The year 2020 has been a very volatile year in the financial markets. In just the first five months of this year, Singapore’s benchmark Straits Times Index (STI) plunged 32% and then subsequently staged a comeback of nearly 18%.
Depicted in the chart below, the plunge was steep and the ensuing recovery was also relatively sharp. Beyond just that, we can also see that after the initial drop, volatility heightened quite a fair bit.
Despite volatility, it does not mean we should complete stop investing or pull everything we have out of the markets. No one know what will happen in future, and it is only with hindsight that we can observe what would have been the best decisions.
For many new investors, or even more experienced investors who do not wish to constantly monitor one part of their portfolio, exchange traded funds (ETFs) can be a low-cost way to gain diversified exposure in the markets.
In this edition of 4 Stocks This Week we look at the 4 best performing ETFs in YTD 2020.
GLD US$ (SGX: O87)
Also known as SPDR Gold Shares, the objective of this ETF is to reflect the performance of the price of gold bullion, less its expenses. Investors are able to gain access to physical gold without taking physical delivery of gold, handle storage, transaction costs and insurance.
In YTD 2020, GLD US$ is the best performing ETF on SGX, gaining 17.4%. It is also perhaps not so surprising that gold has done well, given that it is typically thought of as a safe-haven asset that investors prefer in times of great uncertainties.
XT S&P 500 -1x US$ (SGX: HD6)
This ETF is listed in its prospectus as Xtrackers S&P 500 Inverse Daily Swap UCITS ETF.
As its name suggests, the main objective of this ETF is to reflect the inverse or opposite performance of the S&P 500. This means that when the price of the S&P 500 rises, this ETF will fall, and vice versa.
Gaining 11.4% in YTD 2020, XT S&P 500 -1 US$ is the second-best performing ETF listed on SGX. It is also not hard to fathom why this is so, as the S&P 500 index has fallen by close to 8.5% in 2020.
As we can also tell, it may not be so straightforward to gain access to such an asset, as such there are typically other things that may become a consideration for such ETFs, including counterparties and fees.
XT SingGovBond SG$ (SGX: KV4)
The Singapore Government Bond UCITs ETF 1C aims to reflect the performance of Singapore dollar (SGD) denominated bonds issued by the government of Singapore, with an exposure across the whole yield curve.
In YTD 2020, the XT SingGovBond SG$ has gained 5.4%. Again, given the heightened uncertainties currently plaguing global markets, high quality bonds may see increased interest. The Singapore government is one of the few remaining government that still retain a triple-A credit rating.
ABF SG Bond ETF (SGX: A35)
The ABF Singapore Bond Index Fund was the first bond ETF in Singapore. It primary objective is to invest in high-quality bonds issued by the Singapore government and quasi-Singapore government entities.
Since the beginning of 2020, the ABF SG Bond ETF has gained 5.2%. Similar to the bond ETF above, one of the main reason of its strength in a volatile market is that the Singapore government has triple-A rated credit standing.
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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.