The Straits Times Index (or STI for short), is Singapore’s benchmark index. It comprises 30 Singapore-listed companies that have the largest market capitalisation.

For those who do not have the time to study the individual Singapore-listed companies, but at the same time want to gain exposure to the Singapore market, investing in the Index is the best option (in my opinion.)

In this post, you’ll find 6 things you need to know about Singapore’s benchmark index to give you a better understanding of it before you invest:

1. List of 30 Companies in the STI

As mentioned in the introductory paragraph, the STI comprises of 30 Singapore-listed companies by market capitalisation.

At the time of writing (on 01 December 2022), the 30 companies in the Index (along with the weightage) is as follows:

Most of us Singaporeans should be familiar with many of the companies in the list above – including Singapore’s 3 banks in DBS, UOB, and OCBC (where most of us have savings accounts, or banking relations with at least one of them), SingTel (most of us are SingTel mobile and/or home internet customers), Singapore Exchange (or SGX, which is Singapore’s sole stock exchange), Genting Singapore (where they own and manage Resorts World Sentosa), Jardine Cycle & Carriage (car brands like Mercedes-Benz, Mitsubishi, Kia, Citroën are carried by the Singapore-listed company), SIA (our National carrier), SATS (food which we consume when we travel from the Singapore airport terminals are prepared by the company), and the list goes on.

2. STI is ‘Heavy’ on the 3 Singapore Banks

The percentage weightage of the 3 Singapore banks (DBS, UOB, and OCBC) adds up to be 43.7% – as the share prices of the 3 banks tend to move in tandem most of the time, their movements (either positively or negatively) will have a direct influence in the movement of the STI.

For those of you who may have concerns about the stability of the 3 banks – not to worry, as they are very well-managed, and at the same time, well-regulated by the Monetary Authority of Singapore (or MAS for short.)

3. 7 Real Estate Investment Trusts (REITs) in the STI

For those of you who are wondering whether or not there are REITs (which are popular with retail investors for their high distribution yields) in the STI, the answer is yes – in fact, there are a total of 7 REITs listed in the STI, as follows:

i. CapitaLand Integrated Commercial Trust (SGX:C38U) – it is the first and largest REIT listed on the Singapore Exchange, with its portfolio comprising 21 properties used for retail and/or office purposes in Singapore, 2 in Frankfurt (Germany), and 3 in Sydney (Australia) as at 31 December 2021. Some of the retail malls in the REIT’s portfolio include Bugis Junction and Plaza Singapura; office properties include Asia Square Tower 2, and CapitaGreen located in the CBD.

ii. CapitaLand Ascendas REIT (SGX:A17U) – it is Singapore’s first and largest-listed business space and industrial REIT. Properties in its portfolio include those for business space and life science, logistics, as well as for industrial and data centre. As at 30 June 2022, the REIT’s portfolio comprises 228 properties located in Singapore (95), Australia (36), United States (48), United Kingdom/Europe (49).

iii. Mapletree Pan Asia Commercial Trust (SGX:N2IU) – the REIT owns and invests in retail and office properties across 5 key gateway markets of Asia – 5 in Singapore, 1 in Hong Kong, 2 in China, 9 in Japan, and 1 in South Korea. In Singapore, its properties are mostly located in the Harbourfront preccinct, including VivoCity, Mapletree Business City, mTower, Bank of America Harbourfront.

iv. Mapletree Logistics Trust (SGX:M44U) – it is Singapore’s first Asia-focused logistics REIT, whose portfolio comprises of 186 properties in Singapore, Hong Kong, China, Japan, South Korea, Australia, Malaysia, Vietnam, and India as at 30 September 2022.

v. Mapletree Industrial Trust (SGX:ME8U) – as the name implies, the REIT owns and invests in properties for industrial purposes. On top of that, it also owns and invests in properties used for data centre purposes. As at 30 September 2022, the REIT’s portfolio comprises a total of 85 properties in Singapore and 56 properties in North America (including 13 data centres held through the joint venture with Mapletree Investments Pte Ltd.)

vi. Frasers Logistics & Commercial Trust (SGX:BUOU) – the REIT has a portfolio comprising 105 industrial and commercial properties in 5 major developed markets – Australia, Germany, United Kingdom, Singapore (just one property in Alexandra Technopark), and the Netherlands.

vii. Keppel DC REIT (SGX:AJBU) – it is the first pure-play data centre REIT in Asia. As at 30 September 2022, its portfolio comprises a total of 23 data centres in Singapore (6), Australia (2), China (3), Malaysia (1), Germany (2), Ireland (2), Italy (1), The Netherlands (3), The United Kingdom (3).

Personally, I am a unitholder of 6 of the 7 REITs (the only REIT I am currently not invested in is Frasers Logistics & Commercial Trust.) You can check out a list of all the individual Singapore-listed companies I have invested, along with reasons for my investment, here.

4. Investing in the Exchange Traded Fund (ETF) Modelling the STI

While you can’t invest in the STI directly, you can invest in the ETF which models the performance of the STI – you have a choice of investing either in the SPDR Straits Times Index ETF (SGX:ES3), or the Nikko AM STI ETF (SGX:G3B).

For those of you who are wondering what are the differences between the two, if you ask me, they are somewhat the same. The most obvious difference would be they are managed by different fund management firms – with the SPDR STI ETF managed by State Street Global Advisors Singapore Limited, which is one of the largest fund management firms in the world, and the Nikko AM STI ETF managed by Nikko Asset Management Asia Limited, and they are also one of the largest asset managers in Asia.

5. Semi-Annual Dividend Payouts by the STI ETF

Both the SPDR STI ETF, as well as the Nikko AM STI ETF pays out a dividend on a half-yearly basis – for the former, it is usually around February and August, and for the latter, it is usually around January and July.

The respective tables show you the dividend payout by both SPDR & Nikko AM for the STI ETF between 2018 and 2022 (a period of 5 calendar years):

SPDR STI ETF:

NIKKO AM STI ETF:

For those you wondering about the yield of the respective ETFs, based on the current traded price of the SPDR STI STF at S$3.352 (as at mid-day break on 01 December 2022) and the total dividend payout of S$0.112/share in FY2022, it is at 3.3%; for the Nikko AM STI ETF, based on its current traded price of S$3.39 (also as at mid-day break on 01 December 2022), and the total dividend payout of S$0.105/share in FY2022, it is at 3.1%.

6. Minimum Investment Amount

Since 17 January 2022, the minimum number of shares you need to buy for ETFs is just one (down from a minimum of 100.)

As such, if you were to invest in the SPDR STI ETF, it will cost just $3.352, and if you were to invest in the Nikko AM STI ETF, it will cost just $3.39 (prices as at mid-day break on 01 December 2022.)

However, do take note of the brokerage fees (which is different for each brokerage platform), along with other fees including exchange trading and clearing fees you’ll need to make for every buy and sell trades you make.

Closing Thoughts

As I have mentioned in the beginning of this post, for those of you who do not have the time to study the individual companies, the STI is one you can consider – by investing in Singapore’s benchmark index, you’re indirectly investing in 30 of the biggest Singapore-listed companies by market capitalisation. Also, in so doing, you’re getting a certain degree of diversification (meaning you’re not putting all your money into one single company – while it can significantly improve your returns if the company you’re invested in does well, but at the same time, if the company turns sour, then you could risk losing all your hard-earned money.)

The only thing not so ideal about in the Index at this point in time if you ask me would be that the yields (for both the SPDR STI ETF as well as the Nikko AM STI ETF) are not exactly very appealing (personally, I’ll only be interested in investing in a company if the yield is at least 4.0% – otherwise, I’d be better off by putting my money in the CPF, as the yield in CPF Special Account is at 4.0%.) Also, at the present moment, the “risk-free” Singapore Savings Bonds (SSBs) and Treasury Bills (T-Bills) are having higher yields compared to the STI ETF.

However, do take note that compared to the SSBs and T-Bills, after they mature after a certain period, you’ll get back your capital and will not be entitled to further coupon payments (also known as dividends, but for bonds, it is known as coupon payments.) But for the STI ETF, you’ll continue to receive dividend payouts every half a year as long as you remain invested in it – and should the companies in the Index see improved performances and dividend payouts in the future, the dividend payout of the STI ETF should increase as well, and giving you a better yield. Of course, you can choose to invest in it then, but you may not get the same price as what you will be getting if you invest today.

With that, I have come to the end of my share on the STI ETF. I hope the contents above will give you a good understanding of it. Also, do note that this post is by no means a buy or sell call for the ETF. You should always do your own due diligence before you make any investment decisions.

Disclaimer: At the time of writing, I am a shareholder of the following companies – DBS Group Holdings Limited, Overseas-Chinese Banking Corporation, United Overseas Bank Limited, CapitaLand Integrated Commercial Trust, CapitaLand Ascendas REIT, Mapletree Pan Asia Commercial Trust, Mapletree Logistics Trust, Mapletree Industrial Trust, and Keppel DC REIT.