SGX’s Three REITs ETFs in Focus

24 November 2017

Market Updates

SGX’s Three REITs ETFs in Focus

• Since listing, Phillip SGX APAC Dividend Leaders REIT ETF, NikkoAM-StraitsTrading Asia ex Japan REIT ETF and Lion-Phillip S-REIT ETF have generated total returns of +6.3% (in SGD terms annualised), +12.8% (since 29th March 2017) and +1.8% (since 30th October 2017) respectively.

• These ETFs pay dividends on semi-annual or quarterly basis, with competitive management fees of 0.3% to 0.5%, and competitive average bid-ask spreads of 21bps to 60bps.

• SGX’s three REITs ETFs aim to provide investors with low-cost access to high-quality Singapore and Asia-Pacific REITs that offer sustainable income streams and potential for capital growth.

Phillip SGX APAC Dividend Leaders REIT ETF

The Phillip SGX APAC Dividend Leaders REIT ETF – the first REITs ETF launched by Phillip Capital Management – was listed on 20 October 2016. It seeks to provide investors a high level of income and moderate long-term capital appreciation by tracking the performance of 30 publicly traded REITs in the Asia Pacific ex-Japan region. It is the first-ever ETF focusing on Asia Pacific REITs, allowing investors a convenient and easy way to gain broad exposure to the best REITs and their prime real estate assets in the region.

The ETF, which tracks the SGX APAC Ex-Japan Dividend Leaders REIT Index, will rank and weight the underlying constituents based on the total dividend paid by the REITs in the previous 12 months. This ensures only the largest and highest dividend-paying REITs are invested in, while poor performers are weeded out.

The ETF has REITs with properties in Australia, Singapore and Hong Kong with a weightage of 58.4%, 27.5% and 13.5% respectively. In terms of REIT classifications, the Index is focused heavily on retail REITs which make up 46.5% of its portfolio.

The ETF paid its first semi-annual dividend in April 2017. The annualised dividend yield stands at 4.2% per annum (net of tax).

Since listing, the ETF has generated annualised total returns of +6.3% (in SGD terms) and + 9.6% (in USD terms). In the 2017 year-to-date, the ETF has generated total returns of +8.8% (in SGD terms) and +17.0% (in USD terms). For more details, click here

NikkoAM-StraitsTrading Asia ex Japan REIT ETF

NikkoAM-StraitsTrading Asia ex Japan REIT ETF was launched by Nikko Asset Management and Straits Trading Company on 29 March 2017. SGX-listed REITs make up 70% of the ETF, with Hong Kong, China and Malaysian REITs comprising the remaining 30%. The ETF will track the FTSE EPRA/NAREIT Asia ex Japan REITs Net Total Return SGD Index, which has a reported index yield of 5.72% as of 31 January 2017.

The FTSE EPRA/NAREIT Asia ex Japan Net Total Return REIT Index is largely exposed to Singapore properties, which comprise approximately 61% of the assets, followed by Hong Kong (23%), China (8%), Malaysia (6%) and Indonesia (3%). In terms of REIT classifications, the Index has a stronger Industrial, Office and Retail REIT focus.

Since listing in March this year, the ETF has generated +12.8% total returns. For more details, click here

Lion-Phillip S-REIT ETF

Lion Global Investors (LGI), together with Phillip Capital Management, launched their new REITs ETF – the Lion-Phillip S-REIT ETF – on SGX on 30th October 2017. This is the first REIT ETF on SGX and the world to comprise 100% Singapore REITs and is designed to provide investors with low-cost access to 23 high-quality S-REITs that offer sustainable income streams.

The Lion-Phillip S-REIT ETF tracks the Morningstar® Singapore REIT Yield Focus Index, which comprises 23 Singapore REITs. The trailing 12-Month Dividend Yield of the index is 5.75%.

Office properties comprise 34% of the ETF portfolio, while retail has 27%, industrial 26% and hospitality 10%, with healthcare comprising 3%.

The portfolio is rebalanced semi-annually – in June and December – and the weights for individual REITs are capped at 10%. The ETF has semi-annual distributions – in February and August. The Designated Market Makers are Commerzbank and Phillip Securities.

Since listing last month, the ETF has generated a price gain of +1.8% from its offer price of S$1.00. For more details, click here

Source: Bloomberg & ETF Manager’s websites (data as of 23 November 2017).

ETFs

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets.

Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors.

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