How to invest in Singapore

Investing in Singapore is investing your money into a symbol of the great Asian growth story. Singapore, though a relatively tiny country (essentially a "city-state"), has established itself as a business-friendly and trade-friendly regional financial center. Here's how to invest in Singapore through exchange-traded funds (ETFs).

Instructions

1. Decide on your allocation to Singapore. Although you may view investing in Singapore as a country diversification away from your other investments (such as in the United States), you should understand the industry weighting of Singapore ETFs currently on the market. The Singapore ETFs currently available are weighted towards the financial and telecommunications industries. These weightings naturally reflect the economic mix within Singapore. You may want to balance the weighting already given to these industries in your portfolio (even if in other countries) against the amount that you wish to invest in Singapore. As the global banking crisis has shown, the world is arguably not yet "decoupled." Your investments in Singapore may correlate to the performance of your other investments in other countries. This may or may not be desirable for you. In other words, look beyond mere country diversification when decide how much to allocate to Singapore ETFs.

2. Obtain prospectuses for Singapore ETFs. One ETF product currently available is the iShares Singapore Index Fund ETF (ticker EWS). Another ETF was the NETS FTSE Singapore Straits Times Index Fund (ticker SGT) - though it appears this ETF may have been liquidated. You can obtain ETF fact sheets (providing a summary of the ETF) and full prospectuses online by taking the name of the ETF and searching on the internet (also see links at the bottom of this page).

3. Compare the expense ratios of the ETFs and their holdings, and then buy one or more ETFs using the ticker symbols, just as you would any other stock.

Tips & Warnings

• As with any investment in a foreign country, other factors such as currency exchange rates will impact your overall investment results (favorably or unfavorably) in addition to the performance of the underlying companies.

• Singapore is a small country. This might mean periods of added volatility, particularly given the concentration in the Singaporean economy towards a few particular industries (at least relative to a larger, more diversified economy).

Resources

• Ishares Singapore Index Fund (EWS)
• NETS FTSE Singapore Straits Times Index Fund (SGT)