1 SGX-Listed ETF That Can Truly Diversify Your Portfolio

Yet, uncertainty lingers wherever investors look. There’s the unresolved trade war between the US and China, ongoing conflicts between Ukraine and Russia as well as Israel and Iran, and a job market in the US that’s starting to slow down.

Indeed, a lot of this market volatility has been caused by inconsistent US policy – a fact that’s reflected by asset managers’ views on forward returns from stocks. In a recent Bank of America Corp fund manager survey, 54% of asset managers expect international stocks to be the best-performing asset class over the next five years.

That easily beat the 23% of respondents that picked US stocks, according to the survey. As one of the more reliable regional equity markets, Singapore’s appeal to investors has increased given its relative stability versus the chaos elsewhere in the world.

And Singapore is also becoming a hub for ETF listings. With investors more uncertain than ever, here’s one ETF listed on the Singapore Exchange (SGX) that investors can add to their portfolios for a genuine level of diversification.

All that Glitters is Gold

In the world of alternative assets (that are easily accessible to all investors), nothing is more appealing than the “yellow metal” and, of course, that means gold.

On the SGX, the best way to get exposure to gold is via the SPDR Gold Shares Trust (SGX: O87) (SGX: GSD), which is traded in both US Dollars and Singapore Dollars.

So, why should investors be considering gold for their portfolio? It’s down to the defensive nature of the hard asset, its decentralised nature and, its price behaviour when it comes to the US Dollar. Right now, all three are in its favour and it looks like these tailwinds will continue for a while yet.

First off, gold has had a phenomenal 2025 so far. The price of the yellow metal is up over 27% year-to-date, versus just a 2% gain for the S&P 500 Index and 3.3% gain for the Straits Times Index over the same period.

Gold’s outperformance is easy to understand once we look at all the factors involved.

Low correlation to other asset classes

A truly diversified asset will give investors the ability to be defensive when core assets (like equities) are falling.

Bonds are supposed to act as that defensive buffer but – in recent years – fixed income hasn’t been performing the role it’s supposed to in portfolios. Indeed, 2022 was a perfect example of that, when both stocks and bonds fell in tandem.

That’s why gold has been studied more closely as an alternative defensive asset to add to portfolios. As you can see from the chart below, looking at the correlation of various asset classes to the MSCI World Total Return Index, gold has an extremely low correlations throughout the past three decades.

Correlation of asset classes to MSCI World Total Return Index

Sources: Bloomberg Finance, State Street Global Advisors, data as of 31 March 2025

Perhaps the best example of its defensive nature was its 2008 return (the main year of the Global Financial Crisis), when gold rose around 16% while the S&P 500 Index plunged 37%.

It’s the only asset class out of “alternatives” that has been consistent in its low correlation to equity markets. Broader commodities like to be seen as a “hedge against inflation” but their defensive track record has been highly questionable given the relatively high correlation of commodities to equities over the past 17 years or so.

Weaker US Dollar

One of the biggest reasons to think about having a bigger portfolio position in gold has been the weaker US Dollar. With the fiscal mess in the US, alongside its newly-inspired trade policy that relies on punitive tariffs, trust in the world’s reserve currency has plumbed new lows.

This weakness in the greenback can be turned to investors’ advantage. Given a lot of equity assets are priced in US Dollars, due to the sheer size of the US stock market, having a hedge against the greenback makes sense for portfolios.

Gold price vs. the US Dollar Index (DXY) in 2025

Sources: TradingView, StopSaving as of 23 April 2025

Indeed, the gold price can be seen as a proxy to ride on the structural trend of a weaker US Dollar. The divergence between the two assets and how they behave (when the US Dollar weakens, gold rises and vice versa) means that investors have a natural hedge against both weak equity markets and a weak greenback.

How to go about buying gold in Singapore

As mentioned earlier, one of the easiest ways to get exposure to gold in a portfolio is via an ETF. That also applies to Singapore, where the dual-currency-traded SPDR Gold Shares Trust allows you to purchase shares in either US Dollar or Singapore Dollars.

Investors should also remember that ETFs listed on the SGX also permit individuals to buy just 1 share versus the traditional stock “board lot” of 100 shares.

That makes the barriers to entry much lower for individual investors and that’s extremely useful for the SPDR Gold Shares Trust. Its US Dollar share class (SGX: O87) is trading for US$311 apiece while the Singapore Dollar shares (SGX: GSD) are going for around S$400.

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