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8 Best ETFs in Singapore, How to Invest, and Funds to Choose

best etf singapore
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Do not put all your eggs in one basket. You’ve probably heard this advice when you started your investment journey. This means diversifying your portfolio to spread out risks. And one of the easiest and most affordable ways to diversify your portfolio is investing in ETFs.

An ETF, or exchange traded fund, is a popular investment product that you can use to reach your financial goals. In a nutshell, it is a package of securities from a variety of companies. Some ETFs pay out dividends at regular intervals, making them a good source of passive income.

But how do you start investing in ETFs? Most importantly, what funds should you choose? Below is a comprehensive list of the best ETFs in Singapore to choose from.

What is an ETF? 

ETF is an investment fund that tracks a collection of assets or a specific grouping of securities, represented by an index. This allows investors to invest in a basket of securities without hand-picking and purchasing each one individually.

Still confused?

Let’s say you want to buy stocks or shares in companies in Singapore. But with hundreds of companies listed on the Singapore stock exchange, how can you possibly choose the best one?

That’s where ETFs become beneficial. Instead of choosing only one company, you can start investing in an asset class by buying index fund ETFs – not individual stocks. The securities in the index are in the same proportion. 

Why Invest in ETFs? 

Low Barrier to Entry for New Investors

With ETF you can invest in top companies at a lower price and without minimum investment amounts. Since ETFs pool together money from different investors, investing in an ETF allows you to purchase securities, as well as reap its benefits, at a lower capital cost. This option allows new investors to get started even without a lot of investment experience or skills.

Instant Diversification

Diversification lowers your investment risk. With ETFs, you can invest in a basket of stocks, bonds, or other asset classes. This is especially beneficial when you’re not experienced enough in picking stocks and shares.

Passive Approach to Investing

When you invest in exchange traded funds or ETFs, you will not be picking individual stocks yourself. You are simply letting the index dictate which stocks to invest in. Additionally, you don’t have to monitor your investments so closely. This is possible since the index will pick and remove constituent stocks.

High Liquidity

ETFs are traded on the open market. Investors can buy and sell the ETF at any time.

etf analysis

ETF vs Unit Trust Fund

How is ETF different from a unit trust fund?

There are key differences between the two, but the most notable is that you can easily buy and sell ETFs on the stock market while unit trusts are sold through private channels.

Additionally, a unit trust, also known as a mutual fund, is usually professionally managed and costs a lot more than ETFs. Aside from that, you’ll also need to pay an annual management and commission fee of up to 5% that can eat into your possible profits.

ETFs, on the other hand, are passively managed. You can opt to have a fund manager but they charge less than 1%.

  ETF Unit Trust Fund
Buy/Sell Traded on the stock market Sold through private channels
Management Style Passively managed Professionally and actively managed
Liquidity Highly liquid as you can buy and sell it like a stock Not very liquid with high fees and limited buying and selling
Asset class composition Constrained to an asset class Can have diversified asset classes
Annual fees Less than 1% 1.5% (median)
Entry fees If purchased through a broker, S$10-S$20 per trade 3.0-5.0%


8 Best ETFs in Singapore To Invest in 2022

ETF in Singapore What it Tracks Expense Ratio
SPDR STI ETF Top 30 companies on SGX 0.30%
Nikko AM STI ETF Top 30 companies on SGX 0.30%
Lion-OCBC Securities Hang Seng Tech US$ Top 30 tech companies on HKEX 0.45%
Principal ASEAN40 FTSE/ASEAN 40 Index 0.83%
SPDR Gold Shares ETF Price of gold bullion 0.40%
SPDR S&P 500 ETF S&P500 0.09%
NikkoAM-StraitsTrading Asia ex Japan REIT ETF Fast growing Asian REITs (excluding Japan) 0.60%
ABF Singapore Bond Index Fund Singapore government + quasi-government bods 0.54%


1. SPDR STI ETF (SGX: ES3) – Best for Low Cost, Long-Term Investment

The STI, or Straits Times Index is Singapore’s first locally created ETF. It tracks the top 30 companies on SGX, such as DBS Group, Singtel, and CapitaLand. It indirectly tracks Singapore’s economy as well. 

Since STI is typically used as a benchmark for the overall Singapore economy, investing in SPDR STI ETF is similar to investing in the future of Singapore.

SPDR STI ETF has been around since 2002 with an expense ratio of 0.3%, it is reasonably low-cost with an attractive long-term potential. 

Why Invest in SPDR STI ETF?

SPDR STI ETFs are one of the most popular investment products in Singapore. This ETF allows investors to gain diversified exposure to the leading companies in Singapore. That said, it is a long-term investment that’s low risk and low cost. It’s a good option for beginners, especially if you want to safeguard your savings from the effects of inflation.

2. Nikko AM STI ETF (SG: G3B) – Best for Mid- to Long-Term Capital Gains

The Nikko AM STI ETF is another fund that tracks the Straits Times Index. It was established in 2009 and has a smaller fund size than SPDR STI ETF. However, the objective and underlying assets are the same as SPDR STI ETF as it also tracks the top 30 companies in Singapore.

It also has an expense ratio of 0.3%. Lastly, the Nikko AM STI ETF has a lower tracking error than SPDR, but both errors are negligible.

Why Invest in Nikko AM STI ETF?

One of the key reasons why Nikko AM STI ETF is an attractive fund is because it offers a higher dividend yield for its investor compared to SPDR.

In 2020, investors of Nikko AM received S$0.1268 per share compared to the S$0.115 per share of SPDR.

3. Lion-OCBC Securities Hang Seng Tech US$ (SGX: HSS) – Best for Young Investors Who Wants Growth

The Lion-OCBC Securities Hang Seng Tech US$ replicates the performance of the Hang Seng TECH Index – listed on the Hong Kong Stock Exchange (HKEX). They track the top 30 companies on HKEX, including Huawei and Oppo, Tencent, Xiaomi, and more. It was listed on the Singapore Stock Exchange in December 2020 in both SGD and USD.

Why Invest in Lion-OCBC Securities Hang Seng Tech US$?

If you’re interested in investing in the technology sector, then the Lion-OCBC Securities Hang Seng Tech US$ is a good option. With this ETF, you can capture the potential growth of the top 30 Tech-themed companies on HKEX. This allows investors to have a diversified portfolio across different companies from Alibaba to ZTE.

It has a low minimum investment amount (invest with less than S$20) and you can trade in SGD or USD. This ETF also has a trading lot side of just 10 units and its expense ratio is also affordable at 0.45%.

4. Principal ASEAN40 (SGXL QS0) – Best for Diversifying Investment Across Top Performance In Different Regions

The Principal ASEAN40 was formerly known as CIMB FTSE ASEAN 40. This ETF tracks the performance of the top ASEAN companies which makes it an attractive option. The fund launched in five markets – Malaysia, Singapore, Thailand, Philippines, and Indonesia.

Why Invest in Principal ASEAN40?

The Principal ASEAN40 replicates the performance of the FTSE/ASEAN 40 Index, before expenses. Since it allows investors to invest in the best companies across ASEAN nations, it offers a higher level of diversification.

5. SPDR Gold Shares ETF (SGX: 087) – Best for Earning Returns From Gold, Rather Than Stocks

The SPDR Gold Shares ETF tracks the price of gold bullion in the over-the-counter market. This fund offers investors a relatively cost-efficient and secure way to access the gold market. This means you can dip your toes in the gold bullion market without the need to take physical delivery of gold.

SPDR Gold Shares was originally listed on the New York Stock Exchange in November of 2004. Today, this fund is also traded on the SGX, Tokyo Stock Exchange, and Hong Kong Stock Exchange.

Why Invest in SPDR Gold Shares ETF?

If you’re worried about stock market crashes, you may want to consider investing in gold bullion. The SPDR Gold Shares is a gold ETF in Singapore and it tracks the price of gold.

The cost of buying, insuring, and storing physical gold can be costly for individual investors. That’s why investing in gold ETFs can be a cost-efficient alternative to buying and owning gold bullion. 

With this fund, you can buy gold in more affordable units without needing to worry about keeping physical gold bars and coins safe. Plus, ETFs are very liquid, easy to buy and sell throughout the trading day.

The expense ratio for SPDR Gold Shares ETF is 0.4%.

6. SPDR S&P 500 ETF (SGX: S27) – Best for Investing in the 500 Best US Companies

The SPDR S&P 500 ETF tracks the Standard & Poor’s 500 index and is consistently one of the highest-volume trading vehicles on U.S. exchanges. With this fund, investors can invest in the 500 best-performing companies on the US Stock Exchange which represents 80% of the entire American economy.

Why Invest in SPDR S&P 500 ETF?

The SPDR S&P 500 ETF allows investors to invest in a wide range of large U.S. companies with a single purchase. That said, you can invest in some of the most successful companies even with a small budget. On top of that, the fund also has an exceedingly low expense ratio of 0.03%.

7. NikkoAM-StraitsTrading Asia ex Japan REIT ETF (SGX: CFA) – Best For Asian Real Estate Investments

The NikkoAM-StraitsTrading Asia ex Japan REIT ETF aims to replicate the FTSE EPRA Nareit Asia ex Japan REITs 10% Capped Price Index. This Index is designed to represent trends in real estate investment products in Asia, excluding Japan. As of 29 October 2021, it consists of 43 REITs.

Why Invest in NikkoAM- STC Asia REIT?

When you invest in NikkoAM- STC Asia REIT, you can participate in Asia’s fast-growing real estate market. You will be investing in the highest-performing Asian real estate equities. This ETF offers investors sustainable income and long-term capital growth.

Best of all, the Asia REITS (excluding Japan) provides one of the highest yields across the region. The top REITs that are currently in NikkoAM- STC Asia REIT include CapitaLand Mall, Ascendas REIT, Mapletree, Suntec, Parkway Life, and more.

The expense ratio for this ETF is 0.6%.

8. ABF Singapore Bond Index Fund (SGX: A35) – Best for Risk-Averse Beginner Investors

The ABF Singapore Bond Index Fund is one of the earliest ETFs listed on the Singapore Exchange. It was first launched on 31 August 2005 and has since grown significantly. With this ETF, investors can buy a basket of high-profile government and government-linked bonds, such as HDB, LTA, and Temasek Holdings.

Why Invest in ABF SG Bond Index?

Although the returns are not incredible, the ABF Singapore bond index offers the safest investments, making it ideal for conservative beginner investors. Plus, due to its strong association with Singapore government bonds, it is highly resilient in market volatility. It’s a great option if you’re looking to diversify your portfolio to balance against a potential stock market crash.

The expense ratio for ABF SG Bond Index is 0.25%.

trading graph

How To Invest in ETFs in Singapore?

If you’re a total newbie to investing, ETFs are a great way to get started. This is because you don’t have to do a lot of market research in trying to pick the right stocks or bonds. There are two primary methods to start ETF investments in Singapore:

  • Through a Brokerage Account: This option is good for investors with extra cash. They can invest in ETFs in a lump sum.
  • Through a Regular Savings Plan (RSP): This is a good option for small, recurring investments.

Here’s how to do it:

1. Have a bank account with a local bank

2. Fill up an application form

3. Prepare the supporting documents

4. Set up a recurring contribution and the bank will do the rest

Or

1. Open an account with a licensed brokerage firm and a CPD account

2. Make sure you have sufficient funds in your account

Frequently Asked Questions

What Is the Best ETF To Buy in Singapore?

ETFs are a great choice for investors looking for low-cost investing while enjoying a diversified portfolio. There are plenty of ETFs in Singapore that offer good returns. But just like any investment product, your capital is never guaranteed.

Nonetheless, if you’re risk-averse and would like to dip your toes into ETF investing, you may want to start with SPDR STI ETF since it is reasonably low-cost with an attractive long-term potential.

If you want to protect yourself from potential stock market volatility, you can also consider the SPDR Gold Shares ETF. It is a cost-efficient alternative to buying and owning gold bullion while enjoying the high liquidity of ETFs.

What Is the Most Successful ETF? 

The three most popular ETFs in Singapore with the highest 12M yield are:

  •  iShares Barclays USD Asia High Yield Bond Index ETF (6.6%)
  • Lion-Phillip S-REIT ETF (6.0%)
  • Phillip SING Income ETF (5.2%).

Can I Buy an ETF in Singapore?

Yes, you can purchase an ETF on the open SGX market. To do this, you need to open a brokerage account and a CPD account. With this method, you can purchase a Singapore ETF of your choice at a price you can afford.

Other ways to start investing are through a Regular Savings Plan or through a Robo Advisor.

Ready To Start Exploring ETFs?

By making a single ETF investment, you can gain exposure to different investment assets while diversifying your portfolio. Investing in ETFs in Singapore is one of the most cost-effective options, especially for risk-averse beginner investors. However, just like any other investment, the value of your ETFs will fluctuate. That said, it offers long-term passive investment rather than quick gains.

Key Takeaways: 

  • ETF is an investment fund that tracks a collection of assets or a specific grouping of securities, represented by an index.
  • With ETFs, you can invest in a basket of securities without hand-picking and purchasing each one individually.
  • ETFs are attractive because of their low cost, low barrier to entry, high liquidity, and passive approach to investing.

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