Investing can seem complicated, especially when trying to decide between different types of Exchange-Traded Funds (ETFs). For young Singaporean professionals who want to grow their wealth but don’t have the time or expertise to dive deep into investment research, finding the right financial product is crucial.
That’s where personalized platforms that simplify financial decision-making come in, helping you make informed, confident decisions about your portfolio.
Two popular ETFs that often come up in investment conversations are the Nikko AM STI ETF and the SPY/VOO ETFs, both of which offer exposure to different markets. But how do you know which one is right for you? Let’s break it down.
What is the Nikko AM STI ETF?
The Nikko AM STI ETF tracks the Straits Times Index (STI), which consists of Singapore’s top 30 largest companies. This means that if you invest in this ETF, you’re putting your money into a basket of well-established companies like DBS, Singtel, and Singapore Airlines.
Photo Credit: Tiger Brokers Singapore
For Singaporean investors, this ETF offers a more localized investment opportunity, making it an attractive choice if you want to support and benefit from the growth of Singapore’s economy.
What is the SPY/VOO ETF?
On the other hand, SPY and VOO are ETFs that track the S&P 500 Index, which includes 500 of the largest companies in the United States, such as Apple, Microsoft, and Amazon. These ETFs are considered to be more diversified globally and are often used by investors who want exposure to the US market.
Photo Credit: The Market Hustle
As the US is home to many of the world’s biggest and most successful companies, these ETFs provide an opportunity to tap into the potential of the global economy.
Comparing the Two ETFs
Here’s a quick comparison of the two to help you decide which one fits your needs.
| Feature | Nikko AM STI ETF | SPY/VOO ETFs (S&P 500) |
| Underlying Index | Straits Times Index (STI) | S&P 500 Index |
| Exposure | Singapore’s largest companies | Large-cap US companies |
| Expense Ratio | 0.30% | 0.03% (VOO), 0.09% (SPY) |
| Dividend Yield | Higher (around 3-4%) | Moderate (around 1.5-2%) |
| Risk Level | Moderate (focused on Singapore) | Higher (global exposure with US market volatility) |
| Liquidity | Moderate (less global interest) | High (widely traded, high global demand) |
| Currency Exposure | SGD (no US dollar exposure) | USD (exposure to the US dollar) |
Conclusion | Which ETF is Better for You?
Nikko AM STI ETF might be the better option for you if:
- You prefer to invest in local companies and want to support Singapore’s economy.
- You are more comfortable with Singapore dollars (SGD) and want to avoid currency risk.
- You’re looking for a slightly higher dividend yield and are okay with a more moderate risk profile.
SPY/VOO ETFs, on the other hand, could be better if:
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- You want exposure to the growth of the US market, which has a more diverse range of large-cap companies.
- You are open to currency risk and are okay with potential short-term volatility in exchange rates.
- You are looking for broader global diversification and are comfortable with a more aggressive approach to investing.