Retail interest picks up in S-Reit ETFs

SINGAPORE continues to lead the Asia ex-Japan region as the largest Reit exchange traded fund (ETF) market following the listing of CSOP iEdge S-Reit Leaders ETF SRT and the UOB APAC Green Reit ETF GRN on the Singapore Exchange last year.

Together with the two new listings, the 5 Singapore-listed Reit ETFs now have combined assets under management (AUM) of close to S$800 million, which has more than doubled since January 2020.

The 2 ETFs with 100 per cent focus on S-Reits - Lion-Phillip S-Reit ETF CLR and CSOP iEdge S-Reit Leaders ETF SRT - recorded a combined AUM of S$353 million while the other 3 ETFs which offer Asia and Asia-Pacific exposure - NikkoAM-StraitsTrading Asia Ex Japan Reit ETF G3B , Phillip SGX APAC Dividend Leaders Reit ETF BYI and UOB Asia Pacific (APAC) Green Reit ETF GRN - recorded S$437 million of combined AUM.

Retail investors, which net bought (note that net buy/sell amount is derived by subtracting total sell amount from total buy amount) over S$1 billion of S-Reits in 2021, have been a key driver of the overall S-Reits sector fund flow activities.

Since the start of 2022, retail investors continue to net buy S-Reits, accumulating more than S$350 million in net retail inflows in the year to date.

Similarly, the 5 Reit ETFs have seen 24 consecutive months of net buys by retail investors.

In January 2022, retail investors net bought S$15 million of Reit ETFs from the secondary market, the largest amount seen over the last 24 months.

Retail investors are active holders of Reit ETFs and are holding 43 per cent of the combined AUM across the 5 Reit ETFs (as of Jan 2022).

Aside from direct cash investments, retail investors may also invest in Singapore-listed Reit ETFs via the Supplementary Retirement Scheme (SRS) and the CPF investment scheme (CPFIS). The NikkoAM-StraitsTrading Asia ex Japan Reit ETF COI was included under CPFIS in November 2021.

In terms of sector performance, the FTSE ST Reit Index declined close to 2 per cent in the 2022 year to date till Feb 10, amid increasing expectations of a potential rate hike.

The index yield spread (difference between risk-free rate and FTSE ST Reit Index's dividend yield) stands at 402bps, which is close to the average yield spread over the last 10 years.

While interest rates gyration may potentially narrow the yield spread, fundamental factors such as macro-economic recovery and reopening may also have a positive impact on dividend yields.

The 5 best performing Reits in the 2022 year to date include - Suntec Reit T82U (+6.8 per cent), Sabana Industrial Reit M1GU (+4.8 per cent), Ascott Residence Trust hmn (+4.6 per cent), Keppel Reit K71U (+4.4 per cent) and CDL Hospitality Trusts J85 (+4.3 per cent). SGX RESEARCH

For more research and information on Singapore's Reit sector, visit sgx.com/research-education/sectors for the monthly SReits & Property Trusts Chartbook. Source: SGX Research S-Reits & Property Trusts Chartbook.