Invest: Reflections on Index funds – STI & FTSE KLCI

The Straits Time Index and FTSE Bursa Malaysia KL Index are the main composite index tracking the Singapore and Malaysia Market respectively.

What Is The Straits Times Index?

The FTSE Straits Times Index (STI) is a capitalization-weighted stock market index that is regarded as the benchmark index for the Singapore stock market. It tracks the performance of the top 30 companies listed on the Singapore Exchange. It is jointly calculated by Singapore Press Holdings (SPH), Singapore Exchange (SGX) and FTSE Group (FTSE). (Source: Wikipedia)

What is the FTSE Bursa Malaysia Index?

Launched in 2006 in partnership with Bursa Malaysia, the FTSE Bursa Malaysia Index Series is a broad range of indexes covering all eligible companies listed on the Bursa Malaysia Main and ACE Markets. The indexes are designed to measure the performance of the major capital segments of the Malaysian market, dividing it into large cap, mid cap, small cap, fledgling and Shariah-compliant market segments. The indexes enable market participants to measure, invest and create products in these distinct segments of the Malaysian market. (Source: Wikipedia)

Comparing STI to KLCI Index in ETF format

Coincidentally, both index consists of 30 listed companies. However, the STI is more widely tracked in comparison to the KLCI. Partly evident by the 2 Exchange traded funds – SPDR STI ETF (ES3) and Nikko AM STI ETF (G3B). While the KLCI is tracked by FBM KLCI ETF (0820EA).

3-year return
SPDR STI ETF – 6.45% (Source: SPDR)
Nikko AM STI ETF – 5.33% (Source: NikkoAM)
FBM KLCI ETF – 0.46% (Source: FBM KLCI letter to the investor)

My personal view

Personally, I am vested in both SPDR STI ETF and FBM KLCI ETF. Part of the reason being it is tracking 2 different markets, at the same time, the composite companies for both countries also vary. While the average 3-year return for STI is more significant than KLCI, it is worth noting that Malaysia has been underperforming in the past few years. It is a good time to invest in the Emerging market segments while the market is going changes in the coming months to years – however, with some caution.

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