What’s Really Inside Your Singapore STI ETF? 5 Surprising Facts From the Annual Report
Introduction: Beyond the Ticker Symbol
For most investors, an Exchange-Traded Fund (ETF) is the ultimate “set-it-and-forget-it” tool. You buy a single ticker symbol that tracks a market index, like Singapore’s Straits Times Index (STI), and you assume you’ve bought a simple, diversified slice of the economy. It’s supposed to be straightforward, passive, and, let’s be honest, a little boring.
But what if the story behind that simple ticker symbol was more complex and far more interesting than you thought? Buried inside the pages of the official annual report—a document most investors promptly ignore—is a fascinating look under the hood. It reveals the fund’s true character, its hidden operations, and the intricate machinery required to make it all work.
This post digs into the 2025 annual report for the Amova Singapore STI ETF. Let’s turn the page on this unread report and discover the five secrets it tells about what you actually own.
1. The Illusion of Diversification: You’re Buying Three Banks
Investors choose a broad market ETF for diversification, assuming their money is spread widely across different sectors of the economy. A quick look at the Amova Singapore STI ETF’s holdings, however, reveals a powerful concentration in a single industry: banking.
The fund’s “Top 10 holdings” table shows that the three largest Singaporean banks dominate the portfolio. Their weightings as of June 30, 2025, are staggering:
- DBS Group Holdings Limited: 25.22%
- Oversea-Chinese Banking Corporation Limited: 14.78%
- United Overseas Bank Limited: 12.40%
Together, these three companies alone make up 52.4% of the entire fund. The concentration is even clearer when looking at the industry breakdown, where the “Banks & Finance” sector comprises 57.44% of the fund’s assets. This concentration isn’t a choice by the fund manager, but a direct reflection of the Singaporean economy itself, where these three banks are titans that dominate the public market. This means an investor who also owns shares in these banks is not diversifying, but rather ‘double-dipping’ in the same sector, amplifying their exposure to risks specific to the Singaporean financial industry.
2. Your “Singapore” ETF Holds a Passport
It’s natural to assume that an ETF tracking the Singapore Straits Times Index would invest exclusively in companies based in Singapore. The annual report, however, shows that the fund’s portfolio has a few stamps in its passport.
The “Statement of Portfolio” reveals that the fund holds assets with a primary geographic listing outside of Singapore. As of the report date, these non-Singapore holdings included:
- Hong Kong SAR: 5.79%
- Thailand: 0.92%
Specific companies contributing to this geographic mix include Jardine Matheson Holdings Limited, listed under Hong Kong, and Thai Beverage Public Company Limited, listed under Thailand. This isn’t an error; it reflects the complex reality of modern indices. The STI includes companies like Jardine Matheson, with deep historical roots and significant business operations in Singapore, even if its primary listing is in Hong Kong, challenging the simple notion of a ‘country’ index.
3. The Fund’s Hidden Side Hustle: Loaning Out Your Stocks
A passive index fund is supposed to just buy and hold stocks, right? Not quite. The annual report reveals that the Amova STI ETF has an interesting side hustle: securities lending. This is the practice of loaning out the stocks it holds to other financial institutions, typically for short-selling.
According to the report, this is done for “efficient portfolio management.” The key facts are:
- The fund lent out securities with a fair value of S$78,424,221.
- This activity generated S$288,564 in “securities lending income,” which flows back to the fund’s investors.
To protect your investment, the fund doesn’t just hand over the shares. In exchange for the loans, it receives collateral. As of the report date, the fund held collateral (mostly government bonds from countries like Japan, the UK, and Austria) worth S$82,890,361, more than the value of the securities it lent out. This is a calculated decision by the manager: accepting a tiny amount of counterparty risk in exchange for a small but consistent income stream that can help offset fund expenses and slightly boost returns for unitholders.
4. It Takes a Village to Run a “Simple” Fund
The idea of an ETF as a simple, automated product run by algorithms couldn’t be further from the truth. The annual report’s cover page and formal statements show it takes a village of highly specialized financial firms to keep the fund operating safely and legally.
Here are the key players and their distinct roles:
- The Manager (Amova Asset Management Asia Limited): This is the firm in charge, responsible for managing the fund’s investments and daily operations to ensure it tracks the index.
- The Trustee (HSBC Institutional Trust Services): The Trustee acts as a watchdog for investors. Its legal duty is to take custody of the fund’s assets and hold them in trust for the unitholders.
- The Auditor (PricewaterhouseCoopers LLP): An independent third party that audits the fund’s financial statements to verify they are fair and accurate.
- The Custodian (The Hongkong and Shanghai Banking Corporation Limited): A separate entity that provides the critical service of safe-keeping the fund’s securities.
This structure is designed for investor protection through a deliberate separation of powers. The Manager runs the money, but the Trustee, acting on your behalf, legally holds it, while the Auditor independently verifies that the numbers are true. It’s a system of checks and balances, not a single automated black box.
5. The Hidden Dance of “Low-Cost” Investing
ETFs are famous for their low costs, and the Amova STI ETF is no exception, with a Total Expense Ratio (TER) of just 0.24% for 2025. But the annual report shows that achieving this low cost isn’t automatic; it involves an interesting financial dance.
The “Statement of Total Return” breaks down the fund’s expenses, including the Management fee (S$1,673,022), Trustee fee (S$167,302), and Custody fee (S$137,967). But then you spot something counter-intuitive: a line item called “Expense reimbursement” with a value in parentheses of (S$751,861). This means the Manager actually paid money back to the fund.
Why? A note in the financial ratios section reveals the answer: the fund’s expense ratio is capped at 0.25%. When the actual operating costs exceeded this cap, the Manager was required to reimburse the difference to keep fees low for investors. This shows that “low-cost” investing isn’t always passive; it’s often the result of competitive pressures and fee caps that require active management from the fund sponsor.
Conclusion: Read the Fine Print
An annual report can transform a simple ticker symbol into a rich, complex story. A deep dive into the Amova Singapore STI ETF reveals that this “simple” investment is heavily concentrated in banks, has international holdings, actively earns side income by lending stocks, and is governed by a network of professional firms. Even its low cost is the result of an actively managed fee cap.
These details don’t necessarily make it a better or worse investment, but they make for a much more informed investor. The next time you review your portfolio, consider what surprising stories might be hiding just beneath the surface of your investments.
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