If you have been investing in the Singapore Exchange (SGX) for a while, you would be familiar with Nikko Asset Management, also known as Nikko AM. This is because NikkoAM is one of two companies that offer an ETF that tracks the Straits Times Index (STI). Nikko AM is an asset management firm that offers various investment solutions, including mutual funds and ETFs.
In this week’s edition of 4 Stocks This Week, we look at 4 ETFs offered by Nikko AM that are listed on the SGX.
Nikko AM STI ETF (SGX: G3B)
The Nikko AM STI STF (SGX: G3B) is likely the most known ETF among Singapore investors that Nikko AM offers.
Launched in February 2009, the ETF tracks the Straits Times Index, which comprises the 30 largest and most liquid stocks on the SGX. These include the likes of DBS (17.4%), OCBC (13.9%), UOB (11.1%), Singtel (6.1%) and Jardine Matheson (6.0%).
Since its inception, the Nikko AM STI ETF has delivered a return of about 8.8% p.a., assuming that dividends and distributions were reinvested. During the same period, the STI delivered a return of 9.5% p.a. For Nikko AM ETI ETF, the management fee is 0.20% while trustee fees can be up to 0.045%.
However, it’s worth noting that over the past 3 years, returns for the ETF are at – 0.45% p.a. while over the past 5 years, returns are at 5.87% p.a.
With the financial sector comprising about 45% of the ETF and the real estate industry comprising about 22% of the ETF, you will be largely exposed to these two sectors if you choose to invest in the ETF.
ABF Singapore Bond Index Fund (SGX: A35)
Launched in August 2005, the ABF Singapore Bond Index Fund (SGX: A35) is an ETF that invests in various bonds offered by the Singapore government. As of April 2021, 89% of assets held by the ETF are bonds issued by the Government of Singapore. The remaining 11% are bonds issued by quasi-government entities like LTA, HDB and Temasek.
Investing in this ETF is as safe as they come by. With different bonds having different maturity, it also makes the ETF less sensitive to interest rate changes as opposed to just investing in 1-2 individual bonds that are issued by the Singapore government. Not surprisingly, the average rating of bonds within its portfolio is AAA.
Since its inception, the ETF has generated a return of about 2.66% p.a. Management fees are 0.15% p.a. with trustee fees of up to 0.045%.
NikkoAM SGD Investment Grade Corporate Bond ETF (SGX: MBH)
Suppose you want to earn higher returns than what government bonds are giving but only want to invest only in established companies with strong cash flow, you can consider investing in the NikkoAM SGD Investment Grade Corporate Bond ETF (SGX: MBH).
Launched in August 2018, the NikkoAM SGD Investment Grade Corporate Bond ETF tracks the iBoxx SGD Non-Sovereigns Large Cap Investment Grade Index. Bonds that the ETF invests in include NTUC Income, DBS, OCBC, UOB and Aviva Singlife Holdings. The average rating of bonds within its portfolio is A.
Since its inception in August 2018, the ETF has generated an annualised return of 3.69%. Management fees are 0.15% p.a. with trustee fees at 0.02%.
Nikko AM-Straits Trading Asia ex-Japan REITs ETF (SGX: CFA)
Singaporeans love properties and this makes the SGX a haven for many real estate investment trusts (REITs). Not surprisingly, we also have REITs ETFs that allow investors to gain exposure to a diversified portfolio of REITs via a single ETF investment.
Launched in March 2017, the Nikko AM-Straits Trading Asia ex-Japan REITs ETF (SGX: CFA) is an ETF that invests in REITs across the region including Singapore, Hong Kong, Malaysia and India. However, do note that most of its investments are in Singapore REITs (about 76%) followed by Hong Kong (about 17%) and Malaysia (about 4%).
As such, it comes as no surprise the ETF has significant holdings in recognisable Singapore REITs such as Ascendas REITs (10.3%), Capitaland Integrated Commercial Trust (9.8%), and the trio of Mapletree Logistics (7.7%), Commercial (6.5%) and Industrial (6.2%) trusts.
Since its inception, returns are at about 7.47% p.a. Management fees are 0.50% p.a. with trustee fees of up to 0.04%.
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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.