While residential properties have remained resilient in 2020 with resale prices rising for both HDB and condominiums, Real Estate Investment Trusts (REITs) have taken a pummelling this year. With a crash of close to 35% at the lowest point in mid-March 2020, REITs have recovered most of its losses and looks set to end the year at a slight negative loss.
REITs have been a long-time favourite of Singapore investors because of their steady dividend payouts and property-focused investments. Instead of cherry-picking individual REITs, Singapore investors can invest in REIT ETFs which offer diversification and the ease of passive investing.
If you have wondered about the returns of REIT ETFs in Singapore and whether they are worth investing in, here’s how much Singapore investors would have made if you have invested $1,000 in every REIT ETF listed on the SGX during their Initial Offer Periods (IOPs).
Note: This is a theoretical computation and excludes the possible fees incurred if you have actually invested in these IPOs. Your actual returns will be lower due to costs such as transactions fees and management fees.
The Three REIT ETFs In Singapore
As of 2020, there are 3 REIT ETFs listed on the SGX with a Singapore focus.
The first is Phillip SGX APAC Dividend Leaders REIT ETF by Phillip Capital Management, listed in October 2016. The fund tracks the iEdge APAC ex-Japan Dividend Leaders REIT Index and focuses on REITs across the Asia-Pacific region, including Singapore.
Next, the NikkoAM-StraitsTrading Asia ex-Japan REIT ETF was launched by Nikko Asset Management and Straits Trading Company in March 2017. The fund tracks the FTSE EPRA/NAREIT Asia ex-Japan REITs Index and SGX-listed REITs make up 70% of the fund.
Finally, the Lion-Phillip S-REIT ETF was launched by Lion Global Investors and Phillip Capital Management in October 2017. The fund tracks the Morningstar® Singapore REIT Yield Focus Index and consists of only Singapore REITs.
Each of these REIT ETFs launched at a par value of S$1 per share when listed on the SGX.
REIT ETFs Have Returned 7% To 13% Since Their Listing
~ Phillip SGX APAC Dividend Leaders REIT ETF distributes its dividends in US$, the S$ figures are computed based on the forex rate at the close of the ex-dividend month.
^ Total Returns include the capital gains if you sold the shares and the distributions accumulated since the shares were bought at listing. Per annum return is computed by total returns divided by number of years since listing (i.e. 4 years for SGX:BYJ and 3 years for SGX:CFA and SGX:CLR)
Phillip SGX APAC Dividend Leaders REIT ETF (SGX: BYJ)
The Phillip SGX APAC Dividend Leaders REIT ETF returned an average of 13.4% over the past 4 years. While the share price is available in both Singapore dollars and US dollars on the SGX, the dividends are announced in US dollars, thus the returns would be affected by foreign currency changes. Currently, its holdings are based in Australia (56.6%), Singapore (29.2%), Hong Kong (13%) and Thailand (1.2%). Its top 3 holdings are Link Real Estate Investment Trust, Scentre Group and Mirvac Group.
|Year Of Distribution||No. Of Shares||Distributions in US$||Converted to S$|
Since its listing, it has distributed US$135.80 or approximately S$185.40 in dividends which formed about a third of the total returns to date. As it can be seen from the table, the distributions have been fluctuating yearly, even though the average returns are the highest of the 3 REIT ETFs (mainly driven by the increase in share price).
NikkoAM-StraitsTrading Asia ex-Japan REIT ETF (SGX: CFA)
The NikkoAM-STC Asia REIT ETF returned an average of 9.9% since its inception in 2017. Its holdings are concentrated in Singapore (75.6%), followed by Hong Kong (15.2%), Malaysia (4.3%), India (2.8%), China (1.1%) and Thailand (1.1%). Its top three holdings are Ascendas Real Estate Investment Trust, CapitaLand Integrated Commercial Trust and Capitaland REIT.
|Year Of Distribution||No. Of Shares||Distributions in S$|
Since its listing, the REIT ETF has distributed $177.87 for a theoretical lot of 1,000 shares or about 60% of the total returns to date. The distributions have also been slowly increasing over the years and hit its highest distribution in 2020 during the COVID-19 recession.
Lion-Phillip S-REIT ETF (SGX: CLR)
Lion-Philip S-REIT ETF has returned an average 7.2% since its inception in 2017. As this is 100% S-REIT focused ETF, significant bulk of its holdings are in Singapore (though there is no country analysis provided). Its top three holdings are Mapletree Industrial Trust, Mapletree Logistics Trust and Ascendas Real Estate Investment Trust.
|Year Of Distribution||No. Of Shares||Distributions in S$|
Listed on Oct 2017, Lion-Phillip S-REIT ETF only started distributions in 2018 and has distributed $133.90 since its inception or about 60% of its total return to date. Similar to NikkoAM-STC Asia REIT ETF, the distributions have been increasing over the years and the COVID-19 recession has not negatively affected the 2020 distributions.
If you have invested in any of the 3 REIT ETFs since their listing, you would have been well-pleased to know that your investment is paying dividends and weathering the recession well. Based on the above analysis, there’s little wonder that REITs are favoured by Singaporean Investors.
That said, there are differences between the 3 REIT ETFs. Both NikkoAM-STC Asia REIT ETF and Lion-Phillip S-REIT ETF have a strong Singapore focus and bulk of their returns were driven by their distribution payout. If you have traded these two REIT ETFs and missed out on the distributions, your returns would be much poorer. Conversely, Phillip SGX APAC Dividend Leaders REIT ETF derived more of its return from an increase in share price and its distributions have been varied widely over the years.
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