How to Invest in Singapore Equities

In this article, we’ll explore passively managed exchange-traded funds that help you invest in Singapore equities. Singapore is categorized as a developed market by MSCI (MSCI).

Leading the ETF pack for investing in Singapore equities is the iShares MSCI Singapore ETF (EWS). Another option is the iShares MSCI Singapore Small-Cap ETF (EWSS). However, investors should be careful about investing in small-cap stocks of a financial system they don’t know much about. Small-cap stocks are generally more prone to volatility than their large-cap peers.

Another ETF in which Singapore equities form a significant portion is the Global X Southeast Asia ETF (ASEA). Singapore ETFs form 36.5% of the fund’s portfolio. Other ETFs investing in Singapore do not have more than a 13% exposure to Singapore equities. These ETFs are led by the PowerShares S&P International Developed Low Volatility Portfolio (IDLV) and the iShares MSCI Pacific ex Japan ETF (EPP).

More popular ETFs like the iShares MSCI All Country Asia ex-Japan ETF (AAXJ) have a little over 5% of their portfolio invested in Singapore equities. Taiwan Semiconductor Manufacturing (TSM), China Mobile (CHL), and AIA Group (AAGIY) form ~8.1% of AAXJ’s portfolio.

The iShares MSCI Singapore ETF (EWS) was launched in March 1996. It has ~800 million in assets under management and its expense ratio is 0.49%, the cheapest among ETFs with a lion’s share of exposure to Singapore equities.

Given that the nation is a financial hub in Asia, the tilt of the EWS’s portfolio is towards financials stocks. This sector forms 57% of the assets of the ETF. The exposure to this sector is up from 42.3% at the end of 2011. DBS Group Holdings is the largest holding among financials stocks, making up 14% of the entire portfolio.

The industrials and telecommunication services sectors make up ~19% and 14% of the portfolio, respectively.

The consumer staples sector has seen its share of decline from 11.1% of the portfolio in 2011 to 3.8% presently. Meanwhile, the share of telecommunication services has increased from 10.5% in 2010 to 14% presently.

2015 has not been favorable for EHS, which has returned -1.8% year-to-date. However, over a five-year period, the ETF has returned over 41%.

From Singapore, we’ll move to the first of four emerging nations under review, South Korea.