THE BEST OF SINGAPORE S BLUE-CHIP COMPILATION NIKKO AM SINGAPORE STI ETF

Transcription

1 THE BEST OF SINGAPORE S BLUE-CHIP COMPILATION NIKKO AM SINGAPORE STI ETF

2 HIGHLIGHTS Easy access to the 30 blue chip stocks in the Straits Times Index A gateway to Asia s rapid growth Benefit from the bedrock of Singapore s strong corporate governance and political stability CPFIS included + Classified as an Excluded Investment Product (EIP) The Straits Times Index (STI) The Straits Times Index (STI) is a stock market index comprising the top 30 companies ranked by market capitalisation listed on the Singapore Exchange. The following tables and charts show the top 10 constituents, index characteristics and the industry breakdown of the STI. The top 10 constituents make up about 68% of the index, and several of these companies are household brand names that would be familiar to every Singaporean. The top 3 industry sectors within the STI are Banks, Real Estate and Telecommunications with a sector weighting of 35.3%, 18.9% and 12.5% respectively (Source: FTSE, as of 31 December 2015). Figure 1: Industry Breakdown and Characteristics of STI 2.7% 2.7% 1.7% Top 10 Constituents DBS Group Holdings Weight (%) 12.8% 5.8% Overseas-Chinese Banking Singapore Telecommunications 12.3% 11.6% 6.5% 35.3% United Overseas Bank Hongkong Land Holdings Keppel 10.2% 5.0% 4.0% 6.8% CapitaLand Thai Beverage 3.7% 2.9% Global Logistics Properties 2.8% Singapore Exchange 2.7% 7.1% 18.9% Index Characteristics Number of Constituents % Dividend Yield Market Cap (USD m) 3.91% Banks Telecommunications Industrial Goods & Services Oil & Gas Media Real Estate Travel & Leisure Food & Beverage Financial Services Retail Average Largest Smallest Median Top 10 Holdings (% Index) 7,732 29, , % Source: FTSE, as of 31 December The Fund is included under the CPFIS - Ordinary Account and has been classified by the CPF Board under the Higher Risk - Narrowly Focused - Country Singapore.

3 The Nikko AM Singapore STI ETF The Nikko AM Singapore STI ETF is an exchange traded fund with the investment objective of replicating as closely as possible, before expenses, the performance of the Straits Times Index (STI). The Nikko AM Singapore STI ETF will seek to achieve its investment objective by investing all, or substantially all, of its assets in the shares of the companies in the STI, in substantially the same weightings as reflected in the STI (i.e. a full replication strategy). With effect from 29 April 2013, the Nikko AM Singapore STI ETF is classified as an Excluded Investment Product, which means investors need not undergo a review of their knowledge and experience to understand the risks and features of the fund with their brokers before performing transactions on the fund. Who might be suitable for the Nikko AM Singapore STI ETF? Investors who want the familiarity of investing in Singapore blue-chip companies Investors who don t have time or resources to perform individual stock picking or company research. Investors looking for a low cost and simple way to get exposure to the Singapore stock market Interesting things about the STI 1. STI as a gateway to Asia s growth About half of the estimated revenues of the companies making up the STI are actually derived outside of Singapore. Figure 2 below shows the average percentage of estimated non-singapore revenues reported by STI constituents over the past five years. For instance, about 76% of Singapore Telecommunications earnings before interest, taxes, depreciation and amortisation (EBITDA) for FY2015 were derived outside Singapore in countries like Australia, Indonesia, India, Thailand, Bangladesh and the Philippines. Also, about 38% of DBS Group Holdings revenues (for FY2014) were sourced from Hong Kong, Greater China and Southeast Asia regions*. In addition, some of the companies in the STI are foreign based companies with core business interests residing outside Singapore. For example, Thai Beverage is a major beverage producer that earns the majority of its revenues from Thailand. This means that investors in the STI not only gain exposure to the stable long term growth potential of Singapore, they also benefit from the STI s significant exposure to the fast growing Asian region. Figure 2: Average percentage of estimated revenues derived outside Singapore among STI constituents 50.0% 49.0% 48.0% 47.0% 46.0% 45.0% 44.0% 47.9% FY % 48.8% 48.0% 46.0% FY 2011 FY 2012 FY 2013 FY 2014 Source: Bloomberg, Nikko AM Asia, as of 31 March Any references to particular securities are for illustrative purposes only and are as at the date of publication of this material. This is not a recommendation in relation to any named securities and no warranty or guarantee is provided. * Source: Financial reports published by Singapore Telecommunications and DBS Group Holdings as of 31 March 2015 and 31 December 2014 respectively.

4 2. World class corporate governance among Asian countries Investors in Singapore equity are assured that these investments operate in an environment of strong corporate governance and transparency. One of the major concerns about investing in Asia is the lack of a robust corporate governance framework and shareholder protection laws in the region. Singapore is consistently amongst the top Asian countries in this aspect. Table 1: Singapore ranks 2nd in corporate governance standards within Asia 1 Hong Kong 2 Singapore 3 Japan 4 Thailand 5 Malaysia 6 Taiwan 7 India 8 Korea 9 China 10 Philippines 11 Indonesia Corporate Governance Watch market scores: 2010 to 2014 Change vs 2014 (ppt) Trend of corporate governance reform (-1) (-5) (+5) - (+3) (+3) (+3) - - (-1) (+2) Weak leadership, tough enforcement International vs local contrast continues Landmark changes, can they be sustained? Improving, but new legislation needed Improving, but still too top-down Bold policy moves, can they be sustained? Bouncing back, Delhi more supportive Indifferent leader, more active regulators Focus on SOE reform, enforcement Slow reform, improved company reporting Big ambitions, can they be achieved? Source: Asian Corporate Governance Association, as of 30 September 2014 Ways to Invest As the Fund is traded like a stock on the Singapore Exchange, you will have immediate access to prices and trading. Investors may wish to contact their respective brokers or use their online trading account to invest in the Fund. Investors may also seek to invest in the Fund with any of our participating dealers which include DBS Vickers Securities Pte Ltd; Societe Generale Bank & Trust (Hong Kong); Flow Traders Asia Pte Ltd; Commerzbank AG (Hong Kong); BNP Paribas Securities Services. Ways to invest in the fund: Cash CPF + Supplementary Retirement Scheme (SRS) Regular Savings Plan with POSB Invest-Saver (in cash only), OCBC Blue Chip Investment Plan (Cash/SRS) or Maybank Kim Eng Monthly Investment Plan (in cash only) + The fund is included under the CPFIS - Ordinary Account and has been classified by the CPF Board under the Higher Risk - Narrowly Focused - Country Singapore.

5 About ETFs ETFs stands for Exchange Traded Funds. As the name suggests, these are funds that are traded on the stock exchange, much like the way stocks are, with investors buying and selling through a broker. Most ETFs are passively managed to track an index, such as a stock index or a bond index, which means the objective of ETFs is to produce a return that replicates the index s returns. Unlike unit trusts that are actively managed, ETFs do not seek to outperform the underlying index. The three key benefits of ETFs include: a) Efficiency By investing in a single ETF, investors can gain access to a diversified portfolio of stocks or bonds that make up the underlying index. Fees and charges on ETFs are also generally lower than actively managed investment funds. b) Transparency Most ETFs publish the full list of securities held by the ETFs on a daily basis, meaning investors always know exactly what they are investing in. c) Flexibility ETFs are used by investors as an asset allocation tool to gain exposure to broad asset classes when building investment portfolios. Because ETFs trade like stocks, investors can also time their entry or exit into the ETF on an intraday basis, and place limit orders with their brokers.

6 Important Information: This document is for information only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. Any securities mentioned herein are for illustration purposes only and should not be construed as a recommendation for investment. You should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. Investments in unit trusts are not deposits in, obligations of, or guaranteed or insured by Nikko Asset Management Asia Limited ( Nikko AM Asia ). Past performance or any prediction, projection or forecast is not indicative of future performance. The funds may use or invest in financial derivative instruments. The value of units and income from them may fall or rise. Investments in the funds are subject to investment risks, including the possible loss of principal amount invested. You should read the relevant prospectus and product highlights sheet obtainable from appointed distributors of Nikko AM Asia or our website ( before investing. The information contained herein may not be copied, reproduced or redistributed without the express consent of Nikko AM Asia. While reasonable care has been taken to ensure the accuracy of the information as at the date of publication, Nikko AM Asia does not give any warranty or representation, either express or implied, and expressly disclaims liability for any errors or omissions. Information may be subject to change without notice. Nikko AM Asia accepts no liability for any loss, indirect or consequential damages, arising from any use of or reliance on this document. The performance of the ETF s price on the Singapore Stock Exchange ( SGX ) may be different from the net asset value per unit of the ETF. The ETF may also be delisted from the SGX. Transaction in units of the ETF will result in brokerage commissions. Listing of the units does not guarantee a liquid market for the units. Units of the ETF may be bought or sold throughout trading hours of the SGX through any brokerage account. Investors should note that the ETF differs from a typical unit trust and units may only be created or redeemed directly by a participating dealer in large creation or redemption units. Investors may only redeem the units with Nikko AM Asia under certain specified conditions. The CPF interest rate for the Ordinary Account ( OA ) is based on the 12-month fixed deposit and month-end savings rates of major local banks, subject to a minimum 2.5% interest per annum. The interest rate for Special, Medisave and Retirement Accounts ( SMRA ) is pegged to the 12-month average yield of 10-year Singapore Government Securities yield plus 1%. A 4% floor rate will be maintained for interest earned on SMRA until 31 December 2016, after which a 2.5% minimum rate will apply. An extra 1% interest is paid on the first S$60,000 of a member's combined balances, including up to S$20,000 in the OA. The first S$20,000 in the OA and the first S$40,000 in the Special Account ( SA ) cannot be invested under the CPF Investment Scheme ( CPFIS ). Nikko Asset Management Asia Limited. Registration Number H