On this article, I look at the alternatives driving the momentum, assess key dangers that buyers ought to look out for, and share how Singapore investments play a task in my very own portfolio.
What’s driving the STI’s development?
In the event you’re like most Singaporeans, chances are high that an exchange-traded fund (ETF) monitoring the Straits Instances Index (STI) was doubtless your first funding foray into the markets.
It’s native, acquainted to us, and infrequently seen as a protected, slow-and-steady choice to construct our long-term wealth.
However with the STI not too long ago hitting a multi-year excessive, I do know many individuals are questioning: “Ought to I nonetheless purchase in now? Or have I missed the boat?”
To determine this out, we have to first perceive what’s driving the STI ‘s development lately.
Sturdy financial development
A inventory market can typically be seen as a barometer for the nation’s financial system. In 2023, I wrote that buyers eager to experience on Singapore’s financial development can try STI ETFs for his or her portfolio.
That thesis has performed out completely. Singapore’s GDP surged over 50% previously 4 years since COVID hit, and our political stability and diversified financial system proceed to make Singapore a protected haven for companies and buyers.
A strong monetary sector
Due to the rising rate of interest surroundings, web curiosity margins (NIMs) have expanded for our native banks, translating into document income and beneficiant dividends. In reality, for those who’ve held onto Singapore financial institution shares within the final 2 years like I’ve, you’ve most likely smiled at your dividend payouts.
Because the STI is weighted by market capitalisation, the expansion in Singapore’s 3 largest banks has pushed the index larger, and DBS, OCBC and UOB mixed now accounts for barely over 50% of the index as we speak.
Though that may sound overly concentrated, the STI’s tech-lite nature could make it diversification instrument for tech-heavy portfolios.
Help from the Financial Authority of Singapore (MAS)
To revitalise the Singapore market, MAS is pouring $5 billion into efforts to enhance market liquidity, entice listings, and revitalise the SGX. MAS additionally introduced final month that its efforts will embody serving to firms enhance their investor communications, fostering larger investor confidence and higher share value efficiency.
With sturdy authorities help, this can be a long-term catalyst that bodes effectively for anybody investing within the STI as we speak. In my view, barring an financial disaster, I imagine that the overall long-term development is up.
Sturdy, defensive performs
The STI has loads of blue-chip shares which are comparatively resilient in instances of world uncertainty. From REITs to move to telcos, the STI is stuffed with firms offering important companies.
Throughout risky international durations, buyers are inclined to rotate into these “defensive” performs – additional strengthening the STI’s attraction.
Excessive dividend yields
In the event you didn’t already know, based mostly on the common dividend yield throughout the final 10 years, the STI presents one of many highest dividend yields compared with different international market indices.
On the time of writing, the STI ETF (equivalent to ES3 or G3B) nonetheless presents a trailing^ dividend yield of round 4%1 with the potential for capital beneficial properties. That is above the dividend yield of different main indices, such because the Cling Seng Index and the S&P 500 Index. And within the US, dividends have traditionally contributed to roughly a 3rd of complete market returns.
^Word: Trailing dividend yield is the annual dividends paid over the previous 12 months divided by the present share value, exhibiting how a lot revenue you’d earn per greenback invested based mostly on historic payouts.
One other factor to notice is that Singapore dividends are tax-free, whereas US dividends are topic to a 30% withholding tax for international buyers. Whenever you’re investing for the long term, that distinction provides up considerably over time.
A weakening US greenback
The US greenback has fallen greater than 10% previously 12 months on the again of ongoing tariff disputes and rising US debt ranges. In the event you’re a Singapore-based investor, this issues as a result of while you make investments closely in US property, your returns might be affected by forex modifications.
To place issues into perspective, the S&P 500 could have gained 16% in 2025, however the weaker forex meant that Singapore buyers solely obtained single-digit returns2 after changing again to Singapore {dollars}. In distinction, Singapore buyers who went for the STI as a substitute obtained a 22% return with out struggling any forex alternate losses.
In the event you agree with the specialists who imagine that the Singapore greenback may attain parity with the US greenback by 2040, then this makes a powerful case for investing in our native markets.
However…what are the dangers?
After all, no funding is with out danger, and even the STI is not any exception.
Restricted development potential
In comparison with high-growth markets just like the US or China, the STI could appear comparatively conservative. There’s no Apple, NVIDIA or Alibaba equal in our native index, so for those who’re gunning for double-digit annual returns, then you could be disenchanted.
Nevertheless, DBS believes that the STI may nonetheless rise to just about 10,000 factors by 2040 if historic return patterns maintain, as indicated of their Singapore 2040 report right here.
Focus dangers
At time of writing, half of the STI is made up of simply 3 banks. Which means that if the monetary sector takes a success – equivalent to on account of international rate of interest cuts or credit score dangers — buyers could discover their STI portfolio take a heavy hit.
International financial slowdown
Singapore’s financial system is tightly linked to international commerce. As such, a slowdown in China, disruptions in international provide chains, or weaker international demand may negatively impression Singapore’s export-oriented firms.
We could really feel the ripple results, and so could the STI.
So is the STI nonetheless value investing in?
I realized this not too long ago from Amova Asset Administration’s Head of Asian Fairness, Lai Yeu Huan, who identified that “anybody beneath the age of 40 in Singapore has not likely seen a Singapore markets increase. However the older buyers will keep in mind the mid-2000s and mid-Nineties.”
Certainly, within the Nineties, the STI jumped by 59% in 1993 and 78% in 1999. Between 2003 to 2007, the STI grew by greater than 10% each single 12 months. Buyers can try the historic efficiency of the STI right here:
| 12 months | % change in STI |
| 2003 | 31.58% |
| 2004 | 17.09% |
| 2005 | 13.61% |
| 2006 | 27.20% |
| 2007 | 16.63% |
Supply: Yahoo Finance.
The STI was up by 22% final 12 months, and has been steadily climbing to this point in 2026 whereas the S&P 500 has remained flat. With the latest catalysts lined above, I imagine there’s nonetheless extra potential upside for the Singapore equities market to develop additional.
As buyers, we attempt to construct a portfolio that won’t solely develop for us, however permit us to sleep peacefully at evening.
In my view, that’s why many individuals make investments frequently in a powerful basis of market index ETFs, together with that of their very own nation, which they might understand as an anchor. Investing in a basket of diversified shares can assist soften the blow when one explicit inventory takes a success.
In the event you worth stability and also you’re in search of publicity to Singapore’s blue-chip firms whereas getting a dependable stream of passive revenue from dividends, then the STI will nonetheless make sense as we speak. That is particularly so for those who’re nonetheless constructing your core portfolio and investing by way of your CPF/SRS. However for those who’re younger and chasing aggressive development, then the STI may seem much less engaging than its international market counterparts or different growth-oriented investments.
Additionally, don’t overlook the SGD benefit — investing within the STI means you’re not uncovered to international alternate danger. That’s one other layer of stability that’s straightforward to miss.
Personally, investing within the Singapore markets have been a secure supply of development and reassurance for me, and permits me to have peace of thoughts whereas I pursue larger development alternatives within the extra risky US and China markets.
The way to spend money on the STI as we speak
You may experience on the expansion of the STI by shopping for an ETF or a unit belief that tracks it. One widespread possibility is the Amova Singapore STI ETF, which at present manages over $1 billion AUM of buyers’ cash. It’s simply accessible, as you could find it accessible by your brokerage accounts and even use it for investing along with your CPF or SRS funds.
It additionally has a low complete expense ratio (TER), capped at 0.25% p.a.. Which means that for each $100 {dollars} you make investments, your prices are not more than $0.25. This makes the Amova Singapore STI ETF a good way to get publicity whereas maintaining your prices minimal.
Sponsored Message: Advancing Singapore Fairness MarketAmova Asset Administration Asia has been appointed by the Financial Authority of Singapore (MAS) to handle a Singapore fairness portfolio beneath the Fairness Market Growth Programme (EQDP), an initiative to deepen liquidity, strengthen analysis, and increase investor confidence. Constructing on practically 4 many years of management, we stay dedicated to advancing Singapore’s fairness market.
Conclusion
The Amova Singapore STI ETF presents buyers a chance to construct a diversified portfolio of Singapore shares in a easy and low-cost means.
What’s even higher is that they’re now launching a brand new accumulation share class, which makes it good for buyers who need their dividends3 to be mechanically reinvested for them. This may also be eligible for investing along with your CPF funds.
Click on right here to search out out extra!
Disclosure: This put up is delivered to you in collaboration with Amova Asset Administration. All analysis and opinions are that of my very own, and shouldn't be taken as monetary recommendation in your particular scenario(s) as I do know nothing about your particular person monetary circumstances, danger tolerance or funding targets. I extremely advocate that you simply use this as a place to begin to know extra about Amova’s STI ETFs – together with their accumulating and distributing class - which you need to use for money, CPF or SRS investing. You'll want to click on into the respective hyperlinks above to retrieve the fund prospectus and efficiency in order that can assist you resolve whether or not it matches into your funding targets.
Essential Info by Amova Asset Administration Asia Restricted:This doc is solely for informational functions solely as a right given to the particular funding goal, monetary scenario and explicit wants of any particular particular person. It shouldn't be relied upon as monetary recommendation. Any securities talked about herein are for illustration functions solely and shouldn't be construed as a advice for funding. It is best to search recommendation from a monetary adviser earlier than making any funding. Within the occasion that you simply select not to take action, it's best to take into account whether or not the funding chosen is appropriate for you. Investments in funds aren't deposits in, obligations of, or assured or insured by Amova Asset Administration Asia Restricted (“Amova Asia”).
Previous efficiency or any prediction, projection or forecast shouldn't be indicative of future efficiency. The Fund or any underlying fund could use or spend money on monetary spinoff devices. The worth of models and revenue from them could fall or rise. Investments within the Fund are topic to funding dangers, together with the attainable lack of principal quantity invested. It is best to learn the related prospectus (together with the danger warnings) and product highlights sheet of the Fund, which can be found and could also be obtained from appointed distributors of Amova Asia or our web site (https://sg.amova-am.com) earlier than deciding whether or not to spend money on the Fund.
The data contained herein might not be copied, reproduced or redistributed with out the categorical consent of Amova Asia. Whereas cheap care has been taken to make sure the accuracy of the data, Amova Asia doesn't give any guarantee or illustration, both categorical or implied, and expressly disclaims legal responsibility for any errors or omissions. Info could also be topic to vary with out discover. Amova Asia accepts no legal responsibility for any loss, oblique or consequential damages, arising from any use of or reliance on this doc. This commercial has not been reviewed by the Financial Authority of Singapore.
The efficiency of the ETF’s value on the Singapore Alternate Securities Buying and selling Restricted (“SGX-ST”) could also be totally different from the web asset worth per unit of the ETF. The ETF can also be suspended or delisted from the SGX-ST. Itemizing of the models doesn't assure a liquid marketplace for the models. Buyers ought to be aware that the ETF differs from a typical unit belief and models could solely be created or redeemed immediately by a collaborating supplier in giant creation or redemption models.
The Central Provident Fund (“CPF”) Bizarre Account (“OA”) rate of interest is the legislated minimal 2.5% each year, or the 3-month common of main native banks' rates of interest, whichever is larger, reviewed quarterly. The rate of interest for Particular Account (“SA”) is at present 4% each year or the 12-month common yield of 10-year Singapore Authorities Securities plus 1%, whichever is larger, reviewed quarterly. Solely monies in extra of $20,000 in OA and $40,000 in SA might be invested beneath the CPF Funding Scheme (“CPFIS”). Please discuss with the web site of the CPF Board for additional info. Buyers ought to be aware that the relevant rates of interest for the CPF accounts and the phrases of CPFIS could also be diverse by the CPF Board occasionally.
The models of Amova AM Singapore STI ETF aren't in any means sponsored, endorsed, offered or promoted by FTSE Worldwide Restricted ("FTSE"), the London Inventory Alternate Plc (the "Alternate"), The Monetary Instances Restricted ("FT") SPH Information Providers Pte Ltd ("SPH") or Singapore Press Holdings Ltd ("SGP") (collectively, the "Licensor Events") and not one of the Licensor Events make any guarantee or illustration in any respect, expressly or impliedly, both as to the outcomes to be obtained from the usage of the Straits Instances Index ("Index") and/or the determine at which the stated Index stands at any explicit time on any explicit day or in any other case. The Index is compiled and calculated by FTSE. Not one of the Licensor Events shall be beneath any obligation to advise any particular person of any error therein. "FTSE®", "FT-SE®" are commerce marks of the Alternate and the FT and are utilized by FTSE beneath license. "STI" and "Straits Instances Index" are commerce marks of SPH and are utilized by FTSE beneath licence. All mental property rights within the ST index vest in SPH and SGP.
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