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As Singapore’s economy finally moves on and recovers from Covid-19 (fingers crossed!) it seems fitting to direct our attention to the SPDR STI ETF, or SPDR Straits Times Index ETF, which broadly tracks our country’s economy.
Incidentally, the SPDR STI ETF also celebrates its 20th anniversary this year. It was originally introduced by global investment company State Street Global Advisors and first went live on 11 April 2002.1
Now, if you’ve never heard of State Street Global Advisors and don’t know who or what they are, it’s normal.
Unlike, say, DBS or UOB, State Street Global Advisors doesn’t offer consumer banking or investment services, so it may not be a familiar brand name to retail customers. However, State Street Global Advisors is a behemoth in the asset management industry and one of the pioneers of the exchange-traded fund or ETF! So a lot of modern index investing can be traced back to them.
Their SPDR ETF business has become the world’s third largest ETF provider and their top 3 best-known ETFs can be easily accessed in Singapore.2 If you haven’t already invested in these, we’ll walk through them and explain why you should consider them.
SPDR STI ETF (ES3)
As mentioned above, the STI, or Straits Times Index, tracks the top 30 companies across diverse sectors on the Singapore stock exchange, such as DBS, Singtel and CapitaLand. Looking at the STI, therefore, gives us a broad snapshot of our economy as a whole.
State Street Global Advisors was the first company to turn the Straits Times Index into an ETF, a fund that ordinary investors like you and I can easily trade on the stock market.
Inaugurated in 2002, this investment vehicle is called SPDR STI ETF and goes by the stock ticker ES3. (By the way, SPDR stands for “Standard & Poor’s Depository Receipt” and it’s part of State Street Global Advisors’ ETF naming convention.)
When we invest in the STI ETF, we essentially tag our investment portfolios to Singapore’s economic growth.
And what growth! To date, the SPDR STI ETF has grown by 252.73%. Annualised over its 20-year history, that works out to 6.57% in annual returns.1
The SPDR STI ETF also boasts a massive fund size with S$1.6 billion of assets under management. This huge size explains its low fund management fee (expense ratio) of 0.30% per annum and high liquidity for buyers and sellers. In layperson’s language, that means we investors benefit from low costs and greater flexibility.
SPDR S&P 500 ETF Trust (S27)
Similar to how the SPDR STI ETF tracks the top 30 companies on Singapore’s stock exchange, SPDR also has an ETF tracking the US stock market with the SPDR S&P 500 ETF Trust that mimics the performance of top 500 companies across US stock exchanges.
From an investor’s perspective, the S&P 500 ETF gives you exposure to the world’s largest companies since many top companies trade on the US stock exchange, like Apple, Microsoft and Google.
So, should you invest in the SPDR STI ETF or the SPDR S&P 500 ETF? That’s a false dichotomy. The two ETFs actually complement each other.
With the SPDR STI ETF, Singaporeans enjoy the home ground advantage. But it is good to also own the SPDR S&P 500 ETF as it aims to add regional and sector diversification to your portfolio, spreading your investment risk across hundreds of companies across the globe.
Plus, the SPDR S&P 500 ETF boasts an impressive 10.64% annual return1 on average since its inception in 1993, making it an attractive add-on to your investment portfolio.
Like the SPDR STI ETF, the SPDR S&P 500 ETF enjoys massive economies of scale thanks to its huge fund size of S$560.9 billion assets under management. Currently, its expense ratio is a very slim 0.0945% per annum, which is great news for investors.1
SPDR Gold Shares ETF (O87)
We’ve talked about how the SPDR STI ETF tracks Singapore’s stock market, while the SPDR S&P 500 ETF tracks the US stock market. So far, it’s all stocks.
But as we all know, due to the pandemic, all stock markets are vulnerable to fluctuations and can crash. So simply spreading risk around the stock market, no matter how many companies, isn’t quite enough.
Risk-averse investors should therefore consider adding other asset classes to their portfolios, such as bonds or gold. Such assets have lower correlation with the stock market. So while their returns may not be as spectacular as stocks when markets are robust, they may help keep your portfolio stable during times of volatility.
If you’re interested in investing in gold — the perennial “safe haven” — you don’t necessarily need to own physical gold bars, bullion or jewellery.
State Street Global Advisor also has a popular SPDR Gold Shares ETF which tracks the price of gold. It’s listed on the stock market, so you can buy and sell it as easily as the SPDR STI ETF or SPDR S&P 500 ETF. This also means you can invest in gold in smaller, affordable units, and avoid the security risks of physical gold.
While investors typically buy gold to diversify risk, the investment returns are not too shabby either. Since its inception in 2004, the SPDR Gold Shares ETF has offered a respectable 8.18% annual return on average.1
With S$79.5 billion assets under management, the SPDR Gold Shares ETF offers the same low cost (in the form of a 0.4% expense ratio per annum) and flexibility that we’ve come to expect from State Street Global Advisors’ ETFs.1
Partner with a pioneer
As a pioneer of ETFs around the world, including Singapore’s very own SPDR STI ETF, State Street Global Advisors has the asset management chops befitting its stature.
State Street’s SPDR ETF business, in particular, benefits from decades of experience and robust infrastructure, including an arsenal of financial tools, a savvy team of investment experts and offices around the globe.
But, make no mistake, it’s also an asset management company for the modern era. State Street SPDR regularly publishes analyses and insights on the cutting edge of a rapidly-changing world and continues to innovate solutions covering a broad range of asset classes and investment theme.
Best known in Singapore for pioneering the SPDR STI ETF, State Street Global Advisors has many other top exchange-traded funds under its belt. Consider investing in the SPDR S&P 500 ETF Trust and SPDR Gold Shares ETF today.
Sources:
- State Street Global Advisors, as of March 10, 2022. The returns were calculated on an offer to bid/ single pricing basis on SGD terms (taking into account any subscription and realization fee), with all dividends and distributions reinvested taking into account all charges payable upon reinvestment.
- Bloomberg L.P., December 7, 2021.
Disclosure:
All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone.
Diversification does not ensure a profit or guarantee against loss.
This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
The value of units in the SPDR Straits Times Index ETF (the “Fund”) may fall or rise. Past performance of the Fund is not indicative of future performance. Distributions from the Fund are contingent on dividends paid on underlying investments of the Fund and are not guaranteed. Listing of the Fund on the Singapore Stock Exchange (SGX) does not guarantee a liquid market for the units and the Fund may be delisted from the SGX. The Fund’s Prospectus is available from State Street Global Advisors Singapore Limited or can be downloaded from ssga.com/sg.
The specific securities listed do not represent all of the securities purchased, sold, or recommended for advisory clients. This information should not be considered a recommendation to invest in a particular sector or to buy or sell any security shown. It is not known whether the sectors or securities shown will be profitable in the future.
ETFs trade like stocks, are subject to investment risk and will fluctuate in market value. The value of the investment can go down as well as go up and the return upon the investment will therefore variable. Changes in exchange rates may have an adverse effect on the value, price, or income of an investment. Further there is no guarantee an ETF will achieve its investment objective.
Brokerage commissions and ETF expenses will reduce returns. Commodities and commodity-index linked securities may be affected by changes in overall market movements, changes in interest rates, and other factors such as weather, disease, embargoes, or political and regulatory developments, as well as trading activity of speculators and arbitrageurs in the underlying commodities. Currency exchange rates between the U.S. dollar and non-U.S. currencies may fluctuate significantly over short periods of time and may cause the value of investment to decline. Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs. Diversification does not ensure a profit or guarantee against loss. Investing in commodities entails significant risk and is not appropriate for all investors. Commodities investing entails significant risk as commodity prices can be extremely volatile due to wide range of factors. A few such factors include overall market movements, real or perceived inflationary trends, commodity index volatility, international, economic and political changes, change in interest and currency exchange rates. This document is issued by State Street Global Advisors Asia Limited (“SSGA”).
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent. Investors have no right to request the Trust’s sponsor or SSGA to redeem their shares while the shares are listed.
All information is from SSGA unless otherwise noted and has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
Past performance is not indicative of future performance.
The prospectus in respect of the offer of the units (the “Units”) in the SPDR® Straits Times Index ETF (the “Fund”) is available and may be obtained upon request from State Street Global Advisors Singapore Limited (“SSGA”, Company Registration number: 200002719D, regulated by the Monetary Authority of Singapore). Investors should read the prospectus before deciding whether to acquire Units in the Fund. The value of Units and the income from them may fall as well as rise. Units in the Fund are not obligations of, deposits in, or guaranteed by, SSGA or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Past performance figures are not necessarily indicative of future performance of the Fund. Investors may wish to seek advice from a financial adviser before making a commitment to purchase the Units. In the event that Investors chooses not to seek advice from a financial adviser, he should consider whether the product in question is suitable for him.
The prospectus in respect of the offer of the units (the “Units”) in the SPDR® S&P 500 ETF Trust (the “Fund”) is available and may be obtained upon request from State Street Global Advisors Singapore Limited (“SSGA”, Company Registration number: 200002719D). Investors should read the prospectus before deciding whether to acquire Units in the Fund. The value of Units and the income accruing to such Units may fall or rise. Units in the Fund are not obligations of, deposits in, or guaranteed by, SSGA or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Past performance figures are not necessarily indicative of future performance of the Fund. Investors have no right to request SSGA to redeem their Units while the Units are listed. It is intended that holders of Units may only deal in their Units through trading on the Singapore Exchange Securities Trading Limited (“SGX-ST”) or NYSE Arca Inc. (“NYSE Arca”). Listing of the Units on the SGX-ST or the NYSE Arca does not guarantee a liquid market for the Units. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
The prospectus in respect of the Singapore offer of the shares (the ‘Shares’) in the SPDR Gold Trust (the ‘Trust’) is available and may be obtained upon request from State Street Global Advisors Singapore Limited (“SSGA”) (Co. Reg. No: 200002719D). The value of Shares in the Trust and the income accruing to the Shares, if any, may fall or rise. Investors should read the prospectus of the Trust before deciding whether to purchase Shares. Shares in the Trust are not obligations of, deposits in, or guaranteed by, World Gold Trust Services, LLC, SSGA or any of their affiliates. You may wish to seek advice from a financial adviser before making a commitment to purchase Shares. In the event that you choose not to seek advice from a financial adviser, you should consider whether the Trust is suitable for you. Investors have no right to request the Sponsor to redeem their Shares while the
Shares are listed. It is intended that holders of Shares may only deal in their Shares through trading on the SGX-ST. Listing of the Shares on the SGX-ST does not guarantee a liquid market for the Shares. The Trust’s prospectus may be obtained upon request from State Street Global Advisors Singapore Limited and can be downloaded from the Trust’s website www.spdrgoldshares.com.
Investors have no right to request SSGA to redeem their Units while the Units are listed. It is intended that holders of Units may only deal in their Units through trading on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. The Fund is not in any way sponsored, endorsed, sold or promoted by SPH Data Services Pte Ltd or Singapore Press Holdings Ltd (collectively “SPH”) or FTSE International Limited (“FTSE”). SPH and FTSE bear no liability in connection with the administration, marketing or trading of the Fund. No warranties, representations or guarantees of any kind are made in relation to the Straits Times Index (“Index”) or the Fund by FTSE or SPH. All intellectual property rights in the Index vest with SPH.
The World Gold Council name and logo are a registered trademark and used with the permission of the World Gold Council pursuant to a license agreement. The World Gold Council is not responsible for the content of and is not liable for the use of or reliance on, this material. World Gold Council is an affiliate of the Sponsor of each of GLD and GLDM. GLD® is a registered trademark of World Gold Trust Services, LLC used with the permission of World Gold Trust Services, LLC. “SPDR” is a product of S&P Dow Jones Indices LLC (“SPDJI”),and has been licensed for use by State Street Corporation. Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); SPDR is a trademark of the SPDJI; and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by State Street Corporation. State Street Corporation’s financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of SPDR. Further limitations that could affect investors’ rights may be found in the Trust’s prospectus.
The S&P 500 Index is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by SSGA. Standard & Poor’s®, S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by SSGA. SSGA’s SPDR S&P 500 ETF Trust is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index.