2020 is behind us. As investors, we also leave behind one of the most volatile years in recent stock market history.
Compared to its peers, the Straits Times Index, which comprises of the 30 largest and most liquid blue-chip companies listed on the Singapore Exchange, has been one of the poorest-performing indexes in Asia. Both Exchange Traded Funds (ETFs) that track the STI performance – the SPDR Straits Times Index ETF and the Nikko AM Singapore STI ETF – saw a decline of 8.1% and 8.4% respectively in 2020.
This may have given some investors the impression that Singapore-listed ETFs did not perform well in 2020. However, this isn’t true. Many ETFs listed on the Singapore Exchange (SGX) provide investors with exposure to overseas stocks. And when these overseas companies perform well, the ETFs that track them naturally deliver good returns too.
In this week’s edition of 4 Stocks This Week, we looked at the 4 best performing ETFs on the SGX in 2020.
Xtrackers MSCI China UCITS ETF (SGX: LG9/TID)
Available in both USD (SGX: LG9) and SGD (SGX: TID), the Xtrackers MSCI China UCITS ETF invests in large and mid-cap equities that represent about 85% of the Chinese market. Major components within the ETF include Alibaba Group (20%) and Tencent Holdings (15%). Other companies that the ETF also has exposure to are Meituan, China Construction Bank and Baidu.
Since many of the biggest components in this ETF are also technology companies that have done well in 2020, it comes as no surprise that the ETF has delivered a return of about 31.6% for 2020. This makes it the best performing ETF on the SGX in 2020.
United SSE 50 China ETF (SGX: JK8)
Offered by UOB Asset Management, the SSE50 (SGX JK8) is an alternative ETF for Singapore investors looking to gain exposure to China’s stock market. The ETF tracks the SSE 50 index, which consists of the 50 largest and most liquid A-shares listed on the Shanghai Stock Exchange. Companies that are part of this ETF include Kweichow Moutai, Ping An Insurance, China Merchant Banks and Jiangsu Hengrui Medicine.
With a return of 26.9% for 2020, the ETF has performed well in line with the China stock market recovery. The index is traded in SGD so there is no need to worry about foreign currency exchange rate risk.
SPDR Gold Shares (SGX: O87)
The only commodity ETF on the SGX, the SPDR Gold Share ETF (SGX: O87) is a great ETF to consider if you wish to invest in gold without wanting the hassle of having to buy, store and maintain physical gold. The ETF invests in Gold Bullion and its performance is thus tied to gold prices.
Like many other asset classes, gold performed well in 2020, with prices up about 23.6%, from USD 1,527.10 per oz (2 Jan 2020) to USD 1,887.60 (30 Dec 2020). Similarly, the SPDR Gold Share ETF also showed a return of 23.6% for 2020. If you wish to invest in gold in 2021, the SPDR Gold Share ETF is worth considering.
Lyxor MSCI Asia Pacific Ex Japan UCIT ETF (SGX: P60)
Rounding up the top 4 best performing ETFs in Singapore is the Lyxor MSCI Asia Pacific Ex Japan UCIT ETF (SGX: P60) tracks the benchmark index of MSCI Daily Net AC Asia Pacific Ex Japan USD. In turn, the index measures the performance of the equity market of 10 Asia market country indices: China, Hong Kong, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand.
The biggest components of the ETF are essentially some of the biggest companies in Asia. This includes the Alibaba Group (6.53%), Tencent Holdings (5.47%), Taiwan Semiconductor Manufacturing (3.77%), Meituan Dianping – Class B (1.76%) and AIA Group (1.74%).
For 2020, the ETF delivered a return of 20.3% to investors.
Can Your Investments Survive 2021 And Beyond?
While most of us have survived the year, how has your portfolio fared? The financial markets took us and our emotions on a wild roller coaster ride in 2020, leading to some poor decisions like panic selling or missing out on opportunities as fear and uncertainty held them back.
As we step into 2021 amidst a “New Normal”, join the FSM’s flagship event – “What and Where to Invest” held virtually from 9 to 26 January 2021. Be equipped with the right knowledge and skills that will help you invest globally and profitably.
Prepare yourself for the investing years ahead and register now for “What and Where to Invest” virtual conference!
4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.