How should I diversify my investment portfolio?

The STI ETF is not a unit trust. It's an ETF. Though very similar in nature, they do have some differences. But not the point.

AW has you exposed to the US market mainly. You need to ask yourself if you want more exposure to Singapore stocks, if yes get the STI ETF. If not, you can skip it.

I personally don't quite like our local equity market. I'd rather have more money invested in major developed regions like the US, Europe, Japan, and a broad emerging market group of countries.

So you need to decide where else do you want your money to be. If AW is not giving you that, then you can buy those individual geography funds via a ETF or Unit Trust.