Five Reit ETFs in Singapore average 7.2 per cent total returns, ride on rate cut expectations
Agnes Wee SCN &
Emelia Tan
THE five Reit exchange traded funds (ETFs) listed in Singapore averaged 7.2 per cent total returns in November.
At 7.2 per cent total returns, this was the second best performer in terms of underlying segments across Singapore-listed ETFs, after ETFs with Vietnam Equities underlying.
This is also after S-Reits rebounded 7 per cent in November, recording its best month in three years and reversing declines seen in October. The iEdge S-Reit Index also continued to gain 1.5 per cent in price returns in the first week of December.
The five Reit ETFs recorded S$11.5 million in net unit creations in the month of November. This comes after Reit ETFs took over gold and fixed income ETFs as the second most traded ETF asset class by retail investors in the third quarter of 2023.
Much of this performance has been driven by expectations that the rate hike cycle could come to an end.
The five Reit ETFs, in order of assets under management (AUM) size, are NikkoAM-StraitsTrading Asia ex Japan Reit ETF , Lion-Phillip S-Reit ETF , CSOP iEdge SReit Leaders Index ETF , UOB Apac Green Reit ETF , and Phillip SGX Apac Dividend Leaders Reit ETF.
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In total, the five Reit ETFs have a combined AUM exceeding S$840 million as at Nov 30, 2023, more than doubling in size in three years.
The NikkoAM-StraitsTrading Asia ex Japan Reit ETF tracks the FTSE EPRA Nareit Asia ex Japan Net Total Return Reit Index which consists of 42 Reits across Singapore (74 per cent by geographical breakdown), Hong Kong (14 per cent), India (7 per cent), South Korea (3 per cent), Malaysia and the Philippines (both 1 per cent).
The Lion-Phillip S-Reit ETF and the CSOP iEdge SReit Leaders Index ETF are pure-play Singapore Rei ETFs which track the Morningstar Singapore Reit Yield Focus Index and iEdge S-Reit Leaders Index respectively, with over 20 S-Reits in holdings.
The UOB Apac Green Reit ETF provides portfolio exposure into higher-yielding Reits in Asia-Pacific with a focus on environmental performance based on the Global Real Estate Sustainability Benchmark’s (GRESB’s) assessment.
The ETF tracks the iEdge-UOB Apac Yield Focus Green Reit Index which comprises 50 constituents that meet certain environmental factors across indicators such as energy and water consumptions, greenhouse gas emissions, and green building certifications, while also maintaining a competitive dividend yield.
The Phillip SGX Apac Dividend Leaders Reit ETF tracks the iEdge Apac ex Japan Dividend Leaders Reit Index which consists of 33 Reits across Australia (49 per cent by geographical breakdown), Singapore (38 per cent), Hong Kong (11 per cent), and Thailand (2 per cent).
Reit ETFs provide investors with instant diversification and access to Singapore and regional Reit markets, as it tracks the performance of an underlying index – in this case a basket of Reits.
Buying an ETF is also less costly, if one were to build a similar portfolio by buying the individual Reits. Investors can also invest in the Reit ETFs using a Regular Shares Saving Plan (RSSP). SGX RESEARCH
The writer is a research analyst at SGX. For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the monthly S-Reits & Property Trusts Chartbook.
Source: SGX Research S-Reits & Property Trusts Chartbook.
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