To The Moon

🌟🌟🌟Investing can sometimes feel like a roller coaster ride but that is  what makes it so  exciting.  However when it is on a downward slide, just hang on tight and enjoy the ride as the next turn will see it going up!

To cushion against the ups and downs of the stock market, I love to invest in Index ETFs as they help to provide me with a more steady ride due to their sheer diversification of stocks they hold.   In fact for me, Diversification is the key to having a successful long term portfolio.

For those who are new, an Index ETF is a type of fund that tracks the performance of a specific stock market index.  It can either hold physical shares of the Index's constituents or products that mimic its price movement.

The benefits of investing in index ETFs are many.  Index ETFs aim to replicate the performance of their target and use passive management.  They have typically lower expense ratios than actively managed funds.  These Index ETFs provide exposure to all securities in their target index.  They can be traded throughout the day, potentially offering more liquidity than index mutual funds. 

My 3 winning ETFs are SPTM representing the US Market, ES3 representing the Singapore Market and FXI which represents the Chinese stocks trading in the Hong Kong market.  That way, I cover the 3 major markets that is my focus in my investment strategy.  So even if one market is down, the other ETF may go up, giving me a balanced approach in my investment portfolio.

Let's check out these ETFs 

SPTM 

$SPDR Portfolio S&P 1500 Composite Stock Market ETF(SPTM)$ is part of the SPDR Portfolio ETF line up, a collection of core exposure funds that track the S&P indexes.  This ETF consists of those stocks included in the S&P500 Index, the S&P MidCap 400 Index and the S&P SmallCap Index.  That represents 1500 US Equities and approximately 90% of the investable US equity market.

The Top 10 holdings include Apple, Microsoft, Nvidia, Amazon, Meta Platforms, Tesla, Alphabet Class A & C, Broadcom and Berkshire Hathaway.

7 of the holdings are members of the Magnificent 7 which have had a fantastic run this year with their excellent performance, both in earnings and share price appreciation.  Broadcom has recently joined the Trillion Dollar Club with its share price up 34% in just 1 month.    Berkshire Hathaway is Warren Buffett's holding company which has also performed well this year as it is up 25% year todate.

SPTM has a low expense ratio of just 0.03% which is among the lowest among competing ETFs.  Dividends are paid every 3 months.  The current dividend yield is 0.9%.  SPTM goes ex dividend on December 23 2024, just in time for Christmas.

I like that SPTM does the heavy lifting for me to select the best performing stocks and weeding out the non performing ones.  In order to qualify to be included in the Index, the company needs to have positive aggregate earnings over the 4 most recent quarters and for the most recent quarter. 

Performance wise SPTM is up 24.3% year todate .  But if we look back 5 years ago, SPTM is up 81%. 

I have invested in SPTM since 2021 and it has rewarded me with slow and steady returns in that time frame as well as dividends.   I am currently up 37.8% on SPTM, not bad for an index ETF. 

ES3.SI  

$STI ETF(ES3.SI)$  is the oldest ETF in Singapore listed since 11 April 2002.  The STI ETF tracks the performance of the Straits Times Index and represents 30 of Singapore's biggest and strongest blue chip stocks.  Recently this ETF reached its 17 year high, led by the 3 Singapore Big Banks' sterling performance. 

The Top 10 holdings include DBS, OCBC, UOB, Singtel, Jardine Matheson Holdings, Singapore Exchange, Capitaland Integrated Commercial Trust, Keppel Ltd, Capitaland Ascendas REIT and Singapore Airlines. 

The 3 Singapore banks take up 57% weight of the ETF.  So investing in the STI ETF is almost like investing in our 3 Big Banks but at a much lower entry point.  At the last closing price of SGD 3.81 per share for STI ETF it is a lot cheaper than say DBS which closed at SGD 42.82 per share. 

The expense ratio is 0.30%.  The current dividend yield is 4.17% paid twice a year in February and August each year. 

Performance wise STI ETF is up 20.5% year todate.  

I like STI ETF as it pays great dividends regularly which is a good source of passive income.  There is no withholding tax and no exchange rate to grapple with. 

Since 2021 when I first started investing in STI ETF , I have gained 31%.  It is a slow and steady kind of ETF but a consistent performer. 

FXI

$iShares China Large-Cap ETF(FXI)$  tracks a market cap weighted index of the 50 largest Chinese stocks that trade on the Hong Kong Stock Exchange.  It is one of the oldest ETFs listed since October 5 2004 with Assets Under Management of USD 7.22 billion.  The Fund Manager is BlackRock under the iShares brand, the largest fund manager in the world. 

The Top 10 holdings include Meituan, Tencent Holding, Alibaba, China Construction Bank, Xiaomi, JD. com, Trip.com, Industrial and Commercial Bank, Bank of China, Ping An Insurance and BYD. 

The expense ratio is 0.74%.  FXI pays dividends every 6 months.  The last ex dividend date was December 17 2024.  The next one is due in June 2025.

Performance wise FXI is up 30% year todate.   Wall Street Analysts are bullish on FXI with a Buy rating, Target price of USD 39.32, an upside potential of 30%.  This is according to 51 analysts surveyed by Tipranks. 

With the Chinese authorities' recent stimulus to help the economy, I am bullish on FXI as it is the most undervalued of my 3 ETFs.  I have invested in FXI since 2023 and I am happy that FXI has made great progress in capital appreciation.   FXI represents the best of Chinese stocks in just 1 ETF and offers me excellent value for my money. 

Conclusion

With my 3 winning ETFs, I have covered the 3 major markets that I am most interested in.  This  represents a wide diverse range of great companies in just 3 ETFs.  Therefore they pack a lot of power and diversification which is important in order to achieve my ultimate goal of FIRE - Financial Independence Retire Early. 

Investing does not have to be complicated.  With 3 winning ETFs, it is maximum power, minimum cost.  That's my favourite way to invest. 

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