Best ETFs in Singapore 2019
Singapore is continuously looking like a stable island in the instability rocking the world economy. For most of the months elapsed so far, Europe and the United States have performed dismally in terms of growth. As a result, earnings have been depressed. Subsequently, this makes the stocks and exchange-traded funds (ETFs) take a beating. Interestingly, The Economist predicts a coming recession which it says will be bigger than the last.
Most probably, the recession will come out of the ongoing trade war between the US and China, the two world’s largest economies. This will inadvertently hurt most of other markets across the globe. Interestingly, Singapore still shows promise amid all this madness. Basically, most indexes are doing well in Singapore. Therefore, below are some of the ETFs that an investor could consider when planning to invest in the niche.
Nikko AM Singapore STI ETF
The Straits Times Index (STI) contains thirty of the biggest companies in Singapore Exchange Limited (SGX). The companies are determined based on market capitalisation. Basically, this index depicts the performance of the SGX with focus on the stocks of the 30 best companies. The STI ETF is fundamentally an equities index.
Therefore, there is an ETF that mimics the performance of the STI. The ETF is called STI ETF. Basically, this is an ETF that tracks the performance of the STI index. Therefore, their profitability or loss depends on the performance of the 30 companies under focus by the STI.
According to SGX, the STI ETF is the best performing so far. With a volume of a little under 1 million, the ETF is the most popular in Singapore. Additionally, the ETF has posted impressive numbers for the better part of 2018. As at October 12, 2018, the ETF was going at an asking price of S$3.12. Also, the investment represents a good amount of dividend which is almost assured.
Another impressive metric is the fact that most of business is coming to Singapore. Like aforementioned, the US and China are locked in a vicious trade war that is crippling the business environment in the regions. Naturally, investors and businesses are looking for the most stable markets to put their money. Singapore comes as the natural choice. Subsequently, this makes the STI ETF the most recommended for 2019.
ABF Singapore Bond Index Fund
In the third quarter of 2018, Singapore’s economy grew by 2.6%. This was a better performance than what economists expected. In this light, The Strait Times reports that most of the economists are now raising the Q4 forecasts of the economy’s performance. As per the Ministry of Trade and Industry (MTI), the growth slowed down but performed better than expected, The Strait Times adds.
The 2.6% performance is against 4.6% and 4.1% for Q1 and Q2 respectively. Further, the news outlet adds that the 2019 performance is now “far from downbeat.” Interestingly, DBS Bank has raised its expected growth of the Singaporean economy from 2.7% to 3%. By and large, the economy is predicted to post rosy numbers in the coming year. As a result, the performance of the bond ETF is seen to be firming up.
As a testimony, data on sgx.com indicates that the ABF Singapore Bond Index Fund is the second best performing ETF on the exchange. This indicates that investors already have faith in the bonds of Singapore. Therefore, the Bond ETF becomes another best buy for the coming year.
Phillip SGX APAC Dividend Leaders REIT ETF
This is yet another product that is new in the market. However, the ETF exhibits a lot of promise, if the recent data is anything to go by. Apparently, the real estate sector in Singapore has seen recent slowdowns in construction and demand for real estate space. However, it is estimated that the economy as a whole is going to experience higher growth in Q4 of 2018, and Q1 of 2019. Clearly, this implies a sector-specific growth which will spill over to all critical sectors of the economy; real estate being one of them.
Poems.com lists some important features and benefits of this ETF. Important among them is the attractive and stable income that is almost guaranteed. Although it may be performing below expectations at the moment, the general growth in the economy will definitely stimulate some positive numbers for the ETF. Therefore, this is a good place especially for an investor who is after value investing.
Nikko AM SGD Investment Grade Corporate Bond ETF
Most of corporations in Singapore are doing well in terms of income. This is also partly due to the favourable business environment in the country. Normally, corporate bonds follow the performance of the companies. As a result, the long-term earnings of the corporations are guaranteed. Another advantage of corporate bonds is that they are transacted over the counter.
A good case in point is the Nikko AM SGD Investment Grade Corporate Bond ETF mimics the performance of iBoxx SGD Non-Sovereigns Large Cap Investment Grade Index. Essentially, this index brings together the corporate bonds of the companies with large market capitalizations within Singapore.
Considering that most companies, including DBS Group Holdings and Venture Capital are expected to perform well in the coming year, it follows that the index will perform well. As a result, the Corporate Bond ETF will also be a very good bet for that period.
Basically, the ETFs aforementioned are dependent on the performance of the country’s economy. Fortunately, most estimates put the numbers in the positive zone as opposed to this year’s performance. Additionally, most companies in Singapore are adopting emerging technologies at a very high rate.
Given the place and importance of such technologies as Artificial Intelligence and Blockchain, it is expected that the technologies will grow the economy further. Therefore, it is obvious that there are other ETFs that may present good investment opportunities as days go by. However, the above-mentioned represent a diversified portfolio that shields the investor from unforeseen downturns in one or two sectors of the economy.