It has been all over the local business news recently, with the impending launch of a new REIT ETF in the second half of October 2016. By now a number of financial and investment blogs would have talked about it, so I will just give my perspective on it as a Bedokian Portfolio investor.
The upcoming REIT ETF will track the SGX APAC ex Japan Dividend Leaders REIT Index1, which is consisted of 30 REITs across the Asia Pacific region (except Japan). From the product factsheet2, 59.05% of the dividends came from Australia, with Singapore second at 29.62%. The ETF also has a total expense ratio of 0.65% and the dividends are to be paid on a semi-annual basis. It would be dual listed on the local exchange, in US$ and S$.
Application to The Bedokian Portfolio
The nature of the ETF somewhat epitomises The Bedokian Portfolio’s dividend and index investing nature (read: “Dividend Leaders”, “REIT” and “ETF”), since the mantra is “Passive Income Through Dividend and Index Investing”. The ETF could fill the gap for index investing within the REIT asset class, as there is currently none locally to begin with.
Also, with almost 60% of the dividends derived from Australian properties, it would be classified as a foreign component for The Bedokian Portfolio, in accordance to the guidelines.3 So if you have imposed a cap on foreign holdings, do take note.
Last but not least, caveat emptor, please do your due diligence and conduct further analysis before committing the transaction.
1 – SGX News Release, SGX launches SGX APAC ex Japan Dividend Leaders REIT Index, 29 Aug 2016. http://infopub.sgx.com/FileOpen/20160829_SGX_launches_SGX_APAC_ex_Japan_Dividend_Leaders_REIT_Index.ashx?App=Announcement&FileID=419211
2 – Philip Capital Management. Phillip SGX APAC Dividend Leaders REIT ETF, Oct 2016. http://www.phillipfunds.com/uploads/funds_file/Phillip_SGX_APAC_Dividend_Leaders_REIT_ETF_Product_Info_Sheet_ipo_USD.pdf (accessed 9 Oct 2016).
3 – The Bedokian Portfolio, p 111.