We have two new REIT ETFs coming up: CSOP iEdge S-REIT Leaders Index ETF (CSOP ETF) and the UOB APAC Green REIT ETF (UOB Green ETF), both to be listed on the Singapore Exchange (SGX) on 18 Nov 2021 and 23 Nov 2021, respectively. With their entry, the total number of REIT ETFs listed on SGX will be five.
The links to the upcoming REIT ETFs are under References below. In this post, I would like to make a selected comparison between them, and my take of the two REIT ETFs in general.
REIT ETF
| CSOP ETF | UOB Green ETF |
Index | iEdge S-REITs Leaders Index | iEdge-UOB APAC Yield Focus Green REIT Index
|
Total Expense Ratio (per annum)
| 0.615% (estimated)1 | 0.85% (estimated)2 |
No. of Constituents (based on index)
| 27 | 50 |
Geographical Breakdown | Singapore – 64% Australia – 9% United States – 5% Mainland China & Hong Kong SAR – 8% Japan – 3% Others – 9%3
| Japan – 40% Australia – 36% Singapore – 16% Hong Kong – 8%4 |
Sectoral Breakdown | Industrial – 42.5% Office – 19.7% Retail – 18.4% Data Centre – 7.5% Multi-Asset Class – 6.9% Healthcare – 2% Residential – 1.9% Hotel – 1.2%3
| Diversified – 30% Retail – 29% Office – 28% Industrial – 9% Residential – 2% Real Estate Operating Companies – 1% Specialised – 1%4 |
Dividend Yield (latest 12 months)
| 3.96% (as at 30 Jun 2021)5 | 4.25% (as at 30 Sep 2021)4 |
Fig.1: Comparison of selected factors between the two upcoming REIT ETFs.
A Note Before We Proceed
Before I begin to pen down a conclusion, I would like to bring in the existing three REIT ETFs, using the same factors in Figure 1.
REIT ETF | Phillip SGX APAC Dividend Leaders REIT ETF6 | NikkoAM-Straits Trading Asia Ex-Japan REIT ETF7 | Lion-Phillip S-REIT ETF8 |
Index | iEdge APAC Ex-Japan Dividend Leaders REIT Index | FTSE EPRA Nareit Asia ex Japan REITs 10% Capped Index
| Morningstar® Singapore REIT Yield Focus Index |
Total Expense Ratio (per annum)
| 1.16% | 0.6% | 0.6% |
No. of Constituents
| 30 | 28 (as at 31 Mar 2021) | 27 |
Geographical Breakdown | Australia – 52.09% Singapore – 34.39% Hong Kong SAR – 10.84%
| Singapore – 75.4% Hong Kong SAR – 15.3% Malaysia – 3.5% India – 3.5% China – 1.2% Thailand – 1% (as at 31 Mar 2021)
| Singapore – 100%9 |
Sectoral Breakdown | Diversified – 41.67% Retail – 27.7% Industrial – 13.16% Office – 12.38% Others – 2.41%
| Retail – 36.3% Industrial – 30.5% Office – 12.7% Diversified – 11.4% Hotel & Resort – 3.3% Specialised – 3.2% Others – 2.2% (as at 30 Sep 2021)
| Industrial – 35.7% Retail – 32.8% Specialised – 9.6% Diversified – 6.1% Healthcare – 5.8% Office – 5.6% Hotel & Resort – 1.2% Residential – 0.7%
|
Dividend Yield
| 4.27% | 5.22%10 | 4.56%10 |
Fig.2: Comparison of selected factors between the three listed REIT ETFs.
The reason why I brought all the REIT ETFs in is because we need to have an overall view of the REIT ETF landscape in SGX before making the call. As displayed in Figures 1 and 2, there are similarities and differences between the five, along with it some pros and cons are expected.
The factors shown here are typically used (but not exhaustive) by investors (myself included) in the selection of ETFs to invest in for a certain asset class (in this case, REITs). As to which factor to place emphasis on would depend on the individual; some may go for geographical and sectoral diversification, while some may just look at total expense ratios, and others would place importance on the dividend yield as a barometer for future payouts, etc. You could also have a weighted score across the factors and from there determine which to go for.
The Bedokian’s Take
Coming back to the two ETFs, the decision is dependent on the individual investor himself/herself. If one is convinced on the green theme, then having the UOB Green ETF is key, ceteris paribus. Another plus point for the UOB Green ETF is the high percentage of Japanese properties, which for the other one (and the existing three) are relatively much lower, thus a somewhat good proxy in Japanese market exposure.
In terms of geographical diversification and a higher proportion in industrials, the CSOP ETF would be the choice, also considering the seemingly lower expense ratio. Therefore, as per the typical reply in a Bedokian Portfolio blogpost, the answer is “it depends”, but this time it would be on yourself, the individual investor.
If your portfolio is large enough and want to have a diversification of ETFs, then there is no harm in getting both (or all five), too.
References
CSOP iEdge S-REIT Leaders Index ETF (http://www.csopasset.com/sg/en/products/sg-reit/etf.php)
UOB APAC Green REIT ETF (https://www.uobam.com.sg/sustainability/solutions/uob-apac-green-reit-etf.page)
1 – CSOP SG ETF Series I, CSOP iEdge S-REITs Leaders Index ETF prospectus p69-70, 28 Oct 2021. http://www.csopasset.com/sg/pdf/resources/sg_reit_etf/e_sg_reit_etf_30.pdf (accessed 6 Nov 2021). Percentage is derived based on stated current and/or known % p.a. and includes management, trustee and other fees and charges.
2 – United ESG Advanced ETF Series, UOB APAC Green REIT ETF prospectus p12-13, Oct 2021. https://www.uobam.com.sg/web-resources/uobam/pdf/uobam/sustainability/solutions/uob-etf-prospectus.pdf (accessed 6 Nov 2021). Percentage is derived based on stated current and/or known % p.a. and includes management, trustee, valuation and accounting, registrar, audit and custodian and other fees and charges.
3 – Presentation of CSOP iEdge S-REITs Leaders Index ETF: Riding the Wave with S-REITs Leaders by FSMOne. 12min 16 sec mark. https://www.youtube.com/watch?v=zqudA-BIn8I (accessed 6 Nov 2021).
4 – iEdge-UOB APAC Yield Focus Green REIT Index. 30 Sep 2021. https://api2.sgx.com/sites/default/files/2021-10/iEdge-UOB%20Factsheet_Final_4.pdf (accessed 6 Nov 2021).
5 – iEdge S-REITs Indices. 30 Jun 2021. https://api2.sgx.com/sites/default/files/2021-07/S-REIT%20iEdge%20SREIT%20Indices%20-%20Factsheet%20June%202021.pdf (accessed 6 Nov 2021).
6 – Phillip Capital Management. Phillip SGX APAC Dividend Leaders REIT ETF Product Info Sheet. 30 Sep 2021. https://phillipfunds.com/wp-content/uploads/2021/10/Phillip-SGX-APAC-Dividend-Leaders-REIT-ETF-Product-Sheet.pdf (accessed 6 Nov 2021).
7 – NikkoAM-StraitsTrading Asia ex Japan REIT ETF. https://www.nikkoam.com.sg/etf/asia-ex-japan-reit-sgd (accessed 6 Nov 2021). All data in the respective column are from the site itself and downloadable content from the site, unless otherwise specified.
8 – Lion-Phillip S-REIT ETF. https://www.lionglobalinvestors.com/en/funds/lion-phillip-s-reit-etf/index.html#dashBoard?fcode=LEPF (accessed 6 Nov 2021). All data in the respective column are from the site itself and downloadable content from the site, unless otherwise specified.
9 – Geographical breakdown is based on the country of listing of the ETF constituents, not that of the constituents’ assets.
10 – Data from dividends.sg. 7 Nov 2021.
Hi,
ReplyDeleteDo you mind to share with me the difference invest in CSOP iEdge S-REITs Leaders Index ETF and SYFE REIT+?
Which is more worth to invest?
Thank you.
Hi Bryan,
DeleteIn terms of worth, I presume it would be along the lines of which has a lower cost of investment. In short, my answer would be "it depends".
I understand SYFE charges a tiered management fee according to the portfolio size, so going by the highest fee (less than SGD 20K), each dollar of investment would cost you 0.65% = SGD 0.0065. Whereas investing in CSOP ETF would cost you a one-time brokerage fee and the ETF expense ratio, the latter of which is transparent as it is deducted from the ETF and not from your pocket.
Why my answer is "it depends" is due to other factors beyond costs; we have to view it in totality:
- The size of your portfolio, which if invested with SYFE, the costs would go down if it is larger.
- The choice of brokerage if going by the ETF route (there are now low cost brokerages around).
- Your investment methodology on whether to do dollar cost averaging or manage your own portfolio and buy/sell when the time is right, and so on.
Hope this clarify your question and thoughts.
Cheers!
I am new to ETF. I know the shares are kept in custodian accounts. If something bad happen to the manager eg been liquidated due to bad financial, what happen to the ETF we purchased ?
ReplyDeleteI am now to ETF. I know the shares are kept in custodian accounts, but what happen to the ETFs we purchased when the manager running into financial difficulties and liquated ?
ReplyDeleteHi TM,
DeleteBefore answering your question, I would like to let you understand how an ETF works, especially on the creation and redemption processes (see link here) https://www.etf.com/etf-education-center/etf-basics/what-is-the-creationredemption-mechanism?nopaging=1. In short, ETFs work hand-in-hand with institutions called authorized participants to exchange ETF units for the underlying securities, and vice versa. Thus, the ETF that you are holding is a form of “certificate” that represents the basket of securities that the ETF holds.
The thing about the securities or shares in custodian accounts brings forward the point that they are protected should an ETF manager goes bust; the custodians, in this context, are holding the underlying shares of the ETF, thus there is a separation or “ringfence” between the assets of the ETF manager and the shares, which do not belong to the former in the first place.
There are liquidations of ETFs and the reasons behind them are usually business ones (e.g., the ETF is not “popular” and thus getting expensive in maintaining it). In this case, the investors would get back their monies based on the set market price of the ETF. Though an ETF manager may tap into the shares and pay off their debts, it is very, very rare that they do this (and it’s illegal, too). However, should you be concerned, you could practice diversification of ETFs, e.g., having two to three REIT ETFs for your REITs, and practice the same for equities/bonds.
Hope this answers your question and concerns.
Cheers!
Thanks for the explanation and this helps.
DeleteMay I ask how you calculated the current dividend yield from "NikkoAM-Straits Trading Asia Ex-Japan REIT ETF". Looking at dividend.sg I cannot see of how you came up to 5.22%. The yield is always around 4.1 to 4.3 for the past months. Can you please clarify to understand better. Thanks a lot
ReplyDeleteHi Lisa,
DeleteThank you for your question and apologies for not clarifying in my footnote.
The 5.22% was the dividend yield figure obtained from dividends.sg for the year 2020 as at 7 Nov 2021.
On a side note, I noticed that the dividend yield figures for past years change (as of today, the yield for 2020 is 5.3%), probably re-calculated due to change in ETF price.
Cheers!
thanks a lot for the clarification and yes makes sense now :-)
Delete