Investing our money to grow and beat inflation over the long-term is important to building our wealth and safeguarding our retirement. However, starting the investing journey can be daunting and filled with uncertainties.
This is why the STI ETF can be an introduction to start learning about investments and building your confidence. In this guide, you will find everything you need to know about investing in the STI ETF.
What Is The Straits Times Index (STI)?
What Are The 30 Constituent Stocks That Make Up The STI Today?
How To Start Investing In The STI ETF?
Read Also: Why Your First Stock Investment Should Be The STI ETF
What Is The Straits Times Index (STI)?
UK-based FTSE Group, Singapore Press Holdings and the Singapore Exchange (SGX) jointly created the FTSE ST Index Series. In the series, the Straits Times Index (STI) serves as the benchmark index for Singapore’s stock market.
The Straits Times Index is made up of the 30 largest and most liquid blue chip companies listed on the Singapore Exchange (SGX), which accounts for close to 80% of the total value of all listed companies on SGX.
The 30 companies on the STI aren’t always the same either. FTSE carries out quarterly reviews of the STI constituents, in March, June, September and December, and may remove or insert companies into the STI, based on its defined rules. This is how country indexes renew itself, and ensure they remain relevant.
The STI is an index, which is calculated from the performance of individual stocks. As such, we cannot “buy the STI”. Those who wish to gain exposure to the performance of the STI can buy into one of the two Exchange Traded Fund (ETF) that replicates the performance of the STI. The two ETFs are the SPDR STI ETF and the NikkoAM Singapore STI ETF.
Start Investing With Interactive Brokers (IBKR) :
Interactive Brokers (IBKR) charges one of the most competitive brokerage commissions and offers one of the most extensive lists of investment markets and products for Singapore investors.
What Are The 30 Constituent Stocks That Make Up The STI Today?
At the STI comprises the 30 largest and most liquid stocks in Singapore, it is always a snapshot of Singapore’s market. It contains many household names you’ll be familiar with and even interact with on a daily basis.
| No. | Constituents | Market Cap * | Index Weight (%)** |
| 1 | DBS | $128 billion | 22.78% |
| 2 | OCBC | $78 billion | 15.79% |
| 3 | UOB | $63.0 billion | 11.59% |
| 4 | SingTel | $56.3 billion | 7.24% |
| 5 | CapitaLand Integrated Commercial Trust | $14.2 billion | 3.35% |
| 6 | CapitaLand Ascendas REIT | $11.3 | 3.03% |
| 7 | Jardine Matheson Holdings | US$10.1 billion | 2.94% |
| 8 | Singapore Airlines | $19.0 billion | 2.79% |
| 9 | SGX | $14.4 billion | 2.79% |
| 10 | Keppel Corporation | $12.4 billion | 2.73% |
| 11 | CapitaLand Investment | $12.5 billion | 2.12% |
| 12 | ST Engineering | $15.5 billion | 2.11% |
| 13 | Wilmar | $20.5 billion | 1.98% |
| 14 | Yangzijiang Shipbuilding | $12.1 billion | 1.85% |
| 15 | HongkongLand | US$9.2 billion | 1.53% |
| 16 | Genting Singapore | $9.1 billion | 1.51% |
| 17 | SembCorp Industries | $9.5 billion | 1.49% |
| 18 | Mapletree Logistics Trust | $6.2 billion | 1.45% |
| 19 | Mapletree Industrial Trust | $5.8 billion | 1.43% |
| 20 | ThaiBev | $12.6 billion | 1.30% |
| 21 | Venture Corporation | $3.7 billion | 1.09% |
| 22 | Seatrium | $8.7 billion | 1.07% |
| 23 | Mapletree Pan Asia Commercial Trust | $6.2 billion | 1.01% |
| 24 | Frasers Logistics & Commercial Trust | $3.3 billion | 0.98% |
| 25 | SATS | $5.0 billion | 0.96% |
| 26 | UOL Group | $4.3 billion | 0.81% |
| 27 | Frasers Centrepoint Trust | $3.8 billion | 0.75% |
| 28 | City Developments | $4.5 billion | 0.73% |
| 29 | Jardine Cycle & Carriage | $10.5 billion | 0.55% |
| 30 | DFI Retail | US$3.1 billion | 0.25% |
* From SGX Stock Screener
** From FTSE Group STI Factsheet
Looking through this list, we can easily see why the STI can be a good place to start our investing journey. Many of these companies are household names we see around the island and regularly use – from DBS, OCBC, UOB, SingTel and SIA, to places we’ve been such as malls (operated by CapitaLand Integrated Commercial Trust and Frasers Centrepoint Trust) and Resorts World Sentosa (Genting Singapore).
Even companies that may be less familiar, such as Sembcorp Industries, Keppel Corp, Seatrium and ThaiBev, own businesses that we should be fairly familiar with, and we just need to do some desktop research to learn more about them.
While there was no change to the constituent list during the latest quarterly review in December 2024, many companies have been removed and inserted into the STI over the years. For example, companies like SPH and ComfortDelGro have been replaced in recent years. Others, such as CapitaLand Mall Trust and CapitaLand Commercial Trust, which were both STI constituents, were merged – creating a slot for a new entry
STI Reserve List: Substitutes Waiting To Come On
Once a stock is removed from the STI, there is a reserve list of five stocks that will be inserted to take its place. Currently, the five stocks on the STI reserve list are:
- CapitaLand Ascott Trust
- ComfortDelGro
- Keppel DC REIT
- Keppel REIT
- Suntec REIT
You can refer to the most updated list of the STI Constituents here.
What Is An ETF?
An Exchange Traded Fund (ETF) is a fund that seeks to passively mimic the performance of the index it is tracking, like the STI. The ETF manager’s job is not to make active investments to grow your investment returns, but to diligently ensure that the ETF continues to represent the index as closely as possible by performing rebalancing and other tasks.
Since ETFs do not attempt to do active trading to try to beat the market, fees for ETFs are lower than traditional mutual funds, also known as unit trusts. Because ETFs are traded on the stock market, you can also buy or sell them any time.
In trying to replicate the performance of the index, the ETF will typically have a tracking error. This is mainly due to the following reasons:
- Transaction costs to buy and sell constituent stocks when they are deleted or inserted into the index
- Bid-Ask spread incurred when making the transactions
- ETF management fees and related costs (while this is not a tracking error, it will lower the return of your investment in an ETF)
Read Also: Why It Makes Sense For You To Invest In ETFs
What Is The STI ETF?
There are currently two ETFs that track the performance of the STI:
#1 SPDR Straits Times Index ETF (SGX: ES3)
#2 Nikko AM Singapore STI ETF (SGX: G3B)
Read Also: Here’s Why We Think Your First Stock Investment Should Be The STI ETF
As their names suggest, the difference is that they are managed by two different companies – SPDR and Nikko AM. In essence, they both seek to do the same thing, and should give similar returns. You can refer to the fund fact sheets for both ETFs from SPDR and Nikko AM for more information.
The key difference will lie in how well they track the STI and the fees they charge. Since an ETF’s job is to track the performance of their chosen index closely, any deviation, even “positive” ones should be a sign of concern that the ETF isn’t doing an accurate job.
Just like the STI, these ETFs are market-weighted, so value of stocks they hold is in proportion to the capitalisation (total market value) of the company. As years go by and stocks on STI are reviewed, added or removed from the index, these STI ETFs will similarly track the changes by buying and selling the respective stocks.
Read Also: SPDR STI ETF VS Nikko AM STI ETF: What’s The Difference Between The 2 STI ETFs Listed On SGX?
How To Start Investing In The STI ETF?
There are 3 main ways for Singaporeans to invest in a STI ETF:
Method 1: Invest In A STI ETF Through A Brokerage
Since both the SPDR and Nikko AM ETFs are traded on SGX, you can simply invest by buying it through a stock brokerage the same way you would buy an individual stock.
For those who have not invested in stocks before, we have written a step-by-step guide to buying your first stock, and also compiled a comprehensive list of the online stock brokerages in Singapore and their fees.
Start Investing With Interactive Brokers (IBKR) :
Interactive Brokers (IBKR) charges one of the most competitive brokerage commissions and offers one of the most extensive lists of investment markets and products for Singapore investors.
Method 2: Invest Using Regular Shares Savings (Monthly Investment Plan)
Regular Shares Savings (RSS) plans, also known as monthly investment plans, is another good way to invest into a STI ETF over time, with starting capital of as little as $100 a month.
There are four financial institutions that offer RSS plans: FSMOne ETF Regular Savings Plan, OCBC Blue Chip Investment Plan, Phillip Share Builders Plan and POSB Invest-Saver. You can also set up your own monthly investment plan with other brokerages such as IBKR to invest in counters, such as the STI ETFs.
Benefits of this approach are simplicity (you set up an RSS plan online or at an ATM), recurring nature and the fact that it allows you to practise dollar-cost averaging implicitly.
Read Also: Step-By-Step Guide To Investing Using Regular Shares Savings (RSS) Plan
Method 3: Invest Using CPF Investment Scheme
You can also use your CPF Ordinary Account to invest in a STI ETF. It is one of the four approved ETFs that can be invested under the CPF Investment Scheme (CPFIS). To do so, you need to apply a CPFIS scheme account with one of the local banks and link it up with your brokerage account.
The process of buying the STI ETF using CPF monies is the same as you would do with cash, you just need to indicate on your brokerage platform that you are using CPF to pay for the shares. You can invest as much as you like after the first $20,000 in your CPF Ordinary Account.
Read Also: How Do Stocks In Singapore Qualify To Be Listed On The CPFIS
Once we have started investing in the STI ETF, and have built up our knowledge and confidence, we can also invest in individual stocks in Singapore. We can also broaden our investments by looking to invest in US and Hong Kong listed stocks.
Read Also: How Singaporeans Can Start Investing In The US, Hong Kong Or Other Major Overseas Stock Markets
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