Distribution Yields of SPDR STI ETF beat CPF interest rate

SPDR Straits Times Index ETF (Exchange Traded Fund) invests in a portfolio of stocks that are on the list of the Straits Times Index (STI). As such the fund gets dividends from these companies and it then distributes them out to investors of SPDR STI ETF twice a year. 

Prices of SPDR STI ETF moved in nearly lockstep with the STI.

Below is a table showing the distribution history of SPDR STI ETF from 2010 to 2017.

Date Distribution ($) NAV* ($) Yield (%)
30-Jun-17 0.101 3.274 3.1%
30-Jun-16 0.093 2.886 3.2%
30-Jun-15 0.097 3.362 2.9%
30-Jun-14 0.088 3.298 2.7%
30-Jun-13 0.085 3.191 2.7%
30-Jun-12 0.095 2.937 3.2%
30-Jun-11 0.080 3.188 2.5%
30-Jun-10 0.060 2.887 2.1%
       
* NAV = Net Asset Value    

The average distribution yield was 2.8% per year for eight years above. This beats the interest rate offered for the CPF Ordinary Account of 2.5% p.a.

By investing in SPDR STI ETF, one gets to be invested in Singapore stocks. You need not spend time to research and pick specific stocks for your own portfolio. Based on my past experience, I had hits and misses. Another idea to consider – set up a Regular Savings Plan (RSP) to invest in a STI ETF on a regular basis. You pick more units of STI ETF when the index is down and you get lesser units when the index is up. This is called Dollar Cost Averaging. You need not time to enter the market.

My post on RSP: https://limkimtong.wordpress.com/2017/06/12/posb-invest-saver-actual-experience/

(Note: There are other similar kinds of RSP.)

Copyright © 2017, 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 Distribution Yields of SPDR STI ETF beat CPF interest rate

  1. susan says:

    But you lose 8 percent of your capital ? CPF protects your capital.

    • limkimtong says:

      The SPDR STI ETF performance were:
      Annualised since inception (11 Apr 2002) to 30 June 2017 = 7.27% (capital appreciation plus dividends)
      10 years from 30 June 2007 to 30 June 2017 = 2.07% (capital appreciation plus dividends)
      5 years from 30 June 2012 to 30 June 2017 = 5.19% (ditto)
      3 years from 30 June 2014 to 30 June 2017 = 2.84% (ditto)
      1 year from 30 June 2016 to 30 June 2017 = 17.19% (ditto)
      Source: Annual Report
      Investing is not sure-win. We just have to accept risks for returns.

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