Dear readers, recently SPH, SGX and FTSE celebrated the 12 years of the Straits Times Index (STI). The STI tracks the performance of the top 30 stocks listed on the SGX and is regarded as the benchmark index for the local stock market.
It is a moment worth celebrating as without the setting up of the STI, there will not be ETFs premised on the concept of the STI like the SPDR Straits Times Index ETF (ES3.SI) and the Nikko AM STI ETF (G3B.SI). The STI-based ETFs offer investors a relatively low risk in investing through diversification into the many STI component stocks. And at the same time, these ETFs pay investors decent dividend yields.
Investing has inherent risks even if one is to invest in those big-cap stocks on local bourse which were part of the STI before. Think of Noble stock and Hutchinson Ports Holdings Business Trust which have now seem their stock price plummet. As it goes, investing in individual stocks carry their own intrinsic risks no matter how promising these stocks may look like.
As such, for a long-term investing model, as shared in Sg Stocks Investing strategy here, one should have in the core of his investment portfolio STI ETF followed by smaller pockets of potential multi-bagger international picks. In the aforementioned manner, investors are assured of relatively risk-free portfolio with scopes of multi-bagging opportunities.
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