In 2018, ST reported that STI has 9.2% annual returns from 2009-18 with reinvestment of dividends. But I'm having trouble with the calculations, can someone check for me please?

I assume I bought a single stock for about 2.26 dollars and held it to 2018 where it would be about 3.24 dollars. Then, I summed up the dividends and it added up to 1 dollar over 10 years per stock. If $1 is not enough to even buy a single stock, how can it be reinvested? Does the ES3 allow fractional purchase of stocks?

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Elijah Lee

14 Mar 2020

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi Javier,

9.2% refers to the returns as a whole. Your calculation is for a single stock and the numbers will be vastly different. The methodology is different. The underlying holdings of STI ETF are definitely not fractional.

By the way, it is important to understand the distinction between the STI and the STI ETF; the STI is a market capitalisation weighted index that tracks the performance of the top 30 companies listed on SGX. It is a number, you cannot invest in the STI. The STI ETF however, buys into the underlying components, and hence you can invest in it and mirror the returns.

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Frankie Rappaport

13 Mar 2020

This calculation is valid for the single components of the STI and possibly not for (your method to "buy the STI") an STI ETF. The calculation is based on the assumption that from the date of the dividend payment of every dividend is reinvested into "buying more STI".