STI ETF vs MSCI Singapore ETF

SPDR vs iShares

12 Sep STI ETF vs MSCI Singapore ETF

Retail investors should be familiar with FTSE Straits Times Index (STI) while futures traders would prefer MSCI Singapore (SIMSCI). The purpose of these two indices is to provide a measurement of investment returns by selecting a basket of stocks listed on the Singapore Stock Exchange. The STI was constructed by Singapore Press Holdings and FTSE has refine the calculation with her methodology in recent years, MSCI is American while FTSE is British. Maybe because of Singapore’s British colony heritage that we chose to go with FTSE.

What is the difference?

I scoured through the methodologies briefly and found little differences in them. Both combined the elements of market capitalisation and liquidity (or transaction volume) to decide the stocks and their weightage in the indices.

After scoring the Singapore stock universe, both indices came up with 30 constituents, and 25 of them are similar. See the constituents and the respective weightage in the table.

Click Here For A Comprehensive Guide To the STI ETF

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MSCI vs STI Constituents

 

Which one to invest in?

Besides the popular SPDR and Nikko AM STI ETF, iShares MSCI Singapore ETF is also listed in SGX. Retail investors are able to invest in either indices. iShares MSCI Singapore ETF is also listed in New York Stock Exchange.

Most importantly, what are the returns? For the period of 31 Aug 2003 to 31 Aug 2013 (10-year), the annual returns inclusive of dividends are

  • SPDR STI ETF: 9.92%
  • iShares MSCI Singapore ETF: 12.97%

A first look tells us that iShares MSCI Singapore ETF has given an additional 3% annual returns in comparison to SPDR STI ETF! But do not be too happy yet. The iShares MSCI Singapore ETF is quoted in USD. If we convert to SGD, the returns will definitely reduce by a few percent since USD has devalued for so many years.

In addition, the cost of iShares MSCI Singapore is 0.55% while SPDR STI ETF is 0.3% per annum. Choosing a lower cost fund always makes more sense to your pocket.

Hence, if you ask me, I will prefer to stick to SPDR STI ETF. If I am an American, I may consider iShares MSCI Singapore ETF if I want exposure to Singapore equity market.



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2 Comments
  • ryan
    Posted at 14:21h, 12 September Reply

    Thanks Alvin!

  • Cory
    Posted at 10:53h, 14 September Reply

    I do an estimated compounding across the 10 years and Capital Growths t is about 6.5% for STI Index before dividends. And we are measuring the Index from bottom of trough to the highs. Seems like marketing timing is crucial for Capital Gains.

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