In a world increasingly shaped by macroeconomic uncertainty and geopolitical flux, Singaporean investors are turning to home-ground options that offer clarity, consistency and confidence. The SPDR Straits Times Index ETF (ES3), managed by State Street Investment Management, is one such option. Tracking the Straits Times Index (STI), this ETF allows retail investors to participate in the performance of the top 30 listed companies in Singapore through a single, transparent and low-cost investment vehicle.
First introduced in 2002, the ES3 was the first locally listed exchange-traded fund and remains among one of the more recognised and actively traded ETFs in the Singapore market. It is structured to passively replicate the STI’s performance by investing in the constituent companies in the same proportions as the index. This passive structure means the fund does not attempt to outperform the market through stock-picking. Instead, it provides long-term exposure to Singapore’s economy — an economy known for its financial prudence, strong institutions and regional connectivity.
For many retail investors in Singapore, the ES3 offers a straightforward path to market participation. The product’s key selling points, such as accessibility, income potential, relatively low fees and diversification, are aligned with what many Singaporeans value in an investment product – simplicity, reliability and prudence. At a time when global markets remain volatile, the ES3 allows investors to express confidence in Singapore’s economic fundamentals while mitigating exposure to overseas market shocks.
Local access, low barriers, long-term potential
A defining characteristic of the SPDR Straits Times Index ETF is its accessibility. The fund trades on the Singapore Exchange (SGX) under the stock code ES3 and can be purchased in board lots of just one unit. This removes the high minimum investment requirements typically associated with traditional unit trusts or private investment funds. “Investors can access the ES3 with a minimum investment of just one unit through a number of channels ranging from a traditional brokerage account or a CPF Investment Scheme provider,” says Janjira Jaruprateepkul, head of intermediary, Southeast Asia, State Street Investment Management.
In addition to brokerage accounts, the ETF is also available through the Supplementary Retirement Scheme (SRS), offering investors an opportunity to grow their retirement nest egg using pre-tax savings. This is especially useful for Singaporeans looking for tax-efficient investment options that supplement their Central Provident Fund (CPF) contributions. “You can invest in the ES3 through the Supplementary Retirement Scheme (SRS),” adds Jaruprateepkul. “It is a voluntary scheme to encourage individuals to save for retirement, over and above their CPF savings.”
The product is also eligible under the CPF Investment Scheme, which allows CPF members to invest their CPF Ordinary Account funds in approved products to potentially enhance retirement outcomes. Moreover, for those with a more disciplined, dollar-cost averaging approach to investing, the ES3 is also available through regular savings plans offered by local banks and brokers. These plans automatically invest a fixed amount monthly into the ETF, helping investors avoid the emotional pitfalls of market timing while potentially building wealth gradually over time.
Beyond ease of access, the ES3 appeals to income-seeking investors. It offers semi-annual dividend distributions, subject to the dividends paid by the companies that make up the STI. Although not guaranteed, these payouts can be a source of regular income, which is particularly attractive in an environment where bond yields remain subdued. “The dividend-paying structure of the ES3 is particularly attractive for retail investors seeking potential income stability,” says Jaruprateepkul. This combination of income and potential for capital growth over the long term makes the ETF a flexible tool that is suitable for both accumulation and income-generation strategies.
The ETF’s cost advantage also stands out. As at June 30 2025, the fund reported a total expense ratio of 0.28%, lower than actively managed funds. This is because passive index tracking requires less ongoing research, trading and oversight. Lower costs can translate to a lower drag on performance over time, allowing investors to retain more of their returns. And since the ETF is listed, its units can be bought and sold throughout the trading day, providing investors with price transparency and liquidity. While the trading price may differ slightly from the net asset value (NAV), especially during periods of market stress, the presence of designated market makers helps keep prices aligned with the underlying value.
Reflecting the resilience of Singapore’s economy
At its core, the ES3 represents a bet on Singapore and not just as a financial hub, but as a resilient and adaptable economy. The STI is composed of leading Singapore companies across multiple sectors, including financials, real estate, telecommunications and industrials. These sectors underpin Singapore’s economy and are well-capitalised, well-regulated and typically less volatile than speculative growth sectors in other markets.
Because the ETF holds a broad basket of stocks, it offers investors diversified exposure across industries. This diversification reduces the impact of poor performance in any single stock or sector. “It allows investors to gain diversified exposure to Singapore’s economic sectors, without taking on excessive single-stock risk,” says Jaruprateepkul. This can support a more stable investment experience, with potentially lower drawdowns during market downturns, while still allowing for upside when the economy strengthens.
Crucially, this broad market exposure provides an avenue for younger investors to begin building their portfolios with a disciplined, long-term focus. The ES3 may serve as a foundation, or a core holding around which other satellite investments (such as sector ETFs or global equities) can be added. It supports investment principles like diversification, long-term horizon and reinvestment of income, which are especially relevant for those with decades of investing ahead of them.
“Amid volatility in global markets, Singapore-centric ETFs like the ES3 have increasingly gained traction with local investors,” notes Jaruprateepkul. Compared to other regional markets such as China or Hong Kong, where policy risk and regulatory shifts can cause rapid swings in investor sentiment, Singapore has remained a bastion of policy stability and macroeconomic prudence. As a result, the STI’s performance has been relatively resilient and reflects the broader investor confidence in the country’s future. “The ES3 provides a disciplined way for investors to express confidence in Singapore’s economic fundamentals,” the firm adds.
Importantly, while the ES3 offers defensive characteristics, it is not without growth potential. The companies in the index continue to adapt to digitalisation, sustainability mandates and regional expansion. For example, several constituents have expanded operations across Asean and other Asian markets, leveraging Singapore’s strong trade ties and regional influence. By investing in the ES3, investors indirectly gain exposure to these trends without the risks associated with individual stock-picking.
This ability to participate in local growth without the volatility of chasing thematic or speculative plays makes the ES3 a solid long-term proposition. It is not designed to outperform rapidly in short bursts, but rather to offer consistent, benchmark-aligned returns over time. It is this measured, dependable approach that aligns well with the values of many Singaporean investors.
As with any market instrument, there are risks. Because the ETF is not actively managed, the manager will not intervene even if a stock appears overvalued or is facing headwinds, unless it is removed from the STI. Additionally, dividends are contingent on payouts by the underlying companies, which may be suspended or reduced during times of stress. The ETF may also trade at a premium or discount to NAV, although this is typically minor due to liquidity and the presence of market makers. Despite these factors, the ES3 remains one of the most straightforward and transparent ways to invest in Singapore’s economy.
The appeal of the ES3 lies in its combination of accessibility, discipline and market relevance. It gives investors the ability to express a long-term view on Singapore while benefiting from cost-efficiency and simplicity. As financial literacy grows and more Singaporeans seek ways to build wealth outside traditional savings accounts, tools like the ES3 may play an increasingly central role in local portfolios.
For first-time investors, retirees seeking passive income or professionals planning for retirement via SRS or CPF, the ES3 represents a pragmatic option. It offers what many global alternatives cannot: a product built in Singapore, focused on Singapore and committed to helping Singaporeans invest in their own future.
Learn more about the SPDR Straits Times Index ETF (ES3).
State Street Global Advisors (SSGA) is now State Street Investment Management. Please go to statestreet.com/investment-management for more information.
State Street Global Advisors Singapore Limited (“SSGA”), 168, Robinson Road, #33-01 Capital Tower, Singapore 068912 (Company Reg. No: 200002719D, regulated by the Monetary Authority of Singapore). T: +65 6826-7555. F: +65 6826-7501.
All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone.
The prospectus in respect of the offer of the units (the "Units") in the SPDR® Straits Times Index ETF (the "Fund") is available and may be obtained upon request from State Street Global Advisors Singapore Limited ("SSGA", Company Registration number: 200002719D). Investors should read the prospectus before deciding whether to acquire Units in the Fund. The value of Units and the income accruing to such Units may fall or rise. Units in the Fund are not obligations of, deposits in, or guaranteed by, SSGA or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested. Past performance figures are not necessarily indicative of future performance of the Fund. Investors have no right to request SSGA to redeem their Units while the Units are listed. It is intended that holders of Units may only deal in their Units through trading on the Singapore Exchange Securities Trading Limited ("SGX-ST"). Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units.
Diversification does not ensure a profit or guarantee against loss. Past performance is not necessarily indicative of the future performance.
Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs.
The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.
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