To The Moon

Retail flows moving from trading to accumulation

Retail investors have net bought close to S$20 billion of Singapore equities since 2020, while combined STI ETF retail AUM has grown fivefold from S$884 million to S$4.2 billion.

This AUM also rose 74% over the past 12 months, highlighting how systematic investing has gained ground alongside traditional stock selection during the recent $Straits Times Index(STI.SI)$ rally.

The shift suggests regular passive investing is becoming part of the core retail toolkit, with investors increasingly using ETFs to build market exposure through accumulation rather than one-off trading decisions.

Regular STI ETF investing captured recent market returns

The growth in STI ETF assets has coincided with strong underlying market performance. An indicative S$1,000 monthly investment into the SPDR STI ETF from December 2019 to July 2026 would have accumulated 27,093 units from total contributions of S$80,000.

At the July 2026 closing price of S$5.751, those holdings would be valued at S$155,812, implying a basic return of 94.8% and an indicative CAGR of 10.7%, excluding transaction costs.

MU ETF

DCA helped investors buy more when markets were weaker

The regular investment approach also helped investors accumulate more units when market conditions were more difficult.

The same monthly investment purchased 407 units when the ETF traded at S$2.456 in October 2020, compared with 174 units at the July 2026 price of S$5.751. This is the behavioural value of DCA: it turns a difficult decision into a preset process.

Investors did not need to decide whether October 2020 was the right time to buy; the plan simply kept deploying capital when prices were lower.

Dividend reinvestment strengthened the compounding effect

Over the full investment period, reinvested dividends contributed almost S$13,000 of additional capital, reinforcing the role of compounding in long-term returns.

The dividend reinvestment effect also became more visible as the position grew. Dividend cash available for reinvestment rose from S$34.55 in February 2020 to S$1,687.06 in August 2024 and S$2,166.23 in February 2026, as each distribution was paid on a larger accumulated unit base.

This helped turn Singapore’s income-oriented equity market into a compounding mechanism, not just a source of periodic cash income.

DCA reduced timing risk, not market risk

The July 2026 results also demonstrate how systematic investing can participate in rising markets.

The indicative 10.7% CAGR captured approximately 80% of the estimated 13.1% annualised total return generated by an equivalent lump-sum investment over the same period, while reducing the timing risk associated with committing capital at a single market entry point.

However, systematic investing does not eliminate market risk. Had the SPDR STI ETF ended July 2026 at S$3.00 per unit instead of S$5.751, the indicative CAGR would have been approximately 0.2%, highlighting that while regular investing can smooth volatility, long-term returns remain dependent on the performance of the underlying market.

The case for a repeatable passive process

The case for regular passive investing is therefore less about finding the perfect entry point, and more about creating a repeatable process that keeps investors exposed to long-term market returns. Singapore’s market structure supports this approach, with STI ETFs offering broad exposure to the largest and most liquid local stocks, many of which have maintained a long record of dividend payments.

The STI also gives the strategy a distinctly local role. Its constituents include many of Singapore’s largest, most liquid and most widely followed listed companies, giving regular investors diversified exposure without requiring them to select individual stocks each month. The index’s dividend profile also matters, as regular distributions can be reinvested into additional ETF units, turning Singapore’s income-oriented equity market into a compounding base over time.

When regular monthly contributions are combined with reinvested distributions, the strategy turns income into additional units, and additional units into a larger base for future distributions. This does not remove market risk, but it does reduce the need for investors to make repeated timing decisions in volatile markets.

Pension and retirement-plan investing follows a comparable discipline, although it is usually framed around strategic asset allocation, regular contributions, reinvestment and periodic rebalancing rather than dollar-cost averaging.

Pension funds and defined contribution plans are designed around long investment horizons, while target-date funds are commonly structured to provide diversified portfolios that are rebalanced and adjusted over time as retirement approaches. The same principle supports regular passive investing for individuals: instead of relying on one market entry point, the investor follows a repeatable process that keeps capital exposed, reinvests income and allows disciplined allocation to do more of the work over time.

A practical middle ground for long-term investors

For investors who want Singapore equity exposure but do not have the time, confidence or mandate to trade actively, regular passive investing provides a practical middle ground.

It keeps the discipline of monthly saving, the diversification provided by an index ETF, and the compounding effect of reinvested dividends. Future returns will differ, but the strategy’s value lies in its simplicity: invest regularly, stay diversified, reinvest income, and let time do more of the work.