ETF Centre

Singapore’s Next Wave of Stocks Beyond the Banks

While the Straits Times Index (STI) has delivered stellar returns, nearly 60% of its weight is concentrated in just three bank stocks. Here is how the newly launched CGS Fullgoal Singapore Next 50 Active ETF (Q50) offers investors a way to tap into Singapore’s small- and mid-cap universe—balancing heavy banking exposure with REITs, technology, and healthcare.

The Joyful Investors
The Joyful Investors04 Sep 2026 98 Views
Singapore’s Next Wave of Stocks Beyond the Banks

The Straits Times Index tracks the performance of the top 30 companies listed on SGX to represent the Singapore stock market.

At first glance, that sounds pretty diversified. You have banks, property companies, telecommunications, industrials, and a little bit of everything, right?

However, on closer look, almost 60% of the STI component weightage is concentrated in just three companies: DBS, OCBC and UOB. Technically an investor is invested in 30 companies, but a huge chunk of your portfolio is still riding on just three banks.

Beyond these 30 companies, there is an entire universe of businesses listed on the SGX that most investors may be less familiar with. This is where the iEdge Singapore Next 50 Index comes into the picture. It captures another group of 50 companies within the Singapore market, ranked immediately after the STI constituents by market capitalisation.

This article takes a closer look at what’s inside the iEdge Singapore Next 50, how its sector composition differs from Singapore’s blue-chip universe, and how investors could potentially use the CGS Fullgoal Singapore Next 50 Active ETF alongside their existing Singapore equity exposure to build a more diversified portfolio.

Singapore's Blue-Chip Market and Sector Concentration

Financials make up about 60% of the STI. Real Estate is the next largest sector at around 13%, followed by Industrials at close to 9% as of 14 August 2026. This leaves relatively little room for other sectors. Technology accounts for just 0.8%, while Consumer Staples make up about 2%.

This concentration is not necessarily a bad thing by itself. In fact, it has been a major reason why the STI has performed so well.

Singapore’s banks have had a phenomenal run. DBS is up more than 30% year-to-date, OCBC is up more than 50%, and UOB is up more than 15%. When three of the biggest components in an index deliver returns like these, they have a significant impact on the overall index.

That is exactly what we have seen. The STI is already up more than 20% year-to-date, and since October 2025, it has rallied around 36% to reach roughly 5,200 as of 30 June 2026.

The STI is also already four years ahead of the slow-case scenario that DBS modelled last year for the index’s journey towards its 2040 target. Clearly, being heavily exposed to Singapore’s banks has worked very well for STI investors.

Source: CGS International

However, concentration works both ways.

If interest rates come down, the credit cycle weakens, or another headwind hits the financial sector, the same concentration that helped the portfolio on the way up can start working against investors.

Markets do not move in one straight line forever. Companies go through different cycles. The economy changes, interest rates change, consumer behaviour changes, and technology disrupts industries. There will always be developments around the world that are simply outside our control.

This is precisely why investors may not want their entire portfolio to depend on one particular outcome continuing to play out. A more resilient portfolio should be well diversified. One way to consider doing this is to look beyond the 30 names in the STI through the iEdge Singapore Next 50 Index.

What’s in the iEdge Singapore Next 50 Index?

The iEdge Singapore Next 50 Index consists of the next 50 SGX-listed companies by market capitalisation, ranked immediately after the 30 companies in the STI.

This does not simply mean a collection of small, speculative companies. These are not penny stocks. The index requires a minimum market capitalisation of S$100 million, screens for liquidity, and caps each individual stock at 5% of the index. This helps ensure that no single company can become so large that it dominates the entire index.

Looking at some of the companies within the index gives a better sense of what this segment of the market looks like.

One example is Sheng Siong, a company that probably needs little introduction to Singapore investors. The supermarket chain operates more than 88 outlets across the island as of 2026, generated more than S$1.5 billion in annual revenue in 2025, and reported 1H 2026 EPS growth of 11.9% year-on-year.

Another is iFAST Corporation, one of Asia’s larger digital wealth platforms. As of 30 June 2026, its assets under administration reached a record S$36 billion, up nearly 33% year-on-year, while management is targeting S$100 billion by 2030.

The index also includes companies involved in the semiconductor ecosystem. AEM Holdings provides specialised semiconductor test solutions used in advanced chip manufacturing, with Intel as a key customer. UMS Integration supplies high-precision components and sub-assemblies for semiconductor equipment makers, with Applied Materials as a key customer.

On the income side, there are names such as Parkway Life REIT, one of Asia’s largest listed healthcare REITs, with 74 properties across Singapore, Japan and France worth roughly S$2.57 billion. It is also one of the S-REITs that has consistently grown its distribution per unit every year since its IPO.

What the Next 50 Index provides is exposure to Singapore’s small- and mid-cap segment. Investors are potentially getting exposure to a different group of businesses and different growth drivers that can complement exposure to Singapore’s blue-chip companies.

Top constituents on the iEdge Singapore Next 50 Index (Source: SGX)

STI vs Next 50: A Very Different Singapore Portfolio

Putting the two indices side by side highlights just how different their sector compositions are.

Financials dominate the STI. In contrast, Financials make up just 6% of the Next 50 Index. Instead, the Next 50 has significantly greater exposure to REITs at about 40%, Consumer Staples at 13%, Technology at 11%, and Healthcare at 8%, a sector that is essentially absent from the STI.

The composition of these two indices is therefore fundamentally different. There are two areas that are particularly relevant from a portfolio diversification perspective.

1. Greater REIT Exposure

REITs become the largest sector in the Next 50, accounting for around 40% of the index.

This creates a very different interest-rate exposure compared with the STI. Banks have generally benefited from a higher-rate environment through stronger net interest margins, while REITs are more sensitive to the cost of borrowing and the relative attractiveness of their yields.

Alongside STI exposure, the Next 50 therefore provides exposure to a part of the market that can respond differently as the interest-rate environment changes. This is not about predicting where interest rates are going. Rather, it is about avoiding a situation where an entire Singapore portfolio is dependent on the same rate environment.

2. Greater Technology Exposure

The second area worth highlighting is technology. Technology allocation jumps from under 1% in the STI to more than 10% in the Next 50 Index.

Singapore is not just a banking and property hub. There are also a number of SGX-listed companies involved in the global electronics and semiconductor ecosystem, ranging from testing and precision engineering to components and manufacturing.

These companies can be driven by very different factors from the banks. Their performance can be influenced by global technology demand, semiconductor cycles and global capital expenditure, providing another potential source of diversification.

The Next 50 also provides exposure to sectors such as Healthcare at 8% and Consumer Staples at 13%, both of which are essentially absent from the STI.

This is why the Next 50 can potentially be viewed as a complement to the STI, rather than a replacement. Investors could potentially use the Next 50 to broaden sector representation and build a more diversified Singapore equity portfolio.

How To Invest In The Next 50 Index?

Source: CGS International

One way to gain exposure to the Next 50 is through the CGS Fullgoal Singapore Next 50 Active ETF, which will be listed on the Singapore Exchange under the ticker Q50 on 3 September 2026.

There are two important things to understand about this ETF.

First, it is not simply trying to replicate or passively track the Next 50 Index. It is an actively managed ETF.

Structurally, at least 80% of the portfolio has to be invested in actual Next 50 constituents based on the portfolio manager’s investment strategy. However, the fund has some flexibility, with up to 20% of the portfolio allowed to be invested in other SGX-listed companies, including larger and more liquid STI-type names, when the active strategy identifies an opportunity.

We also think having that 20% flexibility can be useful.

The portfolio manager is not forced to remain within the Next 50 universe regardless of what is happening in the market. If attractive opportunities exist outside the Next 50, there is some room to act on them.

From an investor’s perspective, this alignment is important. Ultimately, investors are not investing simply to own the Next 50 Index. The objective is to try to generate attractive returns while managing risk.

This flexibility can also be seen in the current holdings. Among the top 10 holdings are Next 50 names such as iFAST and Parkway Life REIT, but there are also names such as Keppel and DBS Group, which sit in the STI Overlay portion. Investors therefore still get core exposure to the Next 50, while the fund retains some flexibility to look beyond it.

Source: SGX

How is CGS Fullgoal Singapore Next 50 Active ETF Actively Managed?

The fund uses six different factors to assess companies as part of its active management strategy.

1. Valuation

The strategy considers whether a stock is attractively priced relative to factors such as earnings, book value or cash flow. A great company is not necessarily a great investment if investors are paying too much for it.

2. Expected Growth

The strategy looks at whether analysts expect the company’s earnings and revenue to grow, and importantly, whether those expectations are improving.

3. Earnings Surprise

This considers whether a company has performed better than what the market expected. This can be particularly interesting for smaller companies, which tend to receive less analyst coverage and where the market may not always react immediately when something changes.

4. Analyst Sentiment

The strategy considers whether analysts are revising their earnings estimates and ratings upwards or downwards. This means the strategy is not only looking at where a company stands today, but also at how market expectations around that company are changing.

5. Earnings Quality

Not all profits are created equal. The strategy looks at whether reported earnings are actually supported by real cash flow rather than being driven mainly by accounting accruals.

6. Market-Related Factors

These include factors such as turnover, liquidity and stock-specific risk, which can be particularly important when investing in smaller companies. A stock may look attractive on paper, but if it is extremely illiquid, entering or exiting the position can become a problem.

Based on these six factors, each stock receives a composite score. That score then feeds into a portfolio optimisation process, which determines the actual portfolio holdings.

The portfolio will typically hold around 30 to 50 stocks, with a maximum 10% weight for any single stock, and will be rebalanced monthly.

In other words, the Next 50 Index provides the universe, while the active strategy of the CGS Fullgoal Singapore Next 50 Active ETF determines how the fund navigates that universe.

Source: CGS International

How It Fits Into Portfolio Construction

After looking at the differences between the STI and the Next 50, I think the most useful way to view the CGS Fullgoal Singapore Next 50 Active ETF is as a complement to existing Singapore exposure.

It does not necessarily have to replace an STI ETF. Instead, investors could potentially use both to gain exposure to a broader range of Singapore-listed companies and sectors.

The STI provides significant exposure to Singapore’s large blue-chip companies, particularly the banks. The Next 50, on the other hand, provides a very different mix, with much less exposure to financials and more exposure to REITs, technology, healthcare and consumer businesses.

Combining the two could therefore potentially create a more diversified Singapore equity portfolio rather than relying solely on the companies and sectors that dominate the STI.

However, the appropriate allocation ultimately depends on what an investor already owns.

For example, if an investor already has significant exposure to DBS, OCBC and UOB, whether directly or indirectly through an STI ETF, adding some Next 50 exposure could potentially help diversify away from that concentration in banks.

On the other hand, if an investor already has a substantial portfolio of Singapore REITs, adding the CGS Fullgoal Singapore Next 50 Active ETF could actually increase exposure to REITs, given that REITs make up close to 40% of the Next 50 Index.

The important thing is therefore to look at the portfolio as a whole, rather than looking at the ETF in isolation.

From a practical perspective, the ETF can currently be invested through cash or SRS, giving investors another way to potentially add Next 50 exposure depending on their existing portfolio and the account they are investing through.

Potential Risks Involved

Before considering whether this ETF belongs in a portfolio, there are also several risks to be aware of.

1. Higher Fees

The fees are higher, understandably, because this is an actively managed ETF.

The management fee is 0.65% per annum, while the target total expense ratio is around 1.20%, subject to a cap of 1.50%.

Fees create a hurdle that the fund has to overcome. The active strategy therefore needs to add enough value to justify these additional costs. If active management does not generate enough additional returns to compensate for the fees, investors could potentially have been better off with a lower-cost passive alternative, assuming a comparable passive option is available.

2. Active Management Risk

This is a new ETF, so there is no long live track record to assess how the strategy performs through different market environments.

The backtested results may look encouraging, but backtested performance is not the same as actual market performance.

The underlying premise is that CGS Fullgoal’s quantitative model can identify companies that may outperform the broader Next 50 universe. However, there is no guarantee that it will. The model could get things wrong, market conditions can change, and factors that worked well historically may not necessarily work as well in the future.

3. Sector Concentration

The ETF may not eliminate concentration risk completely.

The Next 50 Index has close to 40% exposure to REITs. While investors are reducing their exposure to banks compared with the STI, they are simultaneously taking on greater exposure to the REIT sector.

Although the CGS Fullgoal Singapore Next 50 Active ETF is actively managed and does not exactly replicate the Next 50 Index, there is still a possibility that it could end up with significant exposure to REITs.

Again, this needs to be considered in the context of the overall portfolio rather than looking at the ETF in isolation.

Closing Thoughts

Diversification is not simply about owning more stocks. It is about making sure a portfolio is not overly dependent on one sector, one group of companies or one particular outcome.

The CGS Fullgoal Singapore Next 50 Active ETF could be one potential way for investors to broaden their Singapore exposure beyond traditional blue-chip or bank stocks.

How much of your Singapore portfolio is currently in banks, and would you consider the Next 50 to diversify your exposure?




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