The SPDR Straits Times Index ETF is a Singapore-based exchange-traded fund. The Fund’s goal is to match the performance of the Straits Times Index as closely as possible before expenditures.
Which STI ETF is better?
Because it is the oldest and largest STI ETF, SPDR STI ETF (stock code: ES3) would be preferable. It was founded in 2002 and has $1.6 billion in assets under administration as of October 13, 2021.
Both ETFs, however, track the same index and are likely to perform similarly over time.
Is STI ETF a good investment?
Because it comprises a portfolio of firms that represent Singapore’s future economy, the STI ETF can be an excellent long-term investment. Investing in the STI ETF exposes you to some of Singapore’s most well-known corporations, such as DBS and SingTel.
Does STI ETF pay a dividend?
Yes, the STI ETF pays dividends, and the amount you get is proportional to the ownership of the underlying companies and your unitholding. The STI ETF’s average dividend yield is roughly 3 to 4%.
Key differentiating point: Better performance over the years
Compared to Nikko AM STI ETF, SPDR STI ETF has demonstrated to have greater returns for all three performance comparison points (1 year, 3 years, and 5 years). Even when the market crashed in March 2020, SPDR STI ETF’s one-year performance was better than Nikko AM STI ETF’s.
How to buy SPDR STI ETF?
With your brokerage account, you can buy the SPDR STI ETF directly from the market. This puts the decision-making process in your hands; you choose when and how often you want to buy the ETF.
You can also invest in the SPDR STI ETF on a monthly basis using the following sites.
- POEMS Share Builders Plan (SBP): With just S$100 per month, you can get started. There are almost 40 different counters to pick from in addition to the SPDR STI ETF. A fee of S$6 will be charged if you have fewer than two counters. If you have a POEMS brokerage account, you can also set up a recurring plan to acquire the SPDR STI ETF on a monthly basis at the current account brokerage prices.
- FSMOne Regular Savings Plan: A regular savings plan with FSMOne can be started with just S$50 each month. FSMOne gives you the most options, allowing you to choose between the Nikko AM STI ETF and the SPDR STI ETF.
What is the meaning of STI ETF?
For those who are unfamiliar with the term “STI ETF,” let us first define it: The Straits Times Index is tracked by an exchange-traded fund (ETF) (STI). The Straits Times Index, or STI, is Singapore’s stock index.
Is the STI Index paying dividends?
Stocks in Singapore’s Straits Times Index (STI) are regarded for paying a respectable dividend. The STI’s dividend yield is 3.60 percent as of November 30, 2021. Other indexes, such as the Hang Seng Index (HSI) in Hong Kong and the S&P 500 index in the United States, pay only 2.53 percent and 1.35 percent (as of 14 December 2021), respectively.
While the dividends paid by STI are appealing, they only represent half (or less) of the picture. This is because we aren’t looking at the index’s growth, or total returns, which include price appreciation. Again, the HSI and S&P 500 have increased 21.66 percent and 17.66 percent, respectively, during the last five years, compared to the STI’s 4.7 percent total return.
Investors Who Benefit From Dividend Investing
There are various ways we can employ to develop our portfolio when we begin our investing adventure. Dividend investment is a lucrative and vital way to create income for many people.
Individuals in retirement or partial retirement, for example, may require monthly income to cover their living expenditures. Others pursuing FIRE (Financial Independence, Retire Early) may wish to consider diversifying their assets to include income.
Another way to look about income investing is that only well-established corporations with stable cash flows can afford to pay out regular dividends. As a result, when market downturns occur, such businesses may be well positioned to weather the storm.
However, because of their nature, such businesses may not be at the growth stage of their development. This is one reason why STI businesses’ total returns may lag behind those of the Hang Seng Index or the S&P 500 Index.
Even The STI ETFs Do Not Pay The Same Dividend Yield
While the STI pays a 3.6 percent dividend yield, this does not guarantee that we would earn the same income if we invest in a STI ETF. This is because we must invest in either the SPDR STI ETF or the Nikko AM STI ETF, which are the two STI exchange-traded funds (ETFs). The dividend we receive will be different and should be slightly lower due to additional fees and tracking issues.
The distribution yield of the SPDR STI ETF, for example, is 2.61 percent (as at 14 December 2021). While Nikko AM STI ETF does not explicitly indicate this, it should be rather close.
Also see: SPDR STI ETF vs. Nikko AM STI ETF: What’s The Difference Between These Two SGX-Listed STI ETFs?
Stocks On The STI Pay Out Different Dividend Yields
The Straits Times Index (STI) is comprised of 30 of Singapore’s largest and most liquid stocks. As previously said, such businesses often have robust cash flows and can pay out regular dividends, although they may not be high-growth. In addition, the STI includes seven REITs, all of which are known for paying out reasonable payments on a regular basis.
It should also be self-evident that each of the STI’s 30 constituents will pay a distinct distribution yield. Below is a list of the dividends paid by the various stocks on the STI:
*Unless otherwise noted, dividend yield is based on SGX Stock Screener data.
** CapitalandInvest is a new company that has yet to declare its first dividend.
Best-Yield STI Stocks
The five best yielding STI equities, as shown in the table below, are mostly REITs. This isn’t surprising, given REITs’ proclivity for paying out high dividends. They easily outperform the STI’s overall rate of 3.6 percent.
The remaining STI stocks, with the exception of Frasers Logistics & Commercial Trust, all saw their prices fall. DairyFarm International, in reality, has lost roughly a third of its worth. This is a cautionary lesson about not diversifying our investments, and it stands in stark contrast to the STI’s year-to-date total return of 10.4 percent (as at 30 November 2021).
Also see: A Complete Guide To Investing In Singapore’s Straits Times Index (STI) ETFs
Is it possible to lose money in an ETF?
ETFs, for the most part, do exactly what they’re supposed to do: they happily track their indexes and trade near their net asset value. However, if something in the ETF fails, prices can spiral out of control.
It’s not always the ETF’s fault. The Egyptian Stock Exchange was shut down for several weeks during the Arab Spring. The only diversified, publicly traded option to guess on where the Egyptian market would open after things calmed down was through the Market Vectors Egypt ETF (EGPT). Western investors were very positive during the closure, bidding the ETF up considerably from where the market was prior to the revolution. When Egypt reopened, however, the market was essentially flat, and the ETF’s value plunged. Investors were burned, but it wasn’t the ETF’s responsibility.
We’ve seen this happen with ETNs and commodity ETFs when the product has stopped issuing new shares for various reasons. These funds can trade at huge premiums, and if you acquire one at a significant premium, you should expect to lose money when you sell it.
ETFs, on the whole, do what they say they’re going to do, and they do it well. However, to claim that there are no dangers is to deny reality. Make sure you finish your homework.
Are exchange-traded funds (ETFs) safer than stocks?
The gap between a stock and an ETF is comparable to that between a can of soup and an entire supermarket. When you buy a stock, you’re putting your money into a particular firm, such as Apple. When a firm does well, the stock price rises, and the value of your investment rises as well. When is it going to go down? Yipes! When you purchase an ETF (Exchange-Traded Fund), you are purchasing a collection of different stocks (or bonds, etc.). But, more importantly, an ETF is similar to investing in the entire market rather than picking specific “winners” and “losers.”
ETFs, which are the cornerstone of the successful passive investment method, have a few advantages. One advantage is that they can be bought and sold like stocks. Another advantage is that they are less risky than purchasing individual equities. It’s possible that one company’s fortunes can deteriorate, but it’s less likely that the worth of a group of companies will be as variable. It’s much safer to invest in a portfolio of several different types of ETFs, as you’ll still be investing in other areas of the market if one part of the market falls. ETFs also have lower fees than mutual funds and other actively traded products.
How do I get my STI ETF back?
More Investment Services can be found under Invest in the Top Menu. Click Redeem Unit Trust or Exchange Traded Fund under Manage Investments (ETF). Proceed by selecting the Exchange Traded Fund you want to redeem. Check the specifics of your redemption and submit your request.
How do you profit from ETFs?
Because they are operated almost identically, making money with ETFs is essentially the same as making money with mutual funds. The key distinction between the two is that ETFs are actively exchanged at intervals throughout the trading day, whereas mutual funds are only traded at the conclusion.
The trader will keep an eye on ETF price movements and decide when and where to purchase and sell. Using limit or market orders, the trader establishes criteria for their chosen trades.