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REIT ETFs: The Ultimate Singaporean Guide to Investing in 'Em

profileSudhan P

Real estate investment trusts (REITs) pool money from investors like you and me to invest in a portfolio of income-generating real estate assets. 

Such assets can range from shopping centres to industrial buildings.

In exchange for our investment in a REIT, we are entitled to distributions at regular intervals, usually on a quarterly basis.

Currently, there are 42 REITs and property trusts listed in Singapore, making our country one of Asia’s largest markets for them. 

Source: Singapore Exchange

There are two main ways to get exposure to the REIT market.

One is by investing in individual REITs (the Seedly REITs tool can help with this) and the other is by buying REIT exchange-traded funds (ETFs)

What Are REIT ETFs? 

ETF is an investment that tracks the performance of an underlying asset.

In this case, a REIT ETF tracks the performance of a specific REIT index. In Singapore, there are three REIT ETFs tracking different indices.

The REIT ETFs listed in our city-state are:

  1. Phillip SGX APAC Dividend Leaders REIT ETF (SGX: BYJ) (SGX: BYI)
  2. NikkoAM-StraitsTrading Asia Ex Japan REIT ETF (SGX: CFA) (SGX: COI)
  3. Lion-Phillip S-REIT ETF (SGX: CLR)

More on the REIT ETFs later, but first…

Why REIT ETFs? 

There are four main benefits of investing in REIT ETFs:

  • Instant diversification — REIT ETFs allow investors to own a portfolio of REITs in different sectors with a click of a button
  • Passive — Investors don’t have to pick and monitor individual REITs, so buying REIT ETFs is an excellent option for time-starved investors
  • Low cost — Since investors don’t have to purchase different REITs one-by-one, they save on commission costs that they would have incurred otherwise
  • Professional management — REIT ETFs are also professionally managed where there’s automatic rebalancing and corporate actions, such as rights issues, are taken care of on behalf of unitholders

Phillip SGX APAC Dividend Leaders REIT ETF

Of the three REIT ETFs, Phillip SGX APAC Dividend Leaders REIT ETF is the oldest, having been listed on 20 October 2016.

It is also the first-ever ETF focusing on Asia Pacific REITs.

This ETF follows a smart beta strategy that ranks and weights the underlying REITs according to total dividends paid in the last 12 months, with an aim of enhancing returns above that of traditional market-cap weighted ETFs.

Phillip SGX APAC Dividend Leaders REIT ETF, which has 30 constituents, tracks the iEdge APAC ex Japan Dividend Leaders REIT Index.

In terms of geographical allocation, most of the REITs in the ETF are concentrated in Australia, followed by Singapore, Hong Kong, and Thailand.

With regards to the REIT sector allocation, diversified REITs take up most of the ETF.

Source: Phillip SGX APAC Dividend Leaders REIT ETF product sheet (data as of 31 May 2021)

The following table shows the top 10 constituents of Phillip SGX APAC Dividend Leaders REIT ETF (data as of 31 May 2021):

REITWeightCountry
Link REIT9.85%Hong Kong
Mirvac Group8.58%Australia
Dexus8.04%Australia
Stockland7.56%Australia
Goodman Group7.52%Australia
Scentre Group6.52%Australia
GPT Group6.11%Australia
Ascendas REIT6.02%Singapore
Mapletree Logistics Trust3.03%Singapore
Mapletree Industrial Trust2.90%Singapore

NikkoAM-StraitsTrading Asia Ex Japan REIT ETF

NikkoAM-StraitsTrading Asia Ex Japan REIT ETF is the world’s first Asia ex-Japan REIT ETF, and it tracks the FTSE EPRA Nareit Asia ex Japan Net Total Return REIT Index. 

Most of the REITs in the ETF are concentrated in Singapore and Hong Kong.

In terms of REIT industry allocation, retail REITs take up around 37% of the ETF, followed by industrial REITs, and diversified REITs. 

Source: NikkoAM-StraitsTrading Asia ex Japan REIT ETF factsheet (data as of 31 May 2021)

The following table shows the top 10 constituents of NikkoAM-StraitsTrading Asia Ex Japan REIT ETF (data as of 31 May 2021):

REITWeightCountry
Link REIT 9.8%Hong Kong
Ascendas REIT9.8%Singapore
CapitaLand Integrated Commercial Trust9.6%Singapore
Mapletree Logistics Trust 7.8%Singapore
Mapletree Industrial Trust 6.8%Singapore
Mapletree Commercial Trust 6.2%Singapore
Frasers Logistics & Commercial Trust5.0%Singapore
Keppel DC REIT 4.2%Singapore
Suntec REIT4.1%Singapore
Embassy Office Parks REIT3.5%India

Lion-Phillip S-REIT ETF

Lion-Phillip S-REIT ETF is Singapore’s first ETF dedicated entirely to Singapore REITs.

Among the three REIT ETFs, this ETF is the latest kid on the block as it was listed on 30 October 2017. 

Lion-Phillip S-REIT ETF tracks the performance of Morningstar’s Singapore REIT Yield Focus Index.

The index is one of Morningstar’s strategic beta indexes that uses a proprietary three-factor rules-based investment methodology that emphasises 1) business quality; 2) financial health and 3) dividend yield.

Industrial REITs make up most of Lion-Phillip S-REIT ETF’s sector allocation, followed by retail and office. 

The following pie chart shows the breakdown of the different REIT sectors in Lion-Phillip S-REIT ETF:

Source: Lion-Phillip S-REIT ETF factsheet (data as of 31 May 2021)

Lion-Phillip S-REIT ETF contains 27 high-quality Singapore REITs, and the weight of each REIT is capped at 10%.

As of end-May 2021, the top 10 constituents of the Lion-Phillip S-REIT ETF were:

REITWeight
Mapletree Industrial Trust9.7%
CapitaLand Integrated Commercial Trust9.6%
Mapletree Logistics Trust 9.5%
Ascendas REIT9.2%
Keppel DC REIT8.8%
Mapletree Commercial Trust8.6%
Parkway Life REIT 6.3%
Frasers Centrepoint Trust6.3%
Keppel REIT5.3%
Frasers Logistics and Commercial Trust4.3%

Comparison of the REIT ETFs

Here’s a quick comparison of the three REIT ETFs that we just discussed:

 Phillip SGX APAC Dividend Leaders REIT ETF NikkoAM-StraitsTrading Asia Ex Japan REIT ETFLion-Phillip S-REIT ETF
Benchmark indexiEdge APAC ex Japan Dividend Leaders REIT IndexFTSE EPRA Nareit Asia ex Japan
Net Total Return REIT Index
Morningstar Singapore
REIT Yield Focus Index
Main geographies where underlying REITs are listedAustralia and Singapore Singapore and Hong KongSingapore
Top three REIT constituentsLink REIT, Mirvac Group, and DexusLink REIT, Ascendas REIT, and CapitaLand Integrated Commercial TrustMapletree Industrial Trust, CapitaLand Integrated Commercial Trust, and Mapletree Logistics Trust
Number of holdings302827
Distribution frequencySemi-annualQuarterlySemi-annual
Dividend yield2.1%3.8%4.7%
Total expense ratio per annum1.08%0.60%0.60%
Trading board lot
size
10010100
Stock tickerBYJ (SGD) and
BYI (USD)
CFA (SGD) and
COI (USD)
CLR (SGD)

Have Burning Questions Surrounding REITs?

Then you must check out the community at Seedly and participate in the lively discussion regarding REITs and stocks! 

Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer may have a vested interest in the companies mentioned.

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About Sudhan P
It isn't fair competition when only one company in the world makes Monopoly. But I love investing in monopolies. Before joining the Seedly hood, I had the chance to co-author a Singapore-themed investment book – "Invest Lah! The Average Joe's Guide To Investing" – and work at The Motley Fool Singapore as an analyst.
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