Hello readers!

There are so many Funds to choose from. Wanting to save from the adviser fees, or Sales Charge, you will have to rely on yourself to study the Unit Trusts.

Which Singapore Equity Fund do you choose??

Today, Mr Llama is going to show you what you should consider when picking a Unit Trust.

Many factors are to be carefully thought through - Investment Horizon, Cost averaging plans, Fees involved, even Withholding taxes that involves Funds carrying dividend stocks or bonds based in United States.
(*30% withholding applies for US stock dividends and bond pay-outs to Singaporean investors)

Fund Selector feature in FSM - Free to use
Source: FSM Fund Selector Feature

First, using the FSM Fund Selector feature, we will scope out search results to 'Equity' for Asset Class and 'Singapore' for Fund geographical region. This will pump out Unit Trusts that are mainly invested in Singapore listed equities. 

Followed by that, we shall click on 'Generate Funds Table'.

It will show 16 results as shown below.

Choosing between 16 Singapore Equity Funds
Source: FSM Fund Selector Feature
Today, we shall have have 2 things in mind.

First, you will want to have a Unit Trust with Low Expense Ratio.
Second, you will wish to have a healthy dividend payout of around ~4%.
(*You should analyse according to your needs. In this scenario, Mr Llama wishes to have a dividend payout :) )

4 Unit Trusts were short-listed!

Source: Fund Factsheet, see link above.
  • Benchmark: Straits Times Index
  • Lowest expense ratio among Singapore Equity Funds- 0.91%
  • Lowest amount of allocation to Singapore Banks (DBS UOB OCBC)
  • Small Exposure to Hong Kong, China and Thailand equities
  • Fund size of  ~$82m SGD
  • Industrials focused, with 33% of Assets held in Industrials sector
Source: Fund Factsheet, see link above.
    • Benchmark: MSCI Singapore Free
    • Low expense ratio of 1.33%
    • Overly reliant on SG banks with ~45% portfolio in Singapore Top-3 banks
    • Good focus in Singapore, and has Reits
    • Has 5% Cash as reserves
    Source: Fund Facsheet, see link above.
    • Benchmark: MSCI Singapore Index
    • Low expense ratio of 1.36%
    • Heavy reliance on Singapore banks with ~43% in top-3 banks
    • Fund could purchase high yielding securities like Reits
    • Has 6.5%Cash as reserves
    Source: Fund Factsheet, see link above.

    • Benchmark: No benchmark. Used to be benchmarked against STI pre Nov 2017.
    • Moderate expense ratio of 1.51%
    • Good balance between Industrials and Financials (22.2% vs 26.7% respectively)
    • Diversified into Hong Kong and Thai markets (11.8% Non-Singapore holdings)

    Let's conclude
    Source: Llama Finance - Comparison of the 4 SG equity Unit Trusts
    If you are going for a low-expense & high-yielding Unit Trust, LionGlobal Singapore Dividend Equity Fund is for you.

    If you wish for a monthly pay-out like Mr Llama, Nikko AM Singapore Dividend Equity Fund is for you.

    Mr Llama will not suggest Nikko AM Shenton Thrift Fund, not only because it has the smallest Fund Size of 82.73m, also because of below analysis.

    Source: Llama Finance - 4 SG Equity Funds annualized returns as of  NAV (10 Jan 2019)
    This table shows Returns of 1,2 & 3 years of past NAV of the respective Funds. Please note that 2-year and 3-year figures are annualized, and that figures are derived from FSM Fund Selector feature.

    Nikko AM Shenton Thrift Fund seemed to have performed poorly among all 3 categories.

    Well, because of this analysis, Mr Llama is a huge supporter of Nikko AM Singapore Dividend Equity fund despite its highest expense ratio. It is a well-balanced fund, and has held out pretty well in the past 1 year with it having the lowest loss of -9.59% among the 4 SG equities Unit trusts.

    Well, it has its weakness such as declining monthly dividends. We will have to see how it goes.

    Otherwise, LionGlobal Singapore Dividend Equity Fund is a great alternative, considering its consistent dividend pay-out history.

    Mr Llama has based analysis on below dividend histories:
    Source: FSM platform - LionGlobal Singapore Dividend Equity Fund 
    Source: FSM Platform - Nikko AM Singapore Dividend Equity Fund

    Source: FSM Platform - Schroder Singapore Trust A SGD


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