(ETF Discussion) SGX: SPDR STI ETF (SGX: ES3)?

SPDR STI ETF is managed by State Street Global Advisors Singapore Limited, a subsidiary of the third-largest asset manager in the world.

The investment objective of the Fund is to replicate as closely as possible, before expenses, the performance of the Straits Times Index. The Straits Times Index is maintained by FTSE International Limited and represents the performance of the top 30 eligible companies. The Index constituents are reviewed semiannually in March and September and are diversified across all sectors.

Information accurate as of 22 July 2020.

Fund Details

Inception Date

• 4 November 2002

Base Currency

• SGD

Fund Size

• SGD 1,113.91 million (As of July 2020)

Total Expense Ratio

• 0.30%

Distribution Frequency

• Semi-Annual

1-Year Annualised Tracking Error

• 0.1508%

Performance

Fund Holdings

The SPDR STI ETF is heavily weighted with financials, with DBS Group Holdings, Oversea-Chinese Banking Corporation, and United Overseas Bank account for 37.63% of the ETF.

Sector Allocation

In terms of industry allocation, financials take up a whopping 61.75% of the ETF, followed by industrials, and telecommunications.

Investors

The SPDR STI ETF provides immediate exposure to the top 30 companies in Singapore, and it is great for beginners who are starting out to invest but are not willing to take the risk of overseas investment. However, it is heavily weighted on financials, which is an issue if you are looking diversification. Furthermore, historical performance has shown that the STI has underperformed other regional or global indexes, and hence this is another thing that investors should consider before putting their money into the SPDR STI ETF.

Another ETF that tracks the STI is the Nikko AM STI ETF (SGX: G3B).

References were made to SPDR STI ETF Fact Sheet. Click here to read more!​​​

I'll only recommend this ETF if you are starting out and don't want to spend time reading financial reports, catch up on company news and understanding a individual company's direction and goals. Great to pair it with a Regular Savings Plan(RSP) by the different financial companies where you just DCA your way to build up an investing portfolio. One thing you have to keep in mind that our STI ETF main bulk are the top 3 banks, they make up 1/3 of the entire ETF. When the banks move up or down, the STI follow suit.

Other than that, it's a great ETF to build a portfolio without doing too much work.