STI ETF

C

crystalnox

Supremacy Member
Joined
Feb 2, 2006
Messages
8,730
Reaction score
2,323
silverbomb said:
Just curious how it works. Often when u view STI For example shows 2575 but the price for ES3 is 2.628 (multiply 100 to figure close to STI figures) so does it actually do matching to index itself nearer to the STI? How far is the lag or time delay to match up? Is that what u call a tracking error?

Posted from PCWX using SM-G965F
Click to expand...
They aren't related at all, it's just a coincidence that their numbers are close. STI go up by 3%, ES3/G3B goes up by 3% and vice versa. The index funds are not tracking the absolute values but rather, the movement of STI.
 
silverbomb

silverbomb

Master Member
Joined
Jul 23, 2008
Messages
3,945
Reaction score
693
highsulphur said:
The difference should be the accrued dividend. Come ex div, you should see the price converged to STI level divide by 100
Click to expand...

crystalnox said:
They aren't related at all, it's just a coincidence that their numbers are close. STI go up by 3%, ES3/G3B goes up by 3% and vice versa. The index funds are not tracking the absolute values but rather, the movement of STI.
Click to expand...

Thanks both replies.

But it seems contradicting. If one works like dividend theory (price gradual increase till ex div, and drops upon div payout) while another strictly follows movement of STI (go up 3%, same goes 3%), which is the better way to explain the corelation between STI and ES3?

Posted from PCWX using SM-G965F
 
highsulphur

highsulphur

Greater Supremacy Member
Joined
Aug 16, 2011
Messages
77,864
Reaction score
40,377
silverbomb said:
Thanks both replies.

But it seems contradicting. If one works like dividend theory (price gradual increase till ex div, and drops upon div payout) while another strictly follows movement of STI (go up 3%, same goes 3%), which is the better way to explain the corelation between STI and ES3?

Posted from PCWX using SM-G965F
Click to expand...

They don't contradict. Es3 can still go up same as Sti but whenever a component stock pays dividend, es3 increase by that little bit to reflect that dividend paid
 
hwckhs

hwckhs

Senior Member
Joined
Apr 13, 2012
Messages
1,186
Reaction score
1,343
silverbomb said:
But it seems contradicting. If one works like dividend theory (price gradual increase till ex div, and drops upon div payout) while another strictly follows movement of STI (go up 3%, same goes 3%), which is the better way to explain the corelation between STI and ES3?
Click to expand...

The STI value is calculated based on prices of the component stocks, without considering their dividends. Since ES3 holds dividends from the component stocks, it will definitely differ from STI, depending on how much dividends it hold at that time.

(Check page 20 of this STI document if you would like to know the exact calculation.)

The difference between ES3 and STI cannot be described as tracking error. I would imagine/suspect that the fund manager will deduct the effect of dividends before calculating tracking error. We just have to accept/trust the tracking error reported by fund manager. I don't think there is a way for us to calculate on our own.
 
Mecisteus

Mecisteus

Great Supremacy Member
Joined
Jun 16, 2002
Messages
55,694
Reaction score
12,187
hwckhs said:
The difference between ES3 and STI cannot be described as tracking error. I would imagine/suspect that the fund manager will deduct the effect of dividends before calculating tracking error. We just have to accept/trust the tracking error reported by fund manager. I don't think there is a way for us to calculate on our own.
Click to expand...

Here is the definition of tracking error.

https://www.sgx.com/research-educat...nce-highlights-spdrr-sti-etf-and-nikko-am-sti

The performance of an ETF is usually based on how closely it is able to track the index it is trying to replicate, and the difference – due to factors that include management fees and transaction costs – is referred to as tracking error. The SPDR STI ETF has a rolling one-year tracking error of 0.041%, while the Nikko AM Singapore STI ETF has a three-year annualised tracking error of 0.15% as published on their websites.
 
You must log in or register to reply here.
Important Forum Advisory Note
This forum is moderated by volunteer moderators who will react only to members' feedback on posts. Moderators are not employees or representatives of HWZ Forums. Forum members and moderators are responsible for their own posts. Please refer to our Community Guidelines and Standards and Terms and Conditions for more information.
Top