Key Facts from the Report:
- Fund Performance:
- For the financial year ending 30 June 2024, the Singapore Index Fund achieved a 1-year growth of 8.29%, with a 5-year annualized return of 3.21%. Comparatively, the benchmark Straits Times Index (STI) recorded a 1-year return of 9.41%.
- The Fund’s performance since inception (December 1996) shows an annualized return of 4.06%, exceeding the benchmark’s 3.93%.
- Top Holdings:
- Significant positions in DBS Group Holdings (22.20% of NAV), Oversea-Chinese Banking Corporation (15.81%), and United Overseas Bank Limited (12.91%).
- Real estate and financial sectors dominate the portfolio, with financials representing 53.32% of NAV and real estate 16.22%.
- Dividend Policy:
- No dividends were declared for the financial years ending 30 June 2024 and 2023.
- Market Review and Outlook:
- The Straits Times Index (STI) recorded a total return of 9.4% for FY 2024, outperforming regional market indices. Yangzijiang Shipbuilding had a stellar 71.3% return, while Seatrium Ltd performed poorly with a 41.5% negative return.
- The International Monetary Fund (IMF) projects global GDP growth at 3.2% in 2024, while Singapore’s economy is expected to grow between 2-3% in 2024.
- Inflation is expected to ease, with Singapore’s core inflation projected between 2.5% and 3.5% for 2024.
Special Considerations for Investors:
- High Allocation to Financials: With over 50% of the fund allocated to the financial sector, particularly in banks like DBS, OCBC, and UOB, investors should note that interest rate movements and banking sector performance will significantly impact the fund’s returns.
- Real Estate Investment Trust (REIT) Exposure: As confidence grows that U.S. interest rates have peaked, Singapore’s high-yielding REITs could become more attractive, supported by the fund’s holdings in real estate trusts like CapitaLand Integrated Commercial Trust.
- No Derivatives Exposure: The fund did not use derivative contracts during the period.
Special Actions to Improve Profitability:
- The fund maintains a diversified allocation, with particular focus on financials and real estate sectors. While no specific operational changes are noted, the focus on high-yielding sectors suggests a long-term capital appreciation strategy aligned with the STI.
Recommendations for Investors:
- For Existing Investors:
- Hold: The fund’s diversified exposure to resilient sectors like financials and real estate, along with its steady performance, suggests that investors should continue to hold their units. With projected easing of interest rates and a favorable macroeconomic outlook for Singapore, holding may provide future appreciation.
- For Prospective Investors:
- Consider Buying: The fund offers broad exposure to Singapore’s key sectors and has outperformed its benchmark over the long term. New investors may consider this fund for long-term growth potential, especially in a lower-interest rate environment.
Disclaimer:
Please note that past performance is not indicative of future results. This report does not constitute financial advice. Investors should consult with their financial advisor before making investment decisions.
Date of the Report:
- Date: 24 September 2024
- Financial Year: Reporting period is for the financial year ending 30 June 2024.
