Fund Spotlight: Singapore equities as a portfolio diversifier, not just a safe haven

Markets most exposed to the AI theme have delivered the strongest headline returns in 2026. But that leadership has come with sharper drawdowns along the way, and investors already holding concentrated growth or technology exposure may be looking for markets that participate in the upside without matching the swings. We examine how Singapore equities, and the iFAST-Amova Singapore Equity Fund, have filled that role so far this year.

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STI vs other key markets in 2026: Singapore as a diversifier, not just a safe haven

Year-to-date (YTD) as of 30 September 2026, South Korea (+73.7%), Taiwan (+66.3%) and Japan (+33.2%) have comfortably outpaced the Straits Times Index (STI), Singapore's benchmark stock index, which returned 26.5% in SGD terms, still ahead of Asia-ex-Japan (24.9%), Emerging Markets (22.7%) and the major markets.

Figure 1: 2026 YTD returns across major markets including the STI, in SGD terms

The more telling comparison, however, is how these markets behaved during periods of stress rather than strength. In 3Q26, a series of tech-driven sell-offs hit the more AI-concentrated markets hard: in terms of total returns, KOSPI and Nikkei 225 recorded a decline of 17.1% and 4.6% while the STI, anchored by banks and industrials rather than technology, delivered a positive total return of about 11.4% through the same period.

Figure 2: Total returns of STI versus major markets through the tech sell-offs from 1 Jul

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In our view, the STI's income anchor (banks and industrials still generating resilient earnings and dividends) and its limited direct overlap with the most AI-concentrated names have historically dampened the scale of its drawdowns relative to markets where returns are more narrowly driven by a single theme. For investors who already carry meaningful exposure to higher-beta AI and technology markets, Singapore equities, and a fund able to move across both the index's blue chips and its faster-growing SMID segment, can complement that exposure rather than simply replicate it.

Portfolio construction: SMID growth exposure without abandoning the blue-chip anchor

The iFAST-Amova Singapore Equity Fund is managed by Kenneth Tang, who has managed the fund since 4 July 2022 alongside Lai Yeu Huan. Lai Yeu Huan stepped down as Head of Asian Equities at Amova Asset Management in September 2026, handing leadership of the team to Kenneth Tang, and remains with the firm as a consultant through the end of 2026.

The fund is benchmark-aware rather than benchmark-driven: it is not bound by a prescribed SMID allocation and can take positions that differ meaningfully from the STI, subject to a 10% limit on individual off-benchmark positions. That flexibility has translated into a steadily rising commitment to smaller companies, predating Singapore's Equity Market Development Programme (EQDP) rather than simply following it. The fund's SMID weight has grown from 18.4% in June 2023 to 30.2% in June 2026, even as the fund retains its largest positions in the index's banking heavyweights.

Figure 3: iFAST-Amova Singapore Equity Fund SMID weight, before and after the first EQDP fund launch

Two themes run through the portfolio: smaller companies offering compelling value, strong asset backing and identifiable catalysts such as restructuring or value realisation, and companies aligned with the “New Singapore” narrative across renewable energy, technology, data infrastructure, healthcare and logistics.

Sector allocation: underweight banks and REITs, overweight industrials

As at 30 September 2026, Financials remained the fund's largest sector exposure at 54.1%, but this is a meaningful underweight versus the index's 62.6%. Industrials, the fund's second-largest sector at 21.3%, is a clear overweight versus the index's 14.4%, consistent with the fund manager’s preference for the sector's earnings growth. Real Estate is sharply underweight (3.2% vs. 12.5%), reflecting a cautious stance on S-REITs in a higher-for-longer rate environment, while Technology (5.2%) carries little to no weight in the index at all.

Figure 4: Sectoral breakdown of the fund versus the STI

Top holdings: DBS, OCBC and Keppel as large-cap anchors, with room for SMID conviction elsewhere

The fund's top ten holdings have shifted since earlier in the year as banks rallied hard: OCBC (21.1%) and DBS (21.2%) are now its two largest positions. OCBC (21.1%) is held at a slight overweight and DBS (21.2%) at a significant underweight to their index weights of 19.6% and 29.8% respectively. UOB (5.7% vs. 9.8%) remains a clear underweight.

The underweight position for DBS is largely a function of the fund’s mandate, which sets a size limit of benchmark weight plus 2%, with benchmark weights capped at 20%. This puts the maximum allowable DBS weight at 22%.

Beyond the Financials, Keppel (6.3% vs. 3.0%) and Yangzijiang Shipbuilding (4.8% vs. 2.5%) are notable overweights, while Sea Limited, First Resources and Yangzijiang Maritime Development carry no weight in the index at all. The fund's broader SMID conviction sits outside this top ten table.

Table 1: Top ten holdings of the fund

Company	Fund Weight	Index Weight
DBS	21.2%	29.8%
OCBC	21.1%	19.6%
Keppel	6.3%	3.0%
UOB	5.7%	9.8%
Yangzijiang Shipbuilding	4.8%	2.5%
SGX	3.6%	3.5%
ST Engineering	3.1%	3.1%
Sea Limited	2.7%	-
Yangzijiang Maritime	2.5%	-
First Resources	2.1%	-
Source: iFAST-Amova Singapore Equity Fund Factsheet. Index data is represented by Amova STI ETF. Data as of 30 Sep 2026.

Performance vs the STI and peers: outperformance across most horizons

Since 2023, the fund has outperformed both the STI and the peer average across most horizons. The fund delivered 32.5% YTD, ahead of the STI's 26.4% and the peer average's 18.9%. Over one year, the fund's 45.4% return outpaced the STI's 37.5% and the peer average's 26.4%. Over three years on an annualised basis, the fund returned 31.9%, ahead of the STI's 26.8% and the peer average's 24.6%.

In 3Q26, however, the fund returned 7.8%, behind the STI’s 11.4% and slightly ahead of the peer average’s 7.7%, which we think reflects the broad pullback in SMID stocks that quarter. Amova remains constructive on SMIDs, citing continued EQDP flows and the ‘New Singapore’ sectors.

Figure 5: Performance comparison of the fund, STI and peer average, in SGD terms

On a calendar-year basis, the fund has led for the past two years, returning 37.7% in 2025 (versus 28.8% for both the STI and the peer average) and 26.3% in 2024 (versus 23.5% for the STI and 25.8% for the peer average). It lagged in 2023, returning 3.3% against the STI's 4.7% and the peer average's 3.7%.

Figure 6: Calendar year performance comparison of the fund, STI and peer average, in SGD terms

Within 2025, performance was driven predominantly by the fund's overweight in Industrials and Information Technology, anchored by individual winners including ST Engineering, Addvalue Technologies and Centurion Corporation. For 2024, performance was driven by the fund’s overweight in Industrials and Real Estate. On the other hand, the underperformance for 2023 was due to the fund’s underweight in Financials (SGX, OCBC and UOB), overweight in Technology (SEA Limited) and negative stock selection in REITs (CapitaLand China Trust).

Risk measures: a milder maximum drawdown, but a reminder that growth adds some volatility

The fund's three-year maximum drawdown of -13.5% remains milder than both the STI (-14.4%) and the peer average (-13.7%), a sign that its stock selection has provided some cushion during periods of market weakness.

Figure 7: 3-year maximum drawdown of the fund, STI and peer average

That said, the fund's growth and SMID tilt is not without trade-offs. Its three-year downside deviation, a measure of the variability of the fund’s own negative returns, stands at 6.8%, marginally above the STI's 6.3% and roughly in line with the peer average's 6.5%. Investors should read this alongside the milder maximum drawdown figure above: the fund’s negative returns have been slightly more variable than the index’s, even though its single largest peak-to-trough fall has been smaller. This is broadly consistent with a fund that takes on growth and SMID exposure beyond the index's large-cap core.

Figure 8: 3-year downside deviation of the fund, STI and peer average

Conclusion: Singapore equities as a diversifier for AI-heavy portfolios

With growth markets such as South Korea and Taiwan delivering the strongest headline returns in 2026, but also among the sharpest swings through the recent tech sell-offs, Singapore's differentiated, income-anchored index has continued to demonstrate its value as a diversifier rather than simply a defensive parking spot.

For investors who already carry concentrated AI and technology exposure, the iFAST-Amova Singapore Equity Fund offers a way to participate in Singapore's own growth story, including its SMID and “New Singapore” names, through an actively managed, all-cap approach, while retaining the blue-chip anchor that has helped cushion the market's drawdowns relative to its growth-market peers.

With the recent launch of its distribution share class, iFAST-Amova Singapore Equity D SGD, the fund also offers an option for investors who prefer regular income. The managers currently intend to make quarterly distributions on or about the last business day of each quarter, with distributions made at their absolute discretion. Payouts may be made out of income, investment gains and/or capital, and are not guaranteed. Distributions, whether out of capital or otherwise, may lower the fund’s net asset value.

Investors who prefer to reinvest can remain in the accumulation class (iFAST-Amova Singapore Equity A SGD), which does not make distributions.

Declaration: This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report, including all investment theses, ratings, price targets and conclusions, has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.