Singapore funds have kept ahead of the Straits Times Index in 2012, but all was not rosy a mere 12 months ago, when nearly all funds were beaten by the benchmark.
Author : Nick Tay
Singapore Funds Rise In 2012
Key Points
Back in 1H2011, nearly all Singapore funds were underperforming the benchmark Straits Times Index
As at 1H2012, the situation has reversed, and nearly all Singapore funds have outperformed the benchmark
Over an annualised 5-year period, Aberdeen Singapore Equity, Amundi Spore Dividend Growth, Schroder Singapore Trust Cl A xd, DWS Singapore Eqty Fd, and United Singapore Growth Fund have outperformed the benchmark
Investors should be wary of letting short-term performance cloud their judgment, and consider funds that have shown consistent outperformance over long time frames for Singapore Equity exposure
Image attribution: luis vilanova
“Sometimes a man rises from the darkness.” – Alfred Pennyworth, The Dark Knight Rises
Echoing the general sentiment that pervaded markets in 1H2011, one forum post took aim at our efforts to reassure investors that their Singapore equity funds had not lost the plot. The comments were justified; after all over the 6 months that made up 1H2011, Singapore equity funds had failed to beat the benchmark by quite large margins.
I wrote, perhaps unwisely, why we remained confident about the Singapore funds on the platform, and that in the short-term of 6 months, funds can and will underperform the benchmark, but quality funds will outperform over time. So rewind to 1H2011, nearly all Singapore equity funds lagged the market, as shown in Table 1.
Table 1: Calendar Year Returns, 1H2011
Fund
Return
United Singapore Growth Fund
0.48%
HGIF Spore Eq-A USD
-0.53%
FTSE Straits Times Index
-0.66%
Amundi Spore Dividend Growth
-2.01%
Schroder Singapore Trust Cl A
-2.02%
DBS Shenton Thrift
-2.46%
DWS Singapore Eqty Fd
-2.66%
Aberdeen Singapore Equity
-3.52%
LionGlobal Singapore Trust
-4.28%
JF Singapore A (dist) USD
-4.92%
Outperformance in bold. source: iFAST compilations, in SGD, dividends reinvested
So, as of July 2012, have Singapore equity funds emerged from the pits of 2011 to rise above the benchmark?
Arise in 1H2012
For comparison, we look at 1H2012 returns. As at end-June 2012, here is how Singapore equity funds performed.
Table 2: Calendar year performance, 1H2012
Name
Return
Singapore Dividend Equity Fund
26.16%
Aberdeen Singapore Equity
22.22%
Amundi Spore Dividend Growth
19.48%
Nikko AM Shenton Thrift Fund
17.78%
JF Singapore A (dist) USD
17.31%
DWS Singapore Eqty Fd
16.95%
Schroder Singapore Trust Cl A xd
16.29%
LionGlobal Singapore Trust
15.73%
United Singapore Growth Fund
15.11%
FTSE Straits Times Index
14.74%
HGIF Spore Eq-A USD
12.12%
source: iFAST compilations, in SGD terms, dividends reinvested.
It’s a near mirror image of 1H2011 performance. Nearly all Singapore equity funds, save for HGIF Spore Eq-A USD, beat the STI in 1H2012. Top of the list is the recently relaunched Singapore Dividend Equity Fund, managed by Nikko Asset Management Asia, with 26.16% return, beating the benchmark by more than 11pp (percentage points, the arithmetic difference between two percentages).
Another strong performer is Aberdeen Singapore Equity, which held its position in our 2012 recommended funds list, while posting 22.22% returns year-to-date as at end-Jun 2012. And while I’ve singled out these two funds, it’s worth noting that nearly all funds posted strong benchmark outperformance.
But as we’ve repeatedly preached, it’s important to not let a relatively short-term, 6-month spell of performance overshadow the long-term performance of these funds. We consider recent performance in the context of 5-years.
Looking back 5 years
Table 2: Calendar year performance, end-2006 to end-June 2012
Name
2007
2008
2009
2010
2011
YTD
Singapore Dividend Equity Fund
13.41%
-55.16%
63.05%
11.49%
-12.96%
26.16%
Aberdeen Singapore Equity
15.95%
-39.98%
66.85%
14.37%
-15.83%
22.22%
Amundi Spore Dividend Growth
20.64%
-46.65%
68.07%
12.09%
-16.59%
19.48%
Nikko AM Shenton Thrift Fund
20.87%
-54.95%
77.00%
10.54%
-19.77%
17.78%
JF Singapore A (dist) USD
24.12%
-58.91%
76.41%
14.51%
-18.05%
16.95%
DWS Singapore Eqty Fd
24.80%
-48.89%
69.62%
11.56%
-16.82%
16.29%
Schroder Singapore Trust Cl A xd
19.94%
-44.83%
66.64%
9.91%
-16.31%
17.31%
LionGlobal Singapore Trust
18.61%
-49.64%
70.12%
12.27%
-22.76%
15.73%
United Singapore Growth Fund
11.14%
-48.20%
69.57%
12.72%
-17.08%
15.11%
FTSE Straits Times Index
16.63%
-49.41%
64.49%
10.09%
-17.04%
14.74%
HGIF Spore Eq-A USD
21.78%
-60.84%
83.01%
6.59%
-17.53%
12.12%
YTD figures as at end-June 2012. source: iFAST compilations, in SGD terms, dividends reinvested.
Of note is the fact that by the end of 2011, five funds had emerged ahead of the STI, most of which have, at one point or another, earned recommended fund status.
This is also reflected in their 5-year annualised returns.
Table 4: 5-year Annualised Return, end-July 2007 to end-July 2012
Name
Annualised Return
Aberdeen Singapore Equity
2.60%
Amundi Spore Dividend Growth
-0.55%
Schroder Singapore Trust Cl A xd
-1.11%
DWS Singapore Eqty Fd
-1.93%
United Singapore Growth Fund
-2.60%
FTSE Straits Times Index
-2.94%
Singapore Dividend Equity Fund
-3.26%
LionGlobal Singapore Trust
-3.82%
Nikko AM Shenton Thrift Fund
-4.42%
JF Singapore A (dist) USD
-5.69%
HGIF Spore Eq-A USD
-8.90%
Outperformance in bold. source: iFAST compilations, in SGD, dividends reinvested
Aberdeen Singapore Equity, Amundi Spore Dividend Growth, Schroder Singapore Trust Cl A xd and DWS Singapore Eqty Fd all emerged significantly ahead of the benchmark.
Conclusion
2012 has, thus far, vindicated an earlier statement that “If history rhymes, and each fund manager sticks to their established investment process, we can state with some degree of confidence that our recommended funds are likely to return to their benchmark-beating ways once again.”
Of course, past performance being no guarantee of future performances, readers should avoid any hasty conclusions that the performances of 2012 herald an age of immense returns from Singapore Equity Funds (although we’d certainly not complain if immense returns emerge!), but we can draw a more modest conclusion – Singapore Equity Funds have shown the ability to generate outperformance over long time frames and investors willing to ride out the market volatility should consider them for Singapore equity exposure.
Nick Tay is part of the Content Team in iFAST Financial Pte Ltd.
iFAST and/or its licensed financial adviser representatives may own or have positions in the funds of any of the asset management firms or fund houses mentioned or referred to in the article, or any unit trusts or Singapore Government Securities bonds related thereto, and may from time to time add or dispose of, or may be materially interested in any such unit trusts or Singapore Government Securities bonds. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any fund. No investment decision should be taken without first viewing a fund's prospectus. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Past performance and any forecast is not necessarily indicative of the future or likely performance of the fund. The value of units and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website.
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