Can anyone please advise if it’s worth it to keep my NIKKO AM SINGAPORE ETF? What’s the difference between a unit trust and blue chips?

Hi anon,

You'll want to understand your motive for investing.

Whether or not to keep the Nikko ETF is depending on whether you feel that there is a better option. If there is, then yes, drop it and go on to the alternative. In fact, STI tends to be a very poor performer relative to a lot of other indexes out there, and I am still puzzled as to why many people think it's the best thing since sliced bread.

Your motives will guide your decision. Looking for growth? Other markets like US have done better in the long run. Looking for dividend? Blue chips give 4+% and REITs 5+%. It's really not hard to see why STI isn't really here nor there. I'm sure you'll be able to find better options.

Lastly, blue chips are basically stocks of big companies with good reputations. It doesn't mean that if a company is on the STI and is a blue chip, it is safe. Examples include Noble and Swiber. Unit trusts, however, are a collective investment whereby they have a lot of holdings and hence work similarly to an ETF. The difference is that the ETF just replicates whatever benchmark, but a UT aims to beat the benchmark and hence will be more selective in their holdings.

STI index is a relatively poor-performer compared to S&P 500, the opportunity cost of investing in STI as compared to S&P 500 as a index component of a portfolio is too high. Also, the diversification (or lack of) offered by 30 constituent stocks of STI is paltry compared to 500 constituent stocks of S&P 500 index.

With regards to individual SG stocks, think its better to buy a stock with a lumpsum at your target price range as opposed to letting monthly transactions fees eating into your returns over the long-term. Of cos, if you feel uncomfortable to time your market transactions, by all means use the RSP. But one major bugbear i had of RSP offered by local banks is the limited list of counters available. If there's a stock thats not within the list, you cant do RSP for it.

Perhaps can consider investing via Robo-advisors using US-based ETFs, just dca, contribute and forget, over the long-term.