OREANDA-NEWS. Exchange Traded Funds (ETFs) are open-ended investment funds listed and traded intraday on a stock exchange. They aim to track the performance of an index and provide access to a wide variety of markets and asset classes.

As reported by State Street Global Advisers late last year, there is a growing trend among investors to include ETFs as part of their retirement portfolio as this strategy can potentially improve returns and cash flows, as well as mitigate risks.

The CPF Investment Scheme (CPFIS) comprises the CPF Investment Scheme-Ordinary Account (CPFIS-OA) and CPF Investment Scheme - Special Account (CPFIS-SA). These schemes give members supplementary options in investing their savings in their CPF accounts and enlarge their retirement portfolio. There are four ETFs listed on Singapore Exchange (SGX) included under the CPFIS: the ABF Singapore Bond Index Fund, SPDR® Gold Shares, Nikko AM Singapore STI ETF and SPDR® Straits Times Index ETF. 

The SPDR® Straits Times Index ETF and Nikko AM Singapore STI ETF have averaged a 3.7% decline in total return so far in 2016. Both STI ETFs pay semi-annual dividends and in terms of year to date total returns the SPDR® Straits Times Index ETF has declined 3.6% and the Nikko AM Singapore STI ETF has declined 3.9%. Tracking errors account for the marginal differential in performance of the two STI ETFs.  On a Singapore Dollar basis, the SPDR® Gold Shares have gained 15.8% while the ABF Singapore Bond Index Fund has generated a 4.7% gain. On average the four ETFs have averaged a 3.3% total return in the year thus far.

Recent STI Earnings

The 24 stocks within the STI that have recently reported an averaged 0.63% upside surprise in earnings and a 5.23% upside surprise in sales. This compared to the 602 stocks within the MSCI AC Asia Pacific Index that reported a 15.05% downside surprise in earnings while sales came in 0.02% above expectations. A comparative table of these earnings actuals to earnings estimates is detailed below.