5 REIT ETFs listed in Singapore

Source: SGX, Bloomberg (data as of 31 March 2024). 

Investing in exchange-traded funds (ETF) has become increasingly popular as it provides instant diversification into a basket of securities, transparency and tradability, as well as lower fees and transaction costs. This is probably why the ETF industry exceeded US$11 trillion in global assets under management (AUM) in 2023, after growing 24 per cent year on year since the end of 2022, according to data from ETFGI.

In Asia-Pacific ex-Japan, the ETF industry saw a larger increase, with AUM growing 35 per cent to over US$780 trillion at the end of 2023. In Singapore, retail and institutional clients have also seen ETF adoption grow with AUM almost doubling in the past four years.

Much of this increase was driven by the growth in the usage of ETFs as an SRS (Supplementary Retirement Scheme) portfolio construction tool and investing via digital platforms such as regular share plans and robo-advisers.

In fact, inflows into the two S-REIT ETFs – CSOP iEdge S-REIT Leaders Index ETF and Lion-Phillip S-REIT ETF – reached a 19-month high in April 2024 with a net unit creation of S$16 million during the month. At an AUM of almost S$430 million, the two S-REIT ETFs have also doubled in asset size over the past three years.

Much of the recent inflows into these REIT ETFs have been driven by expectations that interest rates will soon normalise alongside valuation discounts – presenting opportunities for investors to pick up the sector. As of the first quarter of this year, the iEdge S-REIT Index traded at a price-to-book (PB) ratio of 0.87 times, which is a 16 per cent discount to the index’s five-year average PB ratio of 1.04 times.

Aside from S-REIT ETFs, there are three other Singapore-listed REIT ETFs with a wider Asia-Pacific geographical focus. These three are NikkoAM-StraitsTrading Asia ex-Japan REIT ETF, UOB APAC Green REIT ETF, and Phillip SGX Apac Dividend Leaders REIT ETF.

Across the first quarter of 2024, the wider Asia-Pacific Reit market has outperformed with UOB Apac Green REIT ETF and Phillip SGX APAC Dividend Leaders REIT ETF clocking in quarterly declines of 1.9 per cent and 1.6 per cent, respectively, as compared to the average 7 per cent declines recorded by the S-REIT ETFs and NikkoAM-StraitsTrading Asia ex-Japan REIT ETF.

In terms of access, Singapore has the largest REIT ETF market in Asia ex-Japan at a 77 per cent market share.

On average, the five REIT ETFs in Singapore have a dividend yield of 5.5 per cent, with CSOP iEdge S-REIT Leaders Index ETF having the highest 12-month gross dividend yield at 7.1 per cent.

More about the five REIT ETFs in Singapore:

• The Lion-Phillip S-REIT ETF and the CSOP iEdge S-REIT Leaders Index ETF are pure-play Singapore REIT ETFs that track the Morningstar Singapore REIT Yield Focus Index and iEdge S-REIT Leaders Index, respectively, with over 20 S-REITs in its holdings.
• The NikkoAM-StraitsTrading Asia ex-Japan REIT ETF tracks the FTSE EPRA Nareit Asia ex-Japan Net Total Return REIT Index, which consists of 42 REITs across Singapore (71 per cent by geographical breakdown), Hong Kong (14 per cent), India (10 per cent), South Korea (3 per cent), Malaysia and Philippines (both 1 per cent).
• The UOB APAC Green REIT ETF provides portfolio exposure into higher-yielding REITs in Asia-Pacific with a focus on environmental performance based on the Global Real Estate Sustainability Benchmark’s assessment. The ETF tracks the iEdge-UOB APAC Yield Focus Green REIT Index, which comprises close to 50 constituents that meet certain environmental factors across indicators such as energy and water consumptions, greenhouse gas emissions, and green building certifications, while also maintaining a competitive dividend yield.
• The Phillip SGX APAC Dividend Leaders REIT ETF tracks the iEdge APAC ex-Japan Dividend Leaders REIT Index, which consists of 33 REITs across Australia (52 per cent by geographical breakdown), Singapore (36 per cent), and Hong Kong (12 per cent).

Source: SGX Research S-REITs & Property Trusts Chartbook.

REIT Watch is a regular column on The Business Times, read the original version.

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