Nikko AM Singapore STI ETF: Index Investing in Singapore's Blue-Chip Stocks

As the global economy continuously evolves and financial markets become increasingly complex, investors are increasingly inclined to seek stable investment tools with long-term growth potential. Against this backdrop, exchange-traded funds (ETFs) have garnered widespread attention due to their low cost, high liquidity, and diversified investment portfolios. The Nikko AM Singapore STI ETF, which tracks the Straits Times Index (STI), offers investors a convenient way to invest in Singapore's blue-chip stock market.

Overview of Nikko AM Singapore STI ETF
The Nikko AM Singapore STI ETF is an open-ended listed unit trust that aims to replicate the performance of the STI as closely as possible before fees. The STI is a globally recognized benchmark index of the Singapore stock market, comprising the 30 largest listed companies by market capitalization, covering various sectors from banking and telecommunications to real estate and consumer goods. The Nikko AM Singapore STI ETF employs a full replication strategy, investing in the constituent stocks of the STI with weights closely aligned with those in the index. This ETF uses a passive replication strategy, aiming to track the index's performance by holding a proportionate portfolio of stocks that constitute the STI.

Correlation between Nikko AM Singapore STI ETF and STI Index
The performance of the Nikko AM Singapore STI ETF is closely correlated with the STI index, as the ETF adopts a full replication strategy, meaning its portfolio assets match the constituent stocks and their weights in the STI index. The STI index, as a representative index of the Singapore stock market, reflects the overall performance of the 30 largest and most liquid listed companies in Singapore. Consequently, the STI index's performance directly affects the net asset value of the Nikko AM Singapore STI ETF.

The constituent companies of the STI index span multiple industries, including but not limited to finance, real estate, telecommunications, consumer goods, and industrials. The performance of these companies, such as revenue, profits, and market share, directly impacts the STI index's fluctuations. For instance, if a financial company within the STI index reports better-than-expected quarterly earnings, this could boost its stock price, thereby driving up the STI index. Conversely, if a constituent company's performance is subpar, it may result in a decline in its stock price, dragging down the STI index's performance.

source：Investing

Data as of June,3 2024

Recent Market Performance and Analysis
According to the latest market data as of May 29, 2024, the net asset value (NAV) of the Nikko AM Singapore STI ETF is SGD 3.4448. The performance of this ETF is closely correlated with the STI index, which is influenced by the performance of its constituent companies and macroeconomic factors.

source：Yahoo
Data as of June,3 2024

Investment Advantages
●High Dividend Yield: Historically, the STI index has a dividend yield ranging from approximately 3% to 5%, offering relatively attractive returns for income-seeking investors.
●Broad Market Coverage: The ETF provides comprehensive exposure to Singapore's top companies across key sectors, including finance, real estate, and telecommunications.
●Low Investment Threshold: Through the ETF, investors can gain exposure to Singapore's blue-chip stocks at a relatively low cost, without the need for individual stock selection or in-depth company research.
●High Liquidity: As a product listed on the Singapore Exchange (SGX), the Nikko AM Singapore STI ETF offers high liquidity, making it easy for investors to buy and sell.

Risk Considerations
While the Nikko AM Singapore STI ETF offers numerous investment advantages, investors should also consider the following risks:
●Market Risk: As with all stock investments, the value of the ETF can decrease due to market volatility.
●Credit Risk: If any of the constituent companies in the STI index face credit issues, it could negatively impact the ETF's performance.
●Liquidity Risk: Although the ETF is listed on the SGX, liquidity risk can still be present, especially during periods of market stress.
The Nikko AM Singapore STI ETF provides investors with a simple, efficient, and cost-effective way to invest in Singapore's blue-chip stock market. By replicating the performance of the STI index, this ETF allows investors to benefit from Singapore's economic growth while diversifying the risk associated with individual stock investments.

How to place a trade on uSMART mobile application：
After logging into the uSMART SG APP, click on the "Search" option in the top right corner of the screen. Enter the ticker code, such as "G3B"or"Nikko AM STI ETF“, to access the details page where you can view trading details and historical trends. Click on "Trade" at the bottom right corner, then select the "Buy/Sell" function. Finally, fill in the trading conditions and submit your order. The following images provide a step-by-step guide:

This diagram is provided for illustrative purposes exclusively

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We have based this article on our internal research and information available to the public from sources we believe to be reliable. While we have taken all reasonable care in preparing this article, we do not represent the information contained in this article is accurate or complete and we accept no responsibility for errors of fact or for any opinion expressed in this article. Opinions, projections and estimates reflect our assessments as of the article date and are subject to change. We have no obligation to notify you or anyone of any such change. You must make your own independent judgment with respect to any matter contained in this article. Neither we or our respective directors, officers or employees will be responsible for any losses or damages which any person may suffer or incur as a result of relying upon anything stated or omitted from this article.

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