On 23 November 2021, the UOB APAC Green REIT ETF was listed on the Singapore Exchange (SGX) with estimated assets under management of about S$83.4 million.
The UOB APAC Green REIT ETF is the world’s first APAC Green Real Estate Investment Trusts (REITs) ETF replicating the iEdge-UOB APAC Yield Focus Green REIT Index. This positions it in a space that has potential tailwinds as sustainability plays out as an key macro factor that more multinational corporations will pay attention to.
The aim of the ETF is to enable individuals to invest in quality green REITs across APAC with targeted dividend yields of 4% p.a., and this gives investors an opportunity to participate in the development of sustainable real estate that can be invested for both profit and purpose.
In this week’s edition of 4 Stocks This Week, we look at 3 things investors need to know about this REIT ETF listed on the SGX before investing in it.
#1 The UOB APAC Green REIT ETF Tracks The iEdge-UOB APAC Yield Focus Green Index
Similar to many other ETFs that are constructed, the UOB APAC Green REIT ETF aims to replicate and track as closely an index – the iEdge-UOB APAC Yield Focus Green Index.
Developed by SGX as part of the SGX iEdge product suite, in collaboration with UOBAM, the iEdge-UOB APAC Yield Focus Green Index covers 50 higher-yielding REITs listed across the Asia-Pacific and Oceania region that display relatively better environmental performance and attributes based on GRESB’s real estate assessment while meeting the minimum liquidity requirements. The Index provides comparable financial performance to a broader APAC REITs Index while providing improved environmental performance.
Green Impact and Purpose
The ETF aims to :
- advance real estate operations and management practices that are aimed at lowering carbon and other greenhouse gas emissions
- advance energy and water conservation strategies and effective usage measures taken by real estate companies within their portfolio of buildings
- aims to support ESG disclosure within the real estate sector and the importance of green building certification
The Fund measures its Green Impact on its constituents through the following factors:
Scope 1 Greenhouse Gas emissions are direct emissions from sources that are owned or controlled by the organisation.
Scope 2 Greenhouse Gas emissions are indirect emissions from purchased electricity, heat, steam, or cooling consumed by the company but generated elsewhere.
There is a 4% improvement in GRESB Performance Score for UOB APAC Green REIT ETF against the other Non-Green counterparties. The Fund selects REITs that have better sustainability performance and management practices that seek to reduce carbon emissions arising from business operations.
3% improvement in Energy Consumption indicates the energy conservation measures that Green REITs have employed in their operations and this is critical since a significant amount of carbon emissions are derived from operations in REITs.
7% improvement in water consumption indicates clear water conservation strategies and programmes for a portfolio of buildings in Green REITs.
UOB APAC Green REIT ETF has a higher percentage of certified green buildings measured by the percentage of floor area covered by a valid green building certification obtained at the time of design, construction, and/or renovation (DCR) and by a valid operational green building certification (OPS).
The evaluation is based on the data on the individual firms’ environmental performance, which includes the lowering of greenhouse gas emissions, advancing energy and water conservation and supporting green building certification.
The industry’s trend identified that Green buildings are positioned to benefit from the rise in demand for environmentally-conscious real estate. The effects of enhanced environmental performance have results leading to lower operational costs, increased asset values, better occupancy rates, and higher rental yields.
#2 Components that form the iEdge-UOB APAC Yield Focus Green REIT
The UOB APAC Green REIT ETF aims to provide investment results that, before fees, costs and expenses that closely correspond to the performance of the iEdge-UOB APAC Yield Focus Green REIT Index through a full replication strategy.
The iEdge-UOB APAC Yield Focus Green Index consists of 50 constituents Real Estate Investment Trusts (REITs) which tracks the performance of REITs that are listed across the Asia-Pacific region with a specific focus on yield selection and a weighting method that is tilted toward the environmental attributes of real estate assets.
Geographical Allocation of Index Constituents
Sector Allocation of Index Constituents
Top 10 Constituents of Index
For Singapore investors, it’s worth noting that only about 15% of the ETF are focused on Singapore properties so this isn’t a Singapore-heavy portfolio.
#3 Historical Returns Of The iEdge-UOB APAC Yield Focus Green REIT
The past performance and the dividend yield of the iEdge-UOB APAC Yield Focus Green REIT as of 30th September 2021 can be found below.
PR = Price Return
TR= Total Return
NTR = Net Total Return (this is the return after accounting for expenses)
The dividend yield for the ETF is currently about 4.25% p.a.
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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.