Investing in REIT ETFs Listed In Singapore: 5 Things You Need To Know

While REITs are a favourite investment among income investors and passive investors, some of us may be holding back in the current higher interest rate environment. Rather than fixed income investments, though, REITs offer an upside potential while still paying out regular distributions as investors wait for the market to turn.

To ensure we gain broad exposure to the asset class, we can diversify our investments into REIT ETFs. This way, we do not need to be swayed by individual REITs, nor do we have to rely on the performance on individual REITs.

There are five REIT ETFs listed in Singapore – all with slightly differing investment methodologies:

#1 Phillip SGX APAC Dividend Leaders REIT ETF (SGX: BYJ)

Kicking off the REIT ETF market in Singapore, the Phillip SGX APAC Dividend Leaders REIT ETF was listed on 20 October 2016. Managed by Phillip Capital Management, the Phillip SGX APAC Dividend Leaders REIT ETF comprises of REITs listed in Asia Pacific ex-Japan – namely, Australia (52%), Singapore (36%) and Hong Kong (10%).

The Phillip SGX APAC Dividend Leaders REIT ETF pays a semi-annual distribution in June and December each year.

As of April 2024, its fund size is US$8.54 million, and charges a total expense ratio (TER) of 1.54%, inclusive of a 0.3% annual management fee.

Phillip SGX APAC Dividend Leaders REIT ETF comprises REITs including:

– Scentre Group (9.5%) – Australia

– Link REIT (9.0%) – Hong Kong

– CapitaLand Integrated Commercial Trust (CICT) (6.5%) – Singapore

– Goodman Group (5.8%) – Australia

– Vicinity Limited (5.7%) – Australia

– Dexus (5.5%) – Australia

– Stockland (5.2%) – Australia

– GPT Group (5.0%) – Australia

– Mirvac Group (4.0%) – Australia

Its annualised returns in the last 3 years is -5.6%, and in the last 5 years is -2.6%.

Read Also: What You Need To Know About Singapore’s First REIT ETF Before Investing In It

 

#2 NikkoAM-Straits Trading Asia Ex Japan REIT ETF (SGX: CFA)

NikkoAM-Straits Trading Asia Ex Japan REIT ETF was the next REIT ETF to list on SGX on 29 March 2017. As its name suggests, the NikkoAM-Straits Trading Asia Ex Japan REIT ETF has a broad Asian exposure including Singapore (70.7%), Hong Kong (12.5%), India (9.7%), South Korea (3.1%), Malaysia (1.8%), Thailand (0.9%), and others.

The NikkoAM-Straits Trading Asia Ex Japan REIT ETF has a quarterly dividend distribution policy.

As of April 2024, it has a total expense ratio of 0.55% per annum, inclusive of a 0.5% annual management fee.

The top 10 largest constituents in the NikkoAM-Straits Trading Asia Ex Japan REIT ETF include:

– CapitaLand Integrated Commercial Trust (CICT) (10.3%) – Singapore

– CapitaLand Ascendas REIT (9.8%) – Singapore

– Link REIT (9.7%) – Hong Kong

– Embassy Office Parks REIT (7.0%) – India

– Mapletree Industrial Trust (MINT) (6.1%) – Singapore

– Mapletree Logistics Trust (MLT) (6.1%) – Singapore

– Mapletree Pan Asia Commercial Trust (3.9%) – Singapore

– Frasers Logistics & Commercial Trust REIT (3.9%) – Singapore

– Frasers Centrepoint Trust (3.2%) – Singapore

– Suntec REIT (3.1%) – Singapore

Its annualised returns in the last 3 years is -7.6%, and in the last 5 years is -4.3%.

 

#3 Lion-Phillip S-REIT ETF (SGX: CLR)

Listed on 30 October 2017, the Lion-Phillip S-REIT ETF was the first REIT ETF comprising of just S-REITs – or only REITs that are listed in Singapore. As discerned from its name, the manager of the REIT is Lion Global Investors (LGI), while the sub-manager is Phillip Capital Management.

As of April 2024, its fund size is $356.2 million. Currently, the Lion-Phillip S-REIT ETF charges a total expense ratio of 0.6% per annum, inclusive of a 0.5% annual management fee.

The REIT has a dividend distribution policy paying out semi-annually.

Lion-Phillip S-REIT ETF only invests in Singapore-listed REITs, and currently owns 21 S-REITs in its portfolio. Its top 10 exposure are to well-known REITs including:

– CapitaLand Integrated Commercial Trust (CICT) (10.3%)

– Mapletree Industrial Trust (MINT) (9.5%)

– CapitaLand Ascendas REIT (9.0%)

– Frasers Logistics & Commercial Trust REIT (8.5%)

– Mapletree Logistics Trust (MLT) (8.2%)

– Keppel DC REIT (7.5%)

– Frasers Centrepoint Trust (7.2%)

– Keppel REIT (6.6%)

– Mapletree Pan Asia Commercial Trust (6.0%)

– Suntec REIT (5.7%)

Its annualised returns in the last 3 years is -5.8%, and in the last 5 years is -1.2%.

 

#4 CSOP iEdge S-REIT Leaders ETF (SGX: SRT)

Listed on 18 November 2021, CSOP iEdge S-REIT Leaders ETF is managed by CSOP Asset Management, and it only invests in Singapore-listed REITs.

As of April 2024, its fund size is over $70 million. It has an expense ratio of 0.6%, inclusive of a 0.5% annual management fee currently.

It currently pays dividends twice a year – in February and August.

CSOP iEdge S-REIT Leaders ETF currently has a top 10 holdings that comprises of:

– CapitaLand Integrated Commercial Trust (CICT) (10.4%)

– CapitaLand Ascendas REIT (9.9%)

– Mapletree Pan Asia Commercial Trust (9.5%)

– Frasers Logistics & Commercial Trust REIT (9.4%)

– Mapletree Logistics Trust (MLT) (9.2%)

– Keppel DC REIT (8.5%)

– Mapletree Industrial Trust (MINT) (8.0%)

– CapitaLand Ascott Trust (5.9%)

– Keppel REIT (5.6%)

– Frasers Centrepoint Trust (4.2%)

As it was listed in 2021, there is no data on its past 3 and 5 year performance.

Read Also: 4 Things About The CSOP iEdge S-REIT Leaders Index ETF (SRT/SRU) To Know Before Investing

 

#5 UOB APAC Green REIT ETF

Listed on 23 November 2021, the UOB APAC Green REIT is the latest REIT ETF and Singapore’s first green REIT ETF – investing in REITs with lower carbon intensity and riding on the trend of sustainability in buildings and practices. As its name suggests, it is exposed to REITs listed in Asia Pacific – Australia (38.6%), Japan (31.8%), Singapore (22.8%), Hong Kong (5.6%). This makes it the only REIT ETF in Singapore with exposure to Japan REITs as well. UOB Asset Management (UOBAM) is the manager of the REIT.

As of April 2024, it has a fund size of $59.4 million. While it does not reveal the exact total expense ratio, relevant costs on its website amount to 0.6%, inclusive of a 0.45% annual management fee.

The REIT has a dividend distribution policy to pay out semi-annually.

UOB APAC Green REIT ETF has an exposure to popular REITs in the region, including:

– Scentre Group (7.2%) – Australia

– Stockland (6.4%) – Australia

– CapitaLand Integrated Commercial Trust (CICT) (6.1%) – Singapore

– Link REIT (5.6%) – Hong Kong

– Vicinity Limited (5.5%) – Australia

– GPT Group (5.3%) – Australia

– Dexus (5.0%) – Australia

– Japan Metropolitan Fund Invest (3.6%) – Japan

– Mirvac Group (3.6%) – Australia

– GLP J-REIT (3.2%) – Japan

As it was listed in 2021, there is no information on its 3 years, and 5 years performance yet.

Read Also: 3 Things To Know About UOB APAC Green REIT ETF, SGX Latest REIT ETF

 

Before we invest in REIT ETFs listed in Singapore, here are some things we should learn about them.

Read Also: 5 Things You Need To Know About Investing In REITs In Singapore

Enjoy Passive Investing With Stable Income

Investor interest in passive investing has grown in recent years. This is mainly due to the fact that many actively managed investment funds do not regularly beat passive investments and it also takes away the complexity of having to research and monitor each investment on our own.

In the case of REIT ETFs, we don’t need to worry about making certain investment decisions when it comes to investment sizes or rights issues and having to fork out an additional sum of money or even voting at the individual REIT’s general meetings.

The managers of REIT ETFs will make many of these decisions for us. In the case of the REIT ETFs in Singapore, they track indexes that will just make adjustments to their portfolios as and when the index they are tracking makes an update. They also tend to participate in the subscription and use internal funds for such actions.

If required, the managers of the REIT ETF will also be in a stronger position, considering they’re big enough, to talk to the REITs regarding decisions at the company.

Diversification Into A Basket Of High-Quality REITs

Right off the bat, if we’re investing in a REIT ETF, we should already know that we are only going to be exposed to a particular asset class – REITs. So, we have to consider that our investment portfolio isn’t adequately diversified if we have only put money into REIT ETFs.

Beyond that, we are likely to be exposed to particular regions – namely Singapore, Australia, Greater China and even Japan with all the REIT ETFs listed here.

Another diversification strategy we will enjoy is that the REIT ETFs invest in all types of properties, including retail, industrial and logistics, hospitality and offices.

Nevertheless, investing into ETFs allows us to diversify our investments with just one purchase and at a relatively low cost.

Read Also: 7 Types of REITS In Singapore, And The Reasons Why People Invest In Them

 

Trading REIT ETFs Is Similar To Individual REITs

We can still buy and sell our shareholdings on SGX. This provides us with similar liquidity to holdings individual REITs or other stocks.

There’s nothing new to learn. In fact, we may have a lower tendency to trade more frequently. Individual REITs may have more volatility, which may lead investors to trade in and out even though we may have initially bought intending to hold the REITs for the long-term.

Relatively Affordable Management Fees – But Still An Expense To Consider

When we invest in a REIT, we’re already paying one layer of management fee to the REIT manager for their services. This is often tied to the asset under management by the REIT managers.

If we choose to invest in REIT ETFs, we’re paying an additional management fee for some of the convenience we are receiving. The good thing is that REIT ETFs are passive investments and have generally low management fees.

On top of these, there are other fees that we have to bear, usually this includes trustee fees, administration fees as well as other fees related to being listed on SGX – legal fees, audit fees, transaction fees, valuation fees and others.

Of course, we will also have to pay a brokerage charge for buying and selling stocks.

Read Also: REITs Report Card 2023: How Singapore REITs Performed In FY2023

Should I Invest In REIT ETFs?

There are good reasons to invest in REIT ETFs – we’re diversifying our investments, investing passively, getting good returns, participating in potential growth of the economy, limited inputs required and so on.

However, over the long term, fees and other costs could eat into our returns. So, we need to carefully judge whether investing on our own would make more sense. Do we really want to do the extra homework of researching and monitoring our investments?

There are always going to be reasons for and against investing a certain way, and we need to understand ourselves as an investor before putting our hard-earned money into any investments.

Read Also: Complete Guide To Start Your REITs Investing Journey In Singapore

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