thus provides a sure way of not only buying into Singapore economy but gaining exposure in companies doing business outside the country. A good number of these companies have operations in emerging markets of Indonesia and Malaysia.

SPDR STI ETF is also a sure way of diversifying an investment portfolio, given that the underlying index it tracks, has companies touching on various sectors of the economy. The index tracks stocks of companies in the banking and finance sector as well as Entertainment, Telecommunication and Real Estate.

The ETF also boasts of a lower expense ratio compared to other alternatives in the space, something that goes a long way in ensuring optimized returns on capital.

In terms of value generation, SPDR STI ETF was one of the best performing ETFs in Singapore last year. As of the end of the first quarter of 2018, the ETF had a price to earnings ratio of 11.4% and a dividend yield of 2.9%

 

IShares MSCI Singapore ETF

IShares MSCI Singapore ETF is another high profile ETF worth every penny, when trying to gain exposure to Singapore’s equities. The ETF seeks to provide investors with exposure to some of the country’ finest mid-sized and large-cap companies, by tracking the MSCI Singapore, index.

The Fund has about $800 million in Asset Under Management and charges 49 basis points in fees every year. Financial assets account for a huge chunk of the fund’s portfolio at 39.3%, followed by Real Estate at 21.4% and industrials at 18%. The top holdings in the fund include DBS Group Holdings Oversea-Chinese Banking Ltd, and United Overseas Bank Ltd.

Launched in 1996 by BlackRock, iShares MSCI Singapore ETF is one of the best performing emerging market ETF. Its 1-year return currently stands at 19.97%. The underlying index that it tracks, the MSCI Index, has a one-year average return of 20.46%.

 

Global X Southeast Asia ETF

Instead of having limited exposure to Singapore stocks, Global X Southeast Asia ETF is one of the few gems in the ETF space. The ETF is designed to provide investors with exposure to stocks in the five members of the Association of Southeast Asian Nations namely Philippines, Thailand, Indonesia, Malaysia, and Singapore.

The ETF is however dominated by Singapore stocks that account for 30.7% of its asset portfolio followed by Thailand at 22.3%, Malaysia at 21.4%, Indonesia at 19, 1% and Philippines at 6.5%. Financials telecommunication and consumers staples are some of the key sectors that the fund specializes in.

The top three holdings in the ETF are DBS Group, Oversea-Chinese Banking Ltd and United Overseas Bank Ltd. Over the past one year, the ETF has returned 24.1%, a trend expected to continue in 2018 as the five countries continue to show signs of thriving as was the case last year.

 

SPDR Gold Shares ETF

SPDR Gold Shares ETF is another ETF worth paying close attention to, in Singapore this year. The ETF seeks to provide investors with a cost efficient and secure way of investing in the gold market.

In addition to being listed in the Singapore stock exchange, it is also listed in Hong Kong and the U.S, thus gaining exposure to investors in key markets. SPDR Gold Shares is the largest gold-backed traded ETF in the world.

With the outlook of Gold, the metal that the ETF is tracking, looking increasingly positive, SPDR Gold Shares ETF could be one of the top performers in 2018

“All signs point to gold. The safe haven metal took a hit as bond rates jumped in the fourth-quarter of 2016, but has been trending higher despite the rise in real interest rates. Gold bulls should take note of how gold prices have behaved in relation to long-term treasury bonds because they appear to be behaving differently than they have in the past,” said Crystal Kim for Barron’s.

Gold price is expected to continue ticking higher given the concerns over European politics as well as uncertainty around President Donald Trump prices. The increase should have a positive impact on SPDR Gold shares which tracks the bullion.

SPDR Gold Shares is expected to outperform other investment assets such as stocks during tough times. With net asset value of about $36 billion, the ETF boasts of a three year annualized return of 3.29%.

 

Philip SGX APAC Dividend Leaders REIT ETF

Philip SGX APAC Dividend Leaders REIT ETF is a perfect fit for investors who would wish to gain exposure to Singapore’s booming real estate industry in 2018. The ETF has exposure to properties in three countries. Australia leads the park at 59% followed by Singapore at 30% and Hong Kong at 11%

Some of the REITs that the ETF tracks include Ascendas REIT, which has properties in Singapore Australia, Singapore, and China. It also tracks the performance of Mapletree another REIT with a diversified property portfolio in Australia, China, South Korea, Vietnam, and Malaysia.

Philip SGX APAC Dividend Leaders REIT ETF seeks to make it easy for people to invest in REITs in some of the fastest growing emerging markets.

One of the reasons to remain bullish about the ETF’s performance in 2018, is the fact that its returns per annum since inception has always stood at 5.02%. Its expense ratio is also among the lowest in the industry at 0.3%.

 

CIMB FTSE ASEAN 40 ETF

CIMB FTSE ASEAN 40 ETF is a little-known exchange-traded Fund that seeks to provide investors with exposure to 40 of the top Blue Chip companies in five major countries across South East Asia. The ETF tracks some of the biggest companies stocks in Malaysia, Philippines, Singapore, Thailand, and Indonesia.

The ETF boasts of a strong performance since inception, a trend expected to continue as the companies it tracks continue to show signs of robust growth. CIMB FTSE ASEAN 40 ETF is especially suited for people who wish to expand and diversify their investment portfolio.

CIMB FTSE ASEAN 40 ETF boasts of steady returns and distributions. Its one year annualized return currently stands at 7.73% while the three years annualized return stands at 8.7%. In addition to standing chance of benefiting from share price appreciation, one can also take advantage of the fund’s dividend. It currently has a 12-month yield of 1.89%.

 

ABF Singapore Index ETF

Investors looking for a reliable stream of fixed income in 2018, then ABF Singapore Index ETF is a perfect fit in this case. The ETF is known for its stable returns as it tracks the iBoxx Singapore Bond Index. The Index tracks the performance of AAA-rated investment grade Singapore government bonds, most of which have an average yield to maturity of 2.08%.

For investors with low risk tolerant, then ABF Singapore Index ETF should be a no-brainer given that the ETF tracks Singapore government bonds, which are highly secure. With Assets under Management of more than S$800 million, it is considered as one of the largest in the country. Its 3-year annualized return currently stands at 4.36% with a five year annualized return of 1.60%

In addition to gaining from share price appreciation, investors also hold to walk home with dividends as the ETF has a 12-month yield of 2.32.

 

IShares MSCI Korea UCITS ETF

IShares MSCI Korea UCITS Index Korea should be an exciting pick for investors looking to gain exposure to South Korea stock market. The ETF is a perfect fit for investors who wish to diversify their investment portfolio in one of the fastest growing emerging markets.

The ETF tracks the MSCI Korea UCITS Index exposing investors to 85% of the country’s large and medium-sized companies. One of the key benefits of investing in the ETF this year is the fact that one stands to gain exposure to tech giants like Samsung Electronics and LG.

When it comes to returns, very few ETFs in Singapore can live up to iShares MSCI Korea UCITS ETF performance. The ETF boasts of a three year annualized return of 13.56% and a five year annualized return of 10.65%. It pays dividend semi-annually, and its yield currently stands at 0.81%.

 

Nikko AM Singapore STI ETF

Nikko AM Singapore STI ETF is another high-value exchange-traded fund that tracks the performance of the Straits Times Index. The ETF is for investors looking for a low cost and simple way of gaining exposure to the Singapore stock exchange.

Dividend distribution and potential capital gains are some of the benefits that one stands to gain, on investing in the ETF. It also provides a reliable way of investing in a basket of benchmark stocks at a much lower cost. Its expense ratio stands at 0.35%. Dividends are normally paid semi-annually.

Over the past one year, the ETF has returned 16.54% compared to the Straits Times Index returns of 17.30%. Its five-year average returns stand at 4.43% compared to Straits Times Index average return of 4.96%

 

ETF	YTD	3 Years Annualized Return	5 Years Annualized Return
SPDR Straits Times Index ETF	4.74	7.42	5.54
IShares MSCI Singapore ETF	4.93	7.76	5.67
Global X Southeast Asia ETF	2.88	9.13	4.92
SPDR Gold Shares ETF	6.26	–	7.56
Phillip SGX APAC Dividend Leaders REIT ETF	-7.43	–	–
CIMB FTSE ASEAN 40 ETF	4.88	7.97	3.56
ABF Singapore Index ETF	-3.86	4.36	1.60
IShares MSCI Korea UCITS ETF	-0.15	13.56	10.65
Nikko AM Singapore STI ETF	4.56	7.26	5.36

 

 

Read our other interesting articles:

Which Singapore REITs Offer The Best Returns in 2018? (A Comparison Table)

Common Mistakes Investors Make when Investing in Mutual Funds or Unit Trusts (and How to Avoid Them)

Preserving Wealth Vs Growing Wealth | The Differences Between The Two

(By Neha Gupta)

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