Roughly 90% of actively managed funds globally fail to beat their benchmark index over a 10-year period. That single statistic has fuelled the global rise of ETFs — and it’s a question worth asking for anyone investing in Singapore shares: is it better to buy a basket of stocks through an ETF, or pick individual companies yourself? On the SGX, both approaches are available. The Straits Times Index (STI) ETF gives instant exposure to Singapore’s 30 largest listed companies, while individual stock-picking lets you concentrate capital in names you have conviction in.
Neither approach is universally correct. The right choice depends on your time, knowledge, risk tolerance, and what you’re actually trying to achieve.
The Case for ETFs
Instant Diversification
Buying the SPDR Straits Times Index ETF or the Nikko AM STI ETF in a single trade gives you exposure to all 30 STI components in their proper weightings — DBS, OCBC, UOB, Singtel, CapitaLand, Keppel, and the rest. You don’t have to pick winners or worry about over-concentrating in any single name. For investors with $5,000 to deploy, an ETF gives you broader exposure than you could realistically build with individual stocks.
Low Maintenance
ETFs handle rebalancing automatically. When the index composition changes — a company is added, another removed — the ETF adjusts on your behalf. You don’t have to read annual reports, follow earnings calls, or monitor sector trends. For investors who want exposure to Singapore equities without making it a part-time job, this is a meaningful advantage.
Lower Fees Than Active Funds
STI ETFs typically charge expense ratios of 0.20–0.30% annually — a fraction of what actively managed Singapore equity funds charge. Over decades of compounding, the difference is substantial. A 1% annual fee difference on a $100,000 portfolio costs roughly $30,000 over 20 years.
The Case for Individual Stocks
Higher Yield Potential
The STI as a whole yields around 4.5–5% in 2026. But individual constituents like DBS yield closer to 5.5%, and certain S-REITs like Mapletree Logistics Trust yield 6%+. By selecting the higher-yielding components and avoiding the lower-yielding ones, you can build a portfolio that delivers more income than the index average. For income-focused investors, this matters.
Tactical Flexibility
With individual stocks, you can overweight sectors you have conviction in and underweight the ones you don’t. If you think semiconductor stocks have multi-year upside, you can build a meaningful position in Venture Corporation or AEM Holdings without being diluted by the rest of the index. ETFs don’t give you that flexibility — you take the index as it is.
Direct Ownership Through CDP
Individual stocks bought through a CDP-linked broker give you direct ownership in your name, voting rights at AGMs, and dividends credited straight to your bank account. ETFs are units in a fund, not shares in the underlying companies — a small distinction for most investors, but one that matters to some.
Side-by-Side Comparison
| Factor | STI ETF | Individual Stocks |
| Diversification | Built-in (30 stocks) | Requires 10–20+ holdings |
| Annual Fees | 0.20–0.30% | None (only commission per trade) |
| Time Required | Minimal | Ongoing research and monitoring |
| Expected Yield | ~4.5–5% (index average) | 5–6%+ if curated |
| Customisation | None | Full control |
| Voting Rights | No (held by fund) | Yes (via CDP) |
| Suitable Capital | $1,000+ | $10,000+ for proper diversification |
The Hybrid Approach Most Investors Should Consider
In practice, the best answer for many Singapore investors isn’t one or the other — it’s both. A common framework: use an STI ETF as the core holding (perhaps 50–60% of the Singapore equity allocation) for instant diversification and low maintenance, then build smaller individual positions in higher-conviction Singapore stocks around it. This gives you the broad market exposure of an ETF with the targeted upside of individual selections — like adding a high-yield S-REIT, a semiconductor mid-cap, or a specific bank you favour.
Which Approach Suits Which Investor?
ETFs are typically the better starting point for: investors with less than $10,000 in capital, those who can’t commit time to research, anyone who values simplicity over optimisation, and people who explicitly don’t want to make ongoing decisions about individual companies. Individual stock-picking makes more sense for: investors with larger portfolios who want higher yields than the index average, those willing to do fundamental research, and anyone who wants direct CDP ownership and AGM voting rights. Most experienced investors in Singapore end up using both — ETFs as a foundation, individual stocks as an overlay.
Making the Right Call
There’s no single answer to the ETF vs. individual stocks question — only the right answer for your specific situation. The good news: on the SGX, both approaches are accessible, transparent, and supported by a well-regulated market structure. Whether you’re building a $5,000 starter portfolio or managing a $500,000 income strategy, the tools to execute either approach are widely available.
Platforms like Moomoo, regulated by the Monetary Authority of Singapore (MAS), give investors access to both SGX ETFs and individual stocks within a single account, with commission-free trading for new users, free Level 2 market data, AI-powered research tools, and direct CDP linkage. With physical stores across Singapore for in-person support, it’s equally easy to buy a single ETF unit or build a curated portfolio of individual names.
