REIT ETFs: The Ultimate Singaporean Guide to Investing in 'Em
Real estate investment trusts (REITs) have not been spared from the carnage in the Singapore stock market.
In fact, they have fared worse than the local market in general.
The FTSE ST Real Estate Investment Trusts Index, which is an index containing 37 Singapore REITs, is down around 36% from its most recent peak on 19 February 2020 to date.
Comparatively, the Straits Times Index, Singapore’s stock market benchmark, tumbled some 28% “only” during the same time frame.
Those with a long-term view on REITs could consider investing in the resilient ones right now.
The Seedly REITs tool will come in handy for those who wish to pick individual REITs.
However, for those who still want to invest in REITs but long for a hassle-free option, you can check out the REIT exchange-traded funds (ETFs) listed in Singapore.
What Are REIT ETFs?
REITs, as you already know, pool money from investors to invest in a portfolio of income-generating real estate assets.
ETFs, on the other hand, 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.
Those REIT ETFs are:
- Phillip SGX APAC Dividend Leaders REIT ETF (SGX: BYJ) (SGX: BYI)
- NikkoAM-StraitsTrading Asia Ex Japan REIT ETF (SGX: CFA) (SGX: COI)
- Lion-Phillip S-REIT ETF (SGX: CLR)
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, retail REITs take up most of the ETF.
The following table shows the top 10 constituents of Phillip SGX APAC Dividend Leaders REIT ETF:
| REIT | Weight | Country |
|---|---|---|
| Scentre Group | 8.67% | Australia |
| Link REIT | 8.61% | Hong Kong |
| Stockland | 8.05% | Australia |
| Dexus | 6.49% | Australia |
| Goodman Group | 6.20% | Australia |
| Ascendas REIT | 6.09% | Singapore |
| GPT Group | 5.73% | Australia |
| Mirvac Group | 5.44% | Australia |
| Vicinity Centres | 4.84% | Australia |
| CapitaLand Mall Trust | 3.27% | 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 36% of the ETF, followed by industrial REITs, and office REITs.
The following table shows the top 10 constituents of NikkoAM-StraitsTrading Asia Ex Japan REIT ETF:
| REIT | Weight | Country |
|---|---|---|
| Ascendas REIT | 10.4% | Singapore |
| Link REIT | 9.2% | Hong Kong |
| CapitaLand Mall Trust | 7.8% | Singapore |
| CapitaLand Commercial Trust | 6.7% | Singapore |
| Mapletree Logistics Trust | 6.7% | Singapore |
| Mapletree Commercial Trust | 6.6% | Singapore |
| Mapletree Industrial Trust | 5.9% | Singapore |
| Suntec REIT | 5.0% | Singapore |
| Keppel DC REIT | 4.0% | Singapore |
| Keppel REIT | 3.5% | Singapore |
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 on 1) business quality; 2) financial health and 3) dividend yield.
The following pie chart shows the breakdown of the different REIT sectors in Lion-Phillip S-REIT ETF:
Lion-Phillip S-REIT ETF contains 28 high-quality Singapore REITs, and the weight of each REIT is capped at 10%.
The top 10 constituents of the Lion-Phillip S-REIT ETF are:
| REIT | Weight |
|---|---|
| CapitaLand Commercial Trust | 9.9% |
| Mapletree Logistics Trust | 9.0% |
| CapitaLand Mall Trust | 8.5% |
| Ascendas REIT | 8.3% |
| Mapletree Commercial Trust | 8.3% |
| Mapletree Industrial Trust | 7.0% |
| Keppel REIT | 6.7% |
| Manulife US REIT | 6.6% |
| Suntec REIT | 5.2% |
| Parkway Life REIT | 5.0% |
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 ETF | Lion-Phillip S-REIT ETF | |
|---|---|---|---|
| Benchmark | iEdge APAC ex Japan Dividend Leaders REIT Index | FTSE EPRA Nareit Asia ex Japan Net Total Return REIT Index | Morningstar Singapore REIT Yield Focus Index |
| Main geographies where underlying REITs are listed | Australia and Singapore | Singapore and Hong Kong | Singapore |
| Top three REIT constituents | Scentre Group, Link REIT, and Stockland | Ascendas REIT, Link REIT, and CapitaLand Mall Trust | CapitaLand Commercial Trust, Mapletree Logistics Trust, and CapitaLand Mall Trust |
| Number of holdings | 30 | 28 | 28 |
| Distribution frequency | Semi-annual | Quarterly | Semi-annual |
| Total expense ratio per annum | 0.63% | 0.60% | 0.58% |
| Trading board lot size | 100 | 10 | 100 |
| Stock ticker | BYJ (SGD) and BYI (USD) | CFA (SGD) and COI (USD) | CLR (SGD) |
Have Burning Questions Surrounding REITs?
Why not check out the Seedly Community 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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