Guide to STI ETF: How to choose between SPDR STI ETF and Nikko AM STI ETF

What happened?

The Straits Times Index (STI) climbed to all-time highs in 2025. 

It’s a cue for me to revisit home-ground opportunities for capital growth and passive income that Singapore’s blue-chip companies can offer through dividends.

One of the simplest ways to gain exposure to the STI is through exchange-traded funds (ETFs). 

If you’ve been exploring this route too, chances are two names have popped up on your radar: the SPDR STI ETF and the Nikko AM STI ETF. 

Both ETFs track the performance of the STI. 

They could be convenient options for long-term investors and those who prefer a hands-off approach.

Though they share the same goal, they aren’t identical. 

There are differences in expense ratios, dividend payout schedules, liquidity, and so on 

In this guide, I’ll break down how each ETF works and the key factors to consider when choosing between the two.

What is the Straits Times Index (STI)?

Many new investors often wonder what is a good Singapore ETF to buy. 

You can start by understanding what the Straits Times Index (STI) is.

An index tracks the performance of a group of selected stocks that represent a market or sector.

Just like how the S&P 500 index is used as a benchmark for the US stock market, the STI is widely used as a benchmark for the Singapore stock market.

The STI comprises the 30 largest and most actively traded companies listed on the Singapore Exchange (SGX). 

These companies are selected and reviewed by FTSE Russell, a global index provider.

The index is constructed using a market capitalisation-weighted method. 

This means companies are chosen based on both market cap and liquidity, ensuring the STI reflects the performance of the most significant stocks in Singapore.

To stay aligned with market changes, the STI is reviewed and rebalanced quarterly in March, June, September and December.

What are the constituents of the STI?

The top 30 companies listed on the SGX range across various industries. 

The financial sector makes up a sizeable portion of the index. 

This is because the big three banks in Singapore (DBS, UOB, and OCBC) constitute the highest weightage in the STI, comprising close to 50% of the index.

Their strong performance and large market capitalisation give them a heavy influence on the movement of the index.

The constituents of the STI are:

How can I invest in the STI?

You can’t buy the STI directly. It’s not a stock or tradable asset.

To replicate the STI on your own, you’d need to buy shares in all 30 constituent companies, in proportion to their weight in the index.

This takes a lot of money, time, and effort. Plus, you’ll face extra costs like brokerage fees, which can add up. 

For most people, this is not practical. That’s where ETFs come in. 

An ETF is a fund that holds all the stocks in an index and allows you to buy units of the fund, just like buying a stock.

So if you want exposure to the STI, the simplest way is through index-related products like the STI ETF.

What is the STI ETF?

The STI ETF tracks the underlying performance of the Straits Times Index (STI).

When you buy an STI ETF, you’re essentially investing in a fund that tracks the performance of the Straits Times Index.

With a single trade, you can own a basket of the 30 largest and most liquid companies listed in Singapore, from DBS Group Holdings to Singapore Airlines. 

You also get instant diversification across sectors, spreading your risk while keeping costs low compared to buying individual stocks.

There are currently two main STI ETFs available: SPDR STI ETF and Nikko AM STI ETF.

Should I buy the SPDR STI ETF or Nikko AM STI ETF?

The SPDR STI ETF and the Nikko AM STI ETF provide ways to invest in the top 30 companies on the SGX.

Although both ETFs serve to track the performance of the STI, there are a few considerations to look at.

#1 - Performance

In terms of performance, both the ETFs generated a return of around 26% (excluding dividends) in the past 12 months (as of 14 August 2025). 

As of 30 June 2025, on a NAV-NAV basis (with dividends reinvested) and across the longer time horizon of 3 years and 5 years, the returns of the Nikko AM STI ETF have been higher than that of the SPDR STI ETF.

However, both are slightly below the return of the STI across all the years. This is likely due to differences in fees and tracking errors.

#2 - Total expense ratio

The SPDR STI ETF has a slightly higher total expense ratio (TER) at 0.28% p.a., compared to 0.25% p.a. for the Nikko AM STI ETF.

The TER measures the total costs associated with the overall management and operating expenses of the ETF. 

This may include management fees, administrative costs, as well as distribution fees.

#3 - Tracking error

Tracking error refers to the difference between the price of the benchmark fund (in this case the two ETFs) and the index it is trying to track.

On this front, the Nikko AM STI ETF has a slightly lower tracking error. 

According to their latest fact sheets, the SPDR STI ETF has a tracking error of 0.255% while the Nikko AM STI ETF has a tracking error of 0.15%.

#4 - Track record

Both ETFs are run by established fund managers. 

The SPDR STI ETF is managed by State Street Global Advisors with more than US$5.12 trillion worth of assets. 

The Nikko AM STI ETF is managed by Nikko Asset Management, which manages more than US$233.9 billion worth of assets.

As the oldest local ETF in Singapore, the SPDR STI ETF has been in existence since 2002. The Nikko AM STI ETF, on the other hand, was listed on the SGX in 2009.

#5 - Dividend yield

Both the SPDR STI ETF and the Nikko AM STI ETF are distributing ETFs. Distributing ETFs are funds that pay out earnings like dividends to investors in cash, instead of reinvesting them.

The SPDR STI ETF generally pays out dividends twice a year, typically in February and August, while the Nikko AM STI ETF usually distributes its dividends in January and July.

However, these payouts are not guaranteed and are entirely at the fund manager’s discretion. 

Currently, the SPDR STI ETF offers a dividend yield of about 4.15%, while the Nikko AM STI ETF yields around 4.21% over the 12-month period.

Depending on your broker, you can typically choose to receive dividends in cash or automatically reinvest them into additional units of the ETF.

How the Nikko AM STI ETF and SPDR STI ETF compares

Here is a table showing quick facts and comparison of both STI ETFs:

Risks factors to consider

While STI ETFs offer many benefits, it’s important to be aware of certain risks before investing:

#1 – Market risk and volatility

Since STI ETFs track the Singapore stock market, their value fluctuates with overall stock market conditions. This means your investment can go up or down depending on market movements.

#2 – Tracking error 

ETF returns may differ slightly from the actual index due portfolio management and trading costs.

#3 – Expense ratio impact

Although generally lower than actively managed funds, ETFs charge management fees (expense ratios) that can slightly impact your overall returns over time.

What would Beansprout do?

The STI ETF offers you broad-based exposure to the Singapore market, without requiring you to pick individual stocks.

You can learn more about how the SPDR STI ETF and the Nikko AM STI ETF provide ways to invest in the top 30 companies on the SGX.

However, if you are keen to select your own stocks to purchase in the Singapore market, you can start by referring to our guide on Singapore blue chip stocks. 

If you are looking to add more Singapore ETFs into your portfolio apart from the STI ETF, check out our guide on Singapore REIT ETFs, Singapore bond ETFs and Singapore Gold ETFs.

How to buy the STI ETFs?

Here are 3 common and convenient methods to get started:

#1 – Buy STI ETFs via a brokerage

Both the SPDR STI ETF and Nikko AM STI ETF are listed on the Singapore Exchange (SGX), so you can purchase them easily through any stock brokerage, just like buying regular stocks. 

You can buy STI ETFs through a regulated broker that offers access in the Singapore stock market, such as Tiger Brokers and Moomoo Singapore. 

Check out our guide to the best online brokerage and stock trading platform in Singapore. 

#2 – Use a Regular Savings (RSS) Plan

A Regular Savings Plan (RSP) or Regular Shares Savings (RSS) lets you invest in STI ETFs gradually with as little as S$100 per month. 

You can automate your investments and practice dollar-cost averaging (DCA) for steady growth over time with RSS Plans.

They are offered by providers like FSMOne, OCBC, Phillip Securities, Moomoo Singapore and DBS/POSB.

#3 – Invest through the CPF Investment Scheme (CPFIS)

Another alternative is to use your CPF Ordinary Account (OA) savings to invest in STI ETFs under the CPFIS. 

After opening a CPFIS account with a local bank, such as DBS/POSB and UOB, you can link it to your brokerage account and buy STI ETFs using your CPF funds.

What other ETFs to consider?

If you prefer to invest for dividend income, find out more about the ETFs that offer exposure to Singapore REITs. 

If you prefer to invest in the US market, find out more about the ETFs that track the S&P 500 index. 

If you prefer to invest in a portfolio of global stocks, find out more about the ETFs that offer you exposure to both developed and emerging markets..