Investors who don’t want to pick stocks have a simple and attractive investment option in the form of index trackers. An index tracker is a fund designed to investors exposure to a basket of stocks that comprises an index. This means investors get the benefits of diversification at (usually) relatively low cost. For tracking the popular Straits Times Index (STI), the lowest cost options are two ETFs traded on the SGX – the SPDR Straits Times Index Fund (SPDR STI) and the Nikko AM Singapore STI Fund. The average total expense ratios (TER) of these two ETFs in the most recent 5 years (to Dec 2017) are 0.30% and 0.37% respectively. All things equal, low TERs mean higher net returns.
A less well known STI tracker is the Singapore Index Fund (SIF). The SIF is not an ETF but a unit trust whose investment objective is to replicate the returns of the