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To assess the diversification benefits of Singapore equities, we analysed 5-years’ worth of historical data for US and Singapore equities. We plotted every possible portfolio combination on a chart showing risk (on the horizontal axis) and return (on the vertical axis). This produces the efficient frontier – the curve that represents portfolios delivering the highest expected return for a given level of risk. Anything below this curve is considered inefficient – investors could either earn more return for the same risk or take less risk for the same return.
Our analysis shows that a portfolio that is made up of about 50% of US equities and 50% of Singapore equities appears to deliver the most return for the risk taken.
Source: Eastspring Investments (Singapore) Limited, Morningstar. As at 31 October 2025. Returns computed in SGD and on a bid-bid basis with net income reinvested, if any, annualised. Past performance information presented is not indicative of future performance.
What it means for you
Naturally, the optimal mix would change as we add more asset classes and markets, but the point is that diversified portfolios are more efficient than concentrated ones, and Singapore equities can play a meaningful role both as a risk diversifier and source of returns.
Source: MSCI, as at 31 January 2026. Past performance is not indicative of future performance.
Singapore equities have delivered total returns of 9.5% p.a. over the last 5 years1 and valuations remain attractive at 15.5x 12-month forward price to earnings, almost a 45% discount to US equities2. The outlook for the Singapore equity market looks promising as the various measures that are being rolled out under the government’s Equity Market Development Programme are expected to improve both the demand and supply dynamics within Singapore equities.
Singapore equities also offer a high dividend yield of 4.5%, compared to 1.1% for the US3. These dividends can help to dampen market volatility, especially during risk-off periods. In addition, while US indices are increasingly driven by a narrow set of mega-cap tech names, Singapore’s index leadership is distributed across multiple defensive sectors, reducing single-theme risk. Singapore’s lower exposure to options turnover and volatility-targeting strategies compared to the US also implies that Singapore’s equity market has less derivatives-driven feedback loops which can amplify short-term market swings.
Tip
The diversification benefit from Singapore equities is better captured through a diversified basket of stocks rather than a small number of individual stocks. The latter approach potentially exposes investors to more company-specific risks such as management decisions, regulatory changes, or sector-specific issues.
On the other hand, a diversified basket of Singapore equities spreads exposure across multiple sectors, allowing investors to tap into the various growth drivers underpinning the Singapore economy.
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Source:
1MSCI. In USD terms. As of 30 April 2026.
2 MSCI. As of 30 April 2026.
3Bloomberg. 12-month trailing dividend yield for S&P500 Index and FTSE Straits Times
All Share Index. As of 12 May 2026.
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United States of America (for institutional clients only) by Eastspring Investments (Singapore) Limited (UEN: 199407631H), which is incorporated in Singapore and is registered with the U.S Securities and Exchange Commission as a registered investment adviser.
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The afore-mentioned entities are hereinafter collectively referred to as Eastspring Investments.
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