I am planning to start my investment journey with ETFs. How do I determine if i should start investing in SPDR STI ETF (ES3) or NIKKO AM STI ETF (G3B) first? What is the difference between both? - Seedly
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Anonymous

Asked on 12 Jul 2020

I am planning to start my investment journey with ETFs. How do I determine if i should start investing in SPDR STI ETF (ES3) or NIKKO AM STI ETF (G3B) first? What is the difference between both?

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Lim Qin Da

Lim Qin Da

Level 6. Master

Updated on 16 Jul 2020

Hey Anon!

In short, the key differences between the two STI ETFs are in their:

  • fund size

  • expense ratio

  • tracking error

  • dividend distribution

You may wish to refer to the table below for a comparison:

There are different opinions as to whether one should invest in the STI ETF, so it is really up to your preference. If you would like to start local, the STI ETF is a good place to begin as you get immediate exposure to Singapore's top 30 companies. Seeing company names that you are familiar with and keeping up with the local news may be easier for you as you kickstart your investment journey.

However, many have also said to avoid the STI ETF because of its underperformance in its history. There is also an overweight focus on local banks and financial institutions, where DBS, OCBC and UOB account for 37.9% of the STI.

Seedly has written an article to cover both the SPDR and NikkoAM STI ETF previously. You can check it out here!​​​

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X_Y

Level 5. Genius

Answered on 12 Jul 2020

The analytical approach is to gather all the important attributes that you look for before investing an ETF, Gather all the historical data, analyse them and compare them side to side. I look at how the price, dividends, fund size have trended since inception. I also calculate the probabilities to make/lose money and the average positive and negative returns in various time horizons. Lastly, I score these attributes in a checklist.

I have done up the charts and checklists for SPDR STI ETF and NIKKO AM STI ETF. You can get them at https://dl.orangedox.com/fund-analysis-pdfs

File Names:

NIKKO AM SINGAPORE STI ETF (DBSSTI SP Equity)_update_120720

SPDR STRAITS TIMES INDEX ETF (STTF SP Equity)_update_120720

Hope it helps.​​​

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Try to avoid any STI investing from the start.

You can see why in one of the charts given in my text here:

https://seedly.sg/questions/what-is-your-general-investing-philosophy-strategy

The STI has a very bad longterm performance (exception: the dividends).

As a beginner try to invest into a large & cheap MSCI World or MSCI ACWI

ETF.

If You wanted to invest into Singapore, a small part (maximum 20%) could be put into one of the 3 Singapore S-REIT ETFs, with the Lion-Phillip S-REIT ETF

having the highest focus on true Singapore REIT allocation.​​​

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1 more comments

Frankie Rappaport
Frankie Rappaport

17 Jul 2020

Hi, dear Jay, yes, the dividend yield of the STI ETF can be as high as 3.7%, which is really very high. For MSCI World ETFs that are not accumulating but distributing ones, the dividen yield is around 1.5%. You could screen for U.S. and Europe market ETFs on www.etf.com and www.justetf.com where you find ETF screeners.
Jay Hou
Jay Hou

18 Jul 2020

Okie tks
Thank You!
Can you clarify
I wonder if
This is so helpful 👍
What about
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