Will 1st REIT ETF Singapore Be Good To Invest?
Our 1st Reit ETF (Phillip SGX APAC ex-Japan Dividend Leaders REIT ETF) In Singapore will be IPO by Phillip Capital Management (S) Limited on 20 October 2016. This is a long awaited REIT ETF consists of 30 real estate investment trusts (REITs) across the Asia Pacific excluding Japan region. If you like REITs and ETF investment like myself, then this will be another option for you to consider.
5 Reasons Why I Think This REIT ETF will work for long term.
- My last month post mentioned that your value investing portfolio should include STI-ETF. With this new REIT ETF option, your investment risk for your preferred REITs investment can be further diversified across the asia pacific region excluding Japan region. If I am not wrong, this is the first REIT ETF introduced which spans across the Asia Pacific region.
- This is a more balanced stable income and growth approach. This Phillip SGX APAC ex-Japan Dividend Leaders REIT ETF is designed to track the performance of 30 highest total dividend-paying REITs in the Asia Pacific Excluding Japan Region. In my opinion, it aims to provide a higher level of income as compared to investing in STI ETF with a moderate long-term capital appreciation.
- This is the first REIT ETF in Singapore which took reference from SGX APAC ex-Japan Dividends Leader REIT Index launched by SGX Singapore on 29 August 2016. This dividend weighted REIT Index will be reviewed semi-annually in March and September. Distributions if any will be payable within 2 months after the end of each semi-annual period of each year. The Index Provider is SGX Index Edge. From the below table, this is not bad to get an average return of 9.78% based on a 5 year period
- Consider the ease of accessing other countries’ REITs such as Link Reit from HongKong, this is a low cost REIT ETF with the actual management fee is 0.5% without sales charge aside to any applicable brokerage charge.
What are the risks of investing this REIT ETF?
- Like many businesses, this REIT ETF will be impacted by a rising Federal interest rate in one way or another. We anticipate that an increase in Federal rate will be still gradual probably by end of this year and the impact to this REIT ETF will be also gradual. Therefore, we will need to have a long term perspective to see the growth of such REIT ETF.
- Like any other investment, there is a risk to invest and this may be higher than investing in government bonds. If you look at its top constituent, Link REIT, it is from Hong Kong. Though hard landing of the China Property did not come true for the past few years but it does not mean that it is totally out of the woods. Property bubble in either Hong Kong or China is still possible.
- Distribution is not guaranteed by the manager.
For anyone who wants to subscribe its IPO shares, you have to contact the trading representatives from POEMS. After its IPO listing on 20th October 2016, units can be traded via SGX in lots of 100 units. After this post is published, I will subscribe this IPO in this coming week. If you keen to subscribe, remember to do your own due diligence first.