Nikko AM Singapore STI ETF - Part 1

Rule Number One in Investment - Know What You're Buying

Nikko AM Singapore STI ETF is a traditional exchange-traded fund, meaning it holds stocks in the index that it is tracking. This is opposed to synthetic ETFs. For a quick overview, check out the fact sheet provided on the official website.

Fund Description

The investment objective of the Fund is to replicate as closely as possible, before expenses, the performance of the FTSE Straits Times Index, or upon the Manager giving three (3) months' prior written notice to the Trustee and the Holders, such other index which tracks the performance of Singapore listed equity securities. The FTSE Straits Times Index is compiled and calculated by FTSE International Limited and represents the top 30 companies listed on the SGX-ST ranked by market capitalisation.

Full Holdings

I've reproduced the Full Holdings here, as at 30th November 2012 :

Singapore Telecom 9.3%
DBS Group Holdings Ltd 9.3%
Oversea-Chinese Banking Corp 8.5%
United Overseas Bank Ltd 7.7%
Jardine Matheson Hldgs Ltd 6.7%
Keppel Corp 5.0%
Hong Kong Land Hldgs Ltd 4.8%
Fraser & Neave Ltd 4.7%
CapitaLand Ltd 3.9%
Jardine Strategic Holdings Limited 3.3%
City Development Ltd 2.8%
Wilmar International Ltd 2.8%
Genting Singapore Plc 2.7%
Singapore Exchange Ltd 2.6%
Jardine Cycle & Carriage Ltd 2.4%
Singapore Press Hldgs Ltd 2.3%
Golden Agri-Resources Ltd 2.3%
Global Logistic Properties Ltd 2.2%
Singapore Airlines Ltd 2.2%
ST Engineering 1.9%
Noble Group Ltd 1.9%
CapitaMall Trust 1.8%
Sembcorp Industries Ltd 1.6%
Sembcorp Marine 1.3%
ComfortDelgro Corp Ltd 1.2%
IHH Healthcare Bhd 1.1%
CapitaMalls Asia Ltd 1.0%
Olam Intl 1.0%
Starhub Ltd 0.9%
SIA Engineering Co 0.3%

For S$300+ per lot of 100 units, you get instant diversification by owning all of the above stocks.

Expense Ratio

Expense Ratio is a measure of what it costs to operate the fund. This is important as we would prefer to keep this as low as possible in order to maximize our gains.

Management Fee 0.20% p.a.
Trustee Fee 0.08% p.a

Looking at the fact sheet for Nikko AM Singapore STI ETF, you would think that the expense ratio should have been 0.28%. However, comparing against the prospectus (see Section 36.6), expense ratio is listed as 0.48%.

• Nikko AM Singapore STI ETF Prospectus (see Section 36.6)
  Expense Ratio = 0.48%

Let's compare this versus another STI ETF.

• SPDR Straits Times Index ETF (STI) Prospectus (see Section 39.2)
  Expense Ratio = 0.30%