For Immediate Release
Chicago, IL – May 8, 2012 – Today, Zacks Investment Ideas feature highlights Features: iShares MSCI Singapore Index Fund ( and iShares MSCI Singapore Small Cap Index Fund ( .
Time to Buy the Singapore ETFs
Seemingly, Singapore has made a name for itself by banking on the few advantages that it has; a prime location and a well-educated workforce. The country took these few positives and turned its country into a major port, both in terms of air and sea, and developed an export-driven economy with massive industries in sectors such as electronics and oil refining (read Play An Oil Bull With These Three Emerging Market ETFs.
It also hasn’t hurt that the Singaporean government has been one of the best run in the world for quite some time, as the country always ranks highly on competitiveness surveys that focus on government institutions and market efficiency. In fact, in a recent report, the country ranked 3rd on Earth for competitiveness including the top rank overall for government regulation, public trust of politicians, and wastefulness of government spending.
Beyond this favorable business climate, the country has also taken steps to diversify its economy outside of manufacturing, transportation, and finance and into tourism. The introduction of casinos and theme parks have helped to make the city a destination in the region and have likely helped to make the country less dependent on exports to power growth going forward.
Downsides to Singapore
The main detractor from investing in Singapore is that the country has a relatively heavy debt load. Debt to GDP is over 100% which could cause problems if citizens stop buying Singaporean securities. However, the country does have a robust sovereign wealth fund while it also has a favorable current account balance and nearly a quarter billion in foreign reserves.
Additionally, investors should note that despite the attempts to diversify the economy, exports to other markets are still key for the country suggesting that it may be exposed to outside shocks. Nevertheless, unemployment is below 2.5% (a level most Western economies would kill for)while life below the poverty line is pretty much an anomaly, suggesting that the country has held up pretty well so far and can continue to do so well into the future.
How to play Singapore
Currently, investors have two ways to play the Singaporean economy in ETF form with products from iShares. While the two funds may have some similarities, there are a few key differences that investors should be aware of, which we have highlighted below:
iShares MSCI Singapore Index Fund (
This ETF tracks the MSCI Singapore Index which looks to give investors broad exposure to the Singaporean stock market. The product charges investors 52 basis points a year and sees good volume of about 1.9 million shares a day.
In total, the fund has 33 stocks in its portfolio and is relatively concentrated in its top securities. The top three companies account for about 30% of total assets and include Oversea-Chinese Banking Corp, DBS Group Holding, and Singapore Telecom.
For sector exposure, EWS is tilted towards a few market segments as financials (32%), industrials (25%), and real estate (12%) take the top three spots. 92% of the stocks in the fund are classified as large caps, although from a style perspective it is split down the middle in terms of growth, value, and blend.
iShares MSCI Singapore Small Cap Index Fund (
For investors looking for pint sized securities based in Singapore, EWSS could be an interesting pick. However, investors should note that the product is still quite young (having debuted in January of this year) while its volume is quite light suggesting wide bid ask spreads.
Nevertheless, the product offers access to 38 companies which represent the bottom 14% of the equity market in the nation. The fund is slightly less concentrated from a top holding perspective as the top three components only account for about 20% of assets.
Yet, from a sector perspective, the concentration issue reappears; financials make up 52% of the assets, followed by a 12.8% allocation to industrials, and a 7.8% holding in consumer staples. While this is somewhat disappointing, the yield is not; the 30 Day SEC Yield comes in at 4.1% for this small cap Singapore ETF (also read 11 Great Dividend ETFs.
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