If you’re starting out investing, or even an experienced investor, one of the best options to get exposure to markets is through an exchange-traded fund (ETF).
That’s because ETFs offer multiple benefits. These include factors such as low fees and broad diversification.
Long term, that helps us to grow our wealth in a more sustainable manner. So, it’s worth asking which ETFs are available to investors here in Singapore.
One great thing about the local stock market – the Singapore Exchange (SGX) – is that you can now buy single shares of ETFs.
That’s in contrast to individual companies’ stocks, where you are required to buy 100 shares in so-called “lots”.
So, for those of us with low amounts of capital to put to work, here are two Singapore-listed ETFs (with a focus on local markets) that you can buy with less than S$10.
1. Lion-Phillip S-REIT ETF
One of the best areas to consider investing in the long term is real estate investment trusts (REITs). If you want exposure to Singapore REITs, then the Lion-Phillip S-REIT ETF (SGX: CLR) is a great option.
With assets under management (AUM) of around S$284 million, and an annual expense ratio of 0.6%, it offers investors relatively broad exposure to the Singapore REIT market along with ample liquidity.
In contrast to other REIT ETFs listed in Singapore, the Lion-Phillip S-REIT ETF is 100% focused on Singapore REITs.
The ETF has large Singapore REITs among its top holdings. Its top five holdings are; Mapletree Industrial Trust (SGX: ME8U), Mapletree Pan Asia Commercial Trust (SGX: N2IU), CapitaLand Ascendas REIT (SGX: A17U), Frasers Centrepoint Trust (SGX: J69U), and CapitaLand Integrated Commercial Trust (SGX: C38U).
The ETF pays out dividends to shareholders semi-annually (twice a year) and currently offers invetsors as 12-month forward dividend yield of 5.6%.
With a share price of S$0.862, investors can actually buy nine whole shares of the ETF for less than S$10 right now.
2. SPDR Straits Times Index ETF
Second on the list is an ETF that tracks the well-known local Straits Times Index (STI) and that is the SPDR Straits Times Index ETF (SGX: ES3).
My colleague Billy has previously highlighted why the Straits Times Index is performing better than other major stock market benchmarks so far in 2022.
The ETF has AUM of a sizeable S$1.5 billion while its annual expense ratio comes in at very reasonable 0.3%.
Investors should remember that the STI has a very strong weighting towards financials (i.e., banks) and that is reflected in the makeup of the SPDR Straits Times Index ETF.
As of the 31 August, the top three holdings combined – DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corporation Limited (SGX: O39), and United Overseas Bank Ltd (SGX: U11) – made up 44.55% of the ETF.
The next biggest sector in the ETF is real estate – with a 21.1% weighting – and rounding out the top three is Industrials (with an 8.2% weighting).
Like the Lion-Phillip S-REIT ETF, this ETF also pays out a dividend semi-annually. It’s currently offering investors a 12-month forward dividend yield of 4.0%.
At the current share price of S$3.06, investors can buy three shares of the SPDR Straits Times Index ETF for under S$10.
Slow and steady wins the investing race
For investors who have a long-term time horizon and want to put small amounts of money into the market, ETFs are the perfect vehicle.
Even better is that the local Singapore stock market offers us the chance to do it at low cost while investing in local companies.
With the Lion-Phillip S-REIT ETF and the SPDR Straits Times Index ETF, investors can easily buy shares of two big Singapore ETFs for less than S$10.
Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips doesn’t own shares of any companies mentioned.
