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Old 28-07-2019, 09:25 PM   #1
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Newbie to the Straits Times Index

Hi guys,

I'm thinking of diving into STI ETF later this year. I would like to know how STI, the index itself, is looked at? I suppose it doesn't read as a stock ticker. What does the points mean? And how do we actually track the performance of the index?

Would appreciate if someone can explain or direct me to links. I've tried Googling and apparently my questions are so basic that I couldn't find an answer to t.
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Old 28-07-2019, 10:06 PM   #2
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Hi guys,

I'm thinking of diving into STI ETF later this year. I would like to know how STI, the index itself, is looked at? I suppose it doesn't read as a stock ticker. What does the points mean? And how do we actually track the performance of the index?

Would appreciate if someone can explain or direct me to links. I've tried Googling and apparently my questions are so basic that I couldn't find an answer to t.
https://www.ssga.com/sg/en/individua...-index-etf-es3

you are welcome
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Old 29-07-2019, 06:42 AM   #3
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STI is just a list of 30 biggest SGX listed stocks.

You can read how the index works from here.

https://www.quora.com/How-is-a-stock...dex-calculated
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Old 29-07-2019, 11:54 AM   #4
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Thanks guys.

Since the index have its own constituents, I understand that the index points are affected by the movements of the share price, and that the constituent that has the higher weightage in the index will affect the index points more compared to a constituent that has a low weightage.

My question is, what are these points and how are they tabulated? Is the point a unit-less measurements of is it in dollars?

How does the STIETF calculate the returns for the investors? Based on which numerical data within the index statistics? Assuming the tracking error is 0% for the brevity of explanation.
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Old 29-07-2019, 02:04 PM   #5
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Thanks guys.

Since the index have its own constituents, I understand that the index points are affected by the movements of the share price, and that the constituent that has the higher weightage in the index will affect the index points more compared to a constituent that has a low weightage.

My question is, what are these points and how are they tabulated? Is the point a unit-less measurements of is it in dollars?

How does the STIETF calculate the returns for the investors? Based on which numerical data within the index statistics? Assuming the tracking error is 0% for the brevity of explanation.
IMO, as an average retail investor, you don't really need to know the deep technical stuff behind the index. All you need to know is that the 3 local banks, Singtel, Jardine group of companies, Keppel corp and property companies have significant weightage. So, if you are buying the STI etf over the long-run, you are pretty much investing in the banking and real estate sectors. Makes sense, bcos these are the sectors which Singapore is strong in.
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Old 29-07-2019, 05:05 PM   #6
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https://research.ftserussell.com/pro...d_Rules.pdf?33

knock yourself out

i do agree with DW that there's no need to geek out on the technical aspects of index construction
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Old 29-07-2019, 05:33 PM   #7
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Every month just put some money into ES3 can alrdy.
Every half-yearly got CD.
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Old 29-07-2019, 06:43 PM   #8
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Reconstructing any index is a dark art. I gave up trying long ago.
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Old 29-07-2019, 06:48 PM   #9
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Thanks once again.

Are the dividends paid together with the returns? How are the returns paid out? Is it equivalent of how an interest pays out?
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Old 29-07-2019, 06:59 PM   #10
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Thanks once again.

Are the dividends paid together with the returns? How are the returns paid out? Is it equivalent of how an interest pays out?
You will get your payout in Feb and Aug of each year. Roughly $50-60 for each payout and about $120 per year for 1000 shares. At the current price of $3400 per 1000 shares, that works out to about 120/3400 ~ 3.4% per annum. You know what I read this info from the SSGA website. I don't bother to find out since the payout is gyro to my savings account.
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Old 29-07-2019, 09:08 PM   #11
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Thanks once again.

Are the dividends paid together with the returns? How are the returns paid out? Is it equivalent of how an interest pays out?
Dividends from STI ETF will be paid semi-annually. Those payouts will form your dividends return. FYI there are 2 ETFs tracking the STI on SGX.

https://www.dividends.sg/view/es3
https://www.dividends.sg/view/g3b

When the STI ETF share price appreciates in value, that will be your capital gain once you sell the shares.
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Old 31-07-2019, 02:23 PM   #12
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Thanks guys for your patience and inputs.

I did read up on some articles mainly from MoneySense, Dollar and Sense and also Dr Wealth which they all explained the basics in layman terms. But I still have some questions

Should I be looking at the STI ticker the same way I would look into a regular stock ticker? Do SPDR and Nikko publish their tracking errors or is it tabulated by analyst over a course of few years?

When I’m invested in STIETF, should I focus on the dividends + capital gain of the shares or should I make decisions based on STI chart movements?
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Old 31-07-2019, 03:39 PM   #13
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You are overthinking and making things more complicated for yourself. Just focus on how much you want to set aside monthly to invest, which platform you want to use then go right ahead. For regular etf investing, getting started as soon as possible and having the discipline to invest monthly for several years until retirement should be the focus.

There's really no need to worry about the intricacies of the index and chart movements unless you are going to work in the financial industry.
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Old 01-08-2019, 10:41 AM   #14
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I cannot think of a better way to mitigate risk than doing a monthly contribution to STIETF. No need to over-analyse

The only problem I have is its slow growth and low yield; but that is a different topic
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Old 01-08-2019, 10:52 AM   #15
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Should I be looking at the STI ticker the same way I would look into a regular stock ticker? Do SPDR and Nikko publish their tracking errors or is it tabulated by analyst over a course of few years?

When Im invested in STIETF, should I focus on the dividends + capital gain of the shares or should I make decisions based on STI chart movements?
1) Tracking errors are published by the ETFs providers. A deviation of +- of a couple of basis points shouldn't be a deal breaker considering that you don't have much of a choice of local ETFs to begin with.

2) If your objective is do a Regular Savings Plan and you are contented with average returns of the market, then you shouldn't be making decisions based on the STI chart. If your objective is to make higher returns through market timing, then you shouldn't be buying STI ETF.
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