We always say that due to their low cost, failure of active managers to consistently perform well, the STI ETF is the way investors should choose if they want to build wealth in the Singapore context.
I decide to tabulate this data where the annualized returns of the SPDR STI ETF, with dividends reinvested are measured against the Singapore focus unit trust I can find on Fundsupermart.
Annualized 1 Year Result
STI ETF on a 1 year basis was found to be at the bottom half of the unit trusts.
Annualized 3 Year Result
On a 3 year annualized basis, the STI look so bad at the bottom. All the unit trust did better during this period where markets was pretty sanguine.
Annualized 5 Year Result
On a 5 year basis, other than Shenton HIF Dividend Singapore Equity, STI ETF trounced most of the unit trusts. This was a period from 2009 onwards. Perhaps this goes to show what happens when an index is fully invested in the market versus the unit trust, which is likely to be holding larger amounts of cash.
Annualized 10 Year Result
On a 10 year basis, only 4 unit trust have a 10 year history. I was surprised United Singapore Growth Fund, Schroder Singapore Trust, Nikko Shenton Thrift did not have a 10 year history. STI ETF did rather close to JP Morgan and DWS Singapore’s fund despite being in the bottom half.
Some of my conclusion
The problem is that it is rather unsafe to conclude anything from this because the sample size is just too small. When the sample is too small we get more extreme results. Perhaps this is more telling at the 3 year and 5 year result.
On this basis if you are a long term investor, cost doesn’t seem to factor highly here. Perhaps, if you are thinking that, by paying a much higher expense ratio for the unit trusts you should expect a much higher performance, the 3 year result would show it, not the rest of the time period. We also cannot draw a conclusion that cost attribute to poorer performance here.
2 funds look rather good based on hindsight, that is the Aberdeen Singapore Equity and the Shenton HIF Dividend Singapore Equity.
No matter which fund, your wealth would be much better than 10 years ago, 5 years ago, 3 years ago or 1 year ago.