Better off investing in STI ETF than selecting stocks for portfolio

Is active management in investing better than passive investing in stock index? I select stocks for my Singapore equity portfolio and took actions in buying and selling certain stocks at different times. At the same time, I bought into SPDR STI ETF as well. This Exchange Traded Fund (ETF) is designed to track the performance of the Straits Times Index (STI).

Is my active stock investing better than or worse off when compared with investing in SPDR STI ETF?

To do this, I compare two columns of data: Loss in Portfolio (%) against Loss in STI ETF (%). Loss (%) is calculated against cost of purchase. The results were obtained for more than one year of data. This one year had been very volatile and investments in general were not performing well.

Date Loss in Portfolio (%) Loss in STI ETF (%)
30-Apr-16 -20.8 -11.7
31-Mar-16 -20.3 -12.0
29-Feb-16 -25.6 -17.2
31-Jan-16 -27.0 -19.1
31-Dec-15 -19.0 -9.2
30-Nov-15 -18.2 -10.1
30-Oct-15 -14.7 -6.4
30-Sep-15 -18.0 -12.3
31-Aug-15 -15.8 -8.6
31-Jul-15 -11.0 -0.3
30-Jun-15 -7.8 3.1
30-May-15 -5.5 5.6
30-Apr-15 -3.1 8.3
31-Mar-15 -3.9 5.9
27-Feb-15 -5.2 4.7
30-Jan-15 -4.0 5.0

The graph below shows the same data.

Loss in portfolio vs Loss in STI ETF

Loss in portfolio vs Loss in STI ETF

What is the conclusion? I am better off in just buying SPDR STI ETF. So passive investing triumphed in my case over active investing during this period of study. My choices of some stocks were off the mark because of circumstances of the global economic environment (e.g oil prices plunge).

Note: I did not factor dividends received in the study. Each stock provided dividend and STI ETF gave dividend as well. The portfolio was relatively stable in terms of size and there is no change in my STI ETF amount over the period of study.

Copyright © 2016, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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2 Responses to Better off investing in STI ETF than selecting stocks for portfolio

  1. Mich says:

    I believe you would have come across articles referencing Warren Buffet and his positive comments on the Vanguard S&P 500 ETF.

    Any chance you have prior experience or intent to dabble into the Vanguard S&P 500 ETF?

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