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How The Amova Singapore STI ETF Achieved A 24.92% Return In 2025 · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts, Matt and Sally.
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  Welcome to the Deep Dive. Today, we're really digging into an ETF that had,
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  well, just a massive year.
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  We've got the annual report for the Imova Singapore STI ETF,
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  the one covering the financial year ending June 30, 2025.
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  And our goal here for you, the listener, is pretty clear.
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  We want to get past the headlines. We're going to pull out the real financial
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  performance numbers, figure out why they were so big, and then look at,
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  you know, what the fund actually holds and the risks involved.
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  Right. And it's crucial to start with the basics. This fund,
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  its whole purpose is just to copy the Straits Times Index, the STI,
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  Simple Passive Replication.
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  Oh, and a quick note on the name, you'll see a Mova Singapore STI ETF in the
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  report. But it only changed that on September 1st, 2025.
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  Before that, it was the Nikko AM
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  Singapore STI ETF, fundamentally the same thing, just a rebrand. Got it.
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  Okay, so let's hit that main number first, because the performance wasn't just
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  decent. It was, frankly, stellar this year.
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  What was that one-year raw return figure? Yeah, it was impressive.
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  For the year ending June 2025, the ETF delivered 24.92%. 24.9%.
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  In just 12 months, that's a really significant gain. Absolutely.
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  It was a huge year for Singapore's big companies. And if you look at the performance
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  table, that 24.92% is interesting because the benchmark itself,
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  the STI, returned 25.46%. Ah, okay.
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  So if the whole point is just to track the index being only about half a percent,
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  54 basic points, below it, that sounds like they did their job pretty well. Exactly.
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  Operationally, that's a success. They delivered what they promised.
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  And that close tracking, it's consistent if you look back further, too.
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  Since it started back in February 2009, the fund's annualized return is 9.03%.
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  The STI itself did 9.71% annualized over that same period.
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  So there's always a little bit of lag, that tracking error, but it's consistently
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  small across all timeframes, three months, six months, one year,
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  10 years. It shows the strategy works.
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  Okay, so let's move from percentages to, well, this year's scale of money involved. Yeah.
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  Because this is where you really see the market momentum, I think.
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  We need to look at that total return for the financial year after income tax.
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  What were those numbers for 2025 versus 2024?
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  Uh-huh. And the growth in actual dollar terms is, well, it's huge.
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  For 2025, the total return was S181.9 million dollars. Wow. Okay.
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  S181.9 million dollars.
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  How does that compare to the year before 2024? That's where it gets really stark.
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  In 2024, the total return was $62.7 million.
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  Wait, hold on. It's $181.9 million versus $62.7 million.
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  That's, go in the math quickly, like 190% increase year over year in the total return.
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  Approximately, yes. It's an enormous jump. That's way beyond just a good year.
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  That suggests something major shifted in the market, right? Yeah.
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  Sentiment, cycle, something.
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  Definitely. And you see that reflected in the fund size, too.
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  People notice those returns. The NEC assets, so the total money managed by the
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  fund, grew significantly.
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  It went from $736.8 million at the end of June 2024 up to $921.4 million by June 2025.
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  Investors clearly liked what they saw and put more money in.
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  Right. That makes sense. So that 190 percent increase in total return,
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  that's the big question.
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  Where did that massive surge actually come from?
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  You look at the statement of total return, what's the main engine driving that
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  S-181.9 million dollar figure?
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  It's overwhelmingly from asset appreciation, not so much the regular income.
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  The key line item is net gains on investments. That includes both realized gains
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  profits from selling things and unrealized gains, meaning the stuff they still hold went up in value.
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  And I'm guessing those numbers are pretty dramatic given the overall return.
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  They really are the core of the story for this financial year.
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  In 2025, these net gains hit 139,840,334 balls. OK, some $140 million roughly.
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  And 2024. In 2024, that same line was $29,943,535.
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  So just under S30 million dollars. Wow. From $30 million in gains one year to
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  S140 million dollars the next.
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  That capital appreciation component, it basically increased by nearly five times. That's incredible.
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  It's like you said, it wasn't the rent who was selling the house for a huge
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  profit. Precisely. The market prices moving up drove the vast majority of that total return.
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  Now, we shouldn't ignore the income side completely. Dividends were also up quite a bit.
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  Okay, what did those look like? Dividends received went from S35 million dollars
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  in 2024 to nearly S45 million dollars, S44.97 million dollars in 2025.
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  So the underlying companies are paying out more cash, which is healthy.
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  But yeah, the defining factor for the year was definitely the stock price surge.
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  And I suppose managing more money and getting these huge returns comes with slightly higher costs.
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  Looking at expenses, management fees went up a bit.
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  S1.37 million dollars to S1.67 million dollars.
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  Transaction costs almost doubled. But I guess when you're talking about S140
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  million dollars in capital gains, those operational cost increases are pretty small in comparison.
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  Yeah, relatively minor, which actually leads into operational efficiency.
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  It's interesting because even though assets grew and transaction costs rose,
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  the overall total expense ratio, the TER, actually went down slightly. Oh, really?
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  How much? It dropped from 0.26% in 2024 to 0.24% in 2025.
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  They managed to keep relative costs in check. And remember, the manager had
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  actually reduced the cap on the expense ratio to 0.25% back in December 2023.
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  So they came in under their own lower cap.
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  Okay, that's efficient. But here's
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  a number that really jumped out at me talking about activity levels.
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  The portfolio turnover ratio, the PTR.
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  This measures how much trading they did relative to the fund's size, right? That's right.
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  Value of trades versus average assets. Well, in 2024, it was just 13.38%. Pretty low.
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  Seems normal for passive. But in 2025, it shot up to 32.74%.
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  Yeah, that's a significant jump. Nearly tripled the activity level.
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  So what does that imply? For a fund that's just supposed to mirror an index,
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  why would trading activity nearly triple in one year?
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  That's the key question, isn't it? Normally, you'd expect turnover in a passive
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  fund mainly from index rebalancing companies entering or leaving the STI or
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  maybe large flows of money in or out from investors. Right. Routine adjustments.
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  But activity on the scale of 32.74 percent, it suggests something more dynamic was happening.
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  Maybe the index changes were unusually large that year or perhaps the manager
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  was being more, let's say, proactive in positioning around those changes or handling flows.
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  More active trading to capture that market momentum we saw. could that be linked
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  to the five-fold jump in capital gains?
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  It certainly implies a strong connection.
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  That level of activity suggests the manager wasn't just passively sitting back.
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  They were likely making tactical moves, perhaps related to index reconstitutions
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  or significant market shifts that paid off massively in terms of realized or unrealized gains.
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  Whatever the specific reasons, that heightened activity clearly coincided with
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  exceptional performance.
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  Okay, so let's look inside the portfolio then.
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  Where was all this capital and all this activity focused? What does the fund
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  actually hold? Well, no surprises. It reflects the STI structure very closely.
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  Geographically, it's overwhelmingly Singapore, about 83.7%. There's a small
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  slice in Hong Kong SAR, around 5.8%, and tiny bit, less than 1% in Thailand.
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  But it's basically a Singapore fund. And industry-wise, what dominates?
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  Banks and finance massively.
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  It accounts for 57.44% of the fund's
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  net assets. Wow, nearly 60% in just financials. That's concentrated.
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  Extremely. It really reflects the Singapore market structure.
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  If Singapore's economy leans heavily on finance, this ETF does too.
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  And the top holdings must reflect that banking dominance directly, I imagine?
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  They absolutely do. You really can't overstate the concentration here.
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  The top three holdings alone make up over half the fund.
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  Just three stocks. Which ones? DBS Group Holdings is the biggest at 25.22%,
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  then OCBC at 14.78%, and UOB at 12.40%.
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  So DBS, OCDC, UOB, yeah, that adds up to over 52% right there. Exactly.
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  Those three banks are the core of this ETF.
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  We did see some slight growth in other sectors, like technology nudged up from
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  about 2.1% to 3.2%, and telecom services grew a bit to 6.7% to 7.6%.
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  But honestly, the story is still the overwhelming weight of the financial sector.
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  Which brings us squarely to risk and the outlook, doesn't it?
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  With that kind of concentration, what's the main risk identified in the report?
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  Well, given its objective, the primary risk is simply market risk,
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  specifically price risk. That's laid out in Node 8a.
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  Because it's designed to track the STI, its performance is fundamentally tied
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  to the ups and downs of the index itself.
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  Whatever the STI does, the fund will pretty much follow. And they even put a
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  number on that sensitivity, right? They do. They provide a sensitivity analysis.
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  They state that what they consider a reasonable possible shift in the index,
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  they use 14% up or down, as the example light, would likely cause a corresponding
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  14% change in the fund's net assets.
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  So almost perfect correlation, which is good for tracking, but it means you're
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  fully exposed to any big swings in the index, positive or negative. Precisely.
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  And this ties directly into diversification risk.
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  When you have 57.44% concentrated in banks and finance, it means the fund's
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  future isn't just about the overall Singapore market, it's incredibly dependent
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  on the health of that specific sector.
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  Think about factors like interest rates, regulations, the regional economic
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  climate impacting banks.
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  All those things will disproportionately affect the CTS performance.
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  The outlook for the fund is basically the outlook for Singapore's big banks.
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  Makes sense. What about operational risks? Like, can they handle investors wanting
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  their money back quickly?
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  Liquidity. They address that. The report mentions they manage liquidity risk
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  by holding a buffer of cash and ensuring their investments are primarily readily
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  sellable securities listed on major stock exchanges.
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  The idea is to be able to meet redemption requests from unit holders smoothly,
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  even if many come in at once.
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  That's standard, but crucial for an ETF.
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  Okay. And from a sort of governance standpoint, everything above board. Seems so.
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  Both the trustee and the manager state in the report that they followed all
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  the investment rules set out in the fund's governing documents, the trust deed.
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  Plus, the external auditors gave a clean opinion, no major issues found.
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  That suggests operational stability and compliance even during that very active
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  high growth year. Right. So let's try and pull this all together.
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  Key takeaways from digging into this 2025 report for the Amova Singapore STI ETF.
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  It was clearly a year of phenomenal growth and returns, almost entirely fueled
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  by that huge surge, nearly five times in capital gains.
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  And underpinning that performance was a much more active portfolio than the previous year.
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  Remember that triple turnover ratio and it all relies very, very heavily on
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  Singapore's big banks. Exactly.
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  So for you, the learner, what does it boil down to? The fund absolutely did
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  what it's supposed to do. It mirrored the STI very effectively.
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  It's a pure index tracker in that sense.
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  But, and it's a big but, that heavy concentration in financials is a double-edged sword.
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  When banks are flying high, like they apparently were in this period,
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  the fund captures that upside brilliantly.
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  However, if sentiment turns or that sector faces headwinds, the downside risk
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  is equally concentrated.
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  Its fate is tied to those heavyweights. And that leads perfectly into a final
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  thought for you to chew on, connecting those two points, activity and gains.
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  We saw the portfolio turnover nearly triple in the exact same year the capital
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  gains exploded to S-140 million dollars. So the question is,
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  what does that aggressive ramp up in trading within a supposedly passive fund
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  tell us about how the manager might have been trying to capture those gains?
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  And maybe more importantly, how sustainable is that level of active intervention
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  for generating such outsized capital gains in the future? Something to think about.