Singapore’s first locally created exchange-traded fund (ETF), the SPDR Straits Times Index ETF (ES3), has retained its leading status in the local ETF market. At The Edge Singapore’s Best Funds Awards 2025, the fund took the top spot under the Singapore ETFs category, marking another milestone in its two-decade track record of delivering relatively low-cost, transparent access to Singapore’s most prominent listed companies.

Launched in 2002 by State Street Global Advisors, the fund tracks the Straits Times Index (STI), comprising 30 of the largest and most liquid stocks on the Singapore Exchange S68 (SGX), including DBS Group Holdings, OCBC, UOB and Singtel. The fund offers investors instant diversification with one trade. It has established itself as a core building block for long-term portfolios, especially for CPF Investment Scheme (CPFIS) and Supplementary Retirement Scheme (SRS) accounts.

As of the end of 2024, a $10,000 investment at inception would be worth over $46,000, reflecting capital growth and dividend income.1 Its continued popularity stems from a simple, disciplined investment strategy: replicating the STI as closely and cost-effectively as possible.

Riding through volatility

The ETF's performance has been particularly noteworthy in challenging macroeconomic conditions. While global equity markets were roiled in 2024 by heightened geopolitical risk and uncertainty ahead of the US presidential election, SPDR Straits Times Index ETF maintained its stability. Unlike markets driven by the "Magnificent Seven" tech stocks, Singapore's STI has a strong tilt towards financials and real estate, offering resilience amid global volatility.

See also: QA SPDR Straits Times Index ETF proves its strength as core Singapore market exposure

mute
Despite shifting US Federal Reserve policy and uneven global growth, the SPDR Straits Times Index ETF continued to meet its mandate: tracking the index as closely as possible. Fund managers achieved this through a disciplined approach to index replication, using a combination of strong execution capabilities and effective cost management tools.

Meaghan Victor, head of intermediary client coverage, Asia Pacific, State Street Global Advisors, says ETFs were created from a crisis — the first was created in the US in 1993. "The aim of the ETF was to democratise investing for investors — to make investments accessible to all investors. By accessing a basket of securities in a single trade, they can then get better exposure to the market," she adds.

Apart from gaining exposure to more stocks, rather than buying into each underlying holding as an investor, Victor elaborates that trading ETFs also offers transparency to investors, as they can track the underlying securities they are holding. Additionally, it is a very liquid investment.

What sets the SPDR Straits Times Index ETF apart is its performance and relevance to everyday Singapore investors. With its relatively low expense ratio and high liquidity, the fund is well-suited as a core portfolio holding, especially for those investing through the CPFIS and SRS.

See also: Big firms get bigger, thematic funds get smaller and private markets are tough: Morningstar

By investing in the fund, retail investors gain access to a diversified portfolio of 30 blue-chip Singapore companies with just one trade. Its daily transparency—where investors can view the underlying holdings at any time—and its liquidity on the SGX make it an attractive alternative to actively managed funds.

“We continue to see ETFs as a key tool for investors to diversify and stay invested through market cycles,” says Victor.

Diving deeper into the SPDR Straits Time Index ETF, Kheng Siang Ng, Asia Pacific head of fixed income and head of Singapore, State Street Global Advisors, elaborates that the fund is managed through index replication. "Through the replication approach, we can track the portfolio holdings to match that of the index constituents. Hence, we can track the index performance tightly," says Ng.

He adds that the stability and predictability of the investment portfolio are crucial, especially during uncertain times such as the global financial crises and the Covid-19 pandemic in the past and Trump's coming into power today.

“We have had no issues or challenges in performance tracking throughout these uncertain periods, not just because of our index replication approach, but also our execution desk,” says Ng, highlighting the importance of the tech and human aspects in portfolio management.

Reliance in uncertainty

State Street Global Advisors is the fourth-largest asset manager in the world, with over 45 years of investment heritage and with clients in 59 countries as of Dec 31, 2024. Its ETF platform is one of the largest globally, the firm manages assets under management of about US$4.72 trillion as of Dec 31, 2024.2

Its global scale provides deep execution capabilities across regions, helping to minimize transaction costs and navigate corporate actions efficiently. Whether index rebalancing or handling inflows and outflows, the firm’s operational infrastructure ensures that the fund continues to track the STI accurately.

As Singapore’s market continues to evolve, State Street Global Advisors remains optimistic. While some revitalisation efforts, such as the Singapore Exchange-led market vibrancy task force, have yet to translate into stronger index performance, the fund's fundamentals remain compelling for long-term investors.

“We have a good ecosystem and network in dealing with the client inflows and outflows that are also being translated into the actual performance numbers,” says Ng, emphasising that this is a critical aspect in managing the fund.

Victor notes that investors are always on the lookout for capital growth when investing. But they are also looking for potential income. "One thing that this fund has been able to do consistently is provide both capital growth and income,” she says.

This year, market watchers are closely monitoring the US Federal Reserve's actions on interest rates, especially amid renewed tariff uncertainty and potential stagnation risks. State Street Global Advisors expects the Fed to implement up to three rate cuts this year but cautions that timing will be critical.

Despite these uncertainties, the firm remains focused on supporting investors in building diversified portfolios. The firm views ETFs like the SPDR Straits Times Index ETF as valuable tools for tactical asset allocation and long-term growth.

From an asset allocation perspective, the firm encourages staying invested and avoiding the temptation to time markets. “In volatile environments, investors may reduce exposure, but we caution against pulling out completely. The cycle matters more than trying to achieve perfect entry or exit timing,” says Ng.

Looking forward, State Street Global Advisors sees education and innovation as key drivers of ETF investment growth in Asia-Pacific. While ETFs are well-established in the US and Europe, Asia is catching up fast. The firm plans to further invest in investor education to help Singaporeans understand and utilise ETFs as core building blocks for their financial planning.

“Innovation, especially in ETFs, is happening across the ecosystem,” says Victor. “We want to make sure investors are aware of what’s available and how to use them to support informed choices.”

Footnotes

1 A hypothetical $10,000 investment assumes reinvestment of all dividends and capital gains. Fund expenses, including management fees and other expenses were deducted. Past performance is not necessarily indicative of the future performance. Investors may lose part or all of their investments.

2 This figure is presented as of December 31, 2024 and includes ETF AUM of US$1,577.74 billion of which approximately US$82.19 billion is in gold assets with respect to SPDR products for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) acts solely as the marketing agent. SSGA FD and State Street Global Advisors are affiliated. Please note all AUM is unaudited.

Disclaimer

State Street Global Advisors Singapore Limited (“SSGA”), 168, Robinson Road, #33-01 Capital Tower, Singapore 068912 (Company Reg. No: 200002719D, regulated by the Monetary Authority of Singapore). T: +65 6826-7555. F: +65 6826-7501.

All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone.

The prospectus in respect of the offer of the units (the "Units") in the SPDR® Straits Times Index ETF (the "Fund") is available and may be obtained upon request from State Street Global Advisors Singapore Limited ("SSGA", Company Registration number: 200002719D). Investors should read the prospectus before deciding whether to acquire Units in the Fund. The value of Units and the income accruing to such Units may fall or rise. Units in the Fund are not obligations of, deposits in, or guaranteed by, SSGA or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Past performance figures are not necessarily indicative of future performance of the Fund.

Investors have no right to request SSGA to redeem their Units while the Units are listed. It is intended that holders of Units may only deal in their Units through trading on the Singapore Exchange Securities Trading Limited ("SGX-ST"). Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units.

Diversification does not ensure a profit or guarantee against loss. Past performance is not necessarily indicative of the future performance.

Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs. There can be no assurance that a liquid market will be maintained for ETF shares.

The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.

The views expressed in this material are the views of Meaghan Victor and Kheng Siang Ng through the period ended 27 March 2025 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

This advertisement or publication is intended solely for audiences in Singapore and has not been reviewed by the Monetary Authority of Singapore.

For more risk information, please visit www.ssga.com/sg