In Singapore, we are consistently reminded that we need to do proper financial planning in order to live a dignified life, whether young or old. The easiest, yet most daunting method is through investing.
We are big fans of investing through index-linked exchange traded funds (ETFs). Here is look at some of the top ETFs that every Singaporean should know about.
1. SPDR STI ETF / Nikko AM STI ETF
The most important index for Singaporeans is the Straits Times Index (STI). It consists of the top 30 companies listed on the Singapore Exchange and it is the benchmark index for how well (or how badly) our country stock market is performing.
This index contains household names such as DBS Group Holdings, Singapore Airlines, SingTel, Keppel Corp, Singapore Press Holdings and Comfort Delgro. When you buy into the ETF, you are essentially purchasing ownership into these companies.
There are currently two ETFs that track the STI, namely SPDR STI ETF and Nikko AM STI ETF. There aren’t many differences between these two ETFs with the exception that SDPR STI ETF has been in the market for a much longer time.
2. SDPR S&P
The US Federal Reserve (Fed) has announced in December 2015 that they are increasing interest rates by 0.25% to 0.5%, on the back of a recovering economy and other positive indicators.
With other economies faltering with high debt burden and sluggish growth prospects, the US might seem to be a shining star amongst the rest.
The S&P 500 Index is one of the most liquid and highly traded ETFs in the world. The index consists of world-class companies such as Apple, Microsoft, JP Morgan, Johnson & Johnson, Amazon, Facebook and Berkshire Hathaway Inc.
If you think our local companies are huge, just wait till you see the valuation of some of these US companies.
3. United SSE 50 China ETF
If China is not part of the business news on any day in your local newspapers, then you should consider stopping your subscription because the editors of the newspapers obviously do not know what is important.
Being the second largest economy (some say largest) with the largest population, China is the country that would be setting future demands and trends.
The SSE 50 Index consists of companies that rule the Asian banking, insurance and securities world. These companies are Industrial and Commercial Bank of China, CITIC Securities and Ping An Insurance Group, major powerhouses in Asia.
4. CIMB FTSE ASEAN 40
This would be the broadest index, in terms of country diversity that is on our list. It consists of 40 companies that are located in the Association of Southeast Asia Nations (ASEAN), namely Singapore, Philippines, Thailand, Indonesia and Malaysia.
Within these ASEAN nations, there are more than 600 million people living with multiple languages and religions. There is also a good mix of emerging economies such as the Philippines and Indonesia along with more developed nations such as Singapore and Malaysia.
This index consists of a wide variety of industries and some are as well known as our large conglomerates. They include Petronas Gas (Malaysia), CP ALL (Thailand), SM Investments (Philippines), DBS Group Holding (Singapore) and Unilever Indonesia (Indonesia).
Bonds and Fixed Income