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How to Buy the Best Singapore REIT ETF Guide 2022

This is the ultimate guide to buying the best Singapore REIT ETF for 2022. There are total of 5 Singapore REIT ETFs you need to know

This is the ultimate guide to Singapore REIT ETFs for 2022.

I’ve broken down ALL 5 popular Singapore REIT ETFs — covering what to look for in a Singapore REIT ETF.

I share my thoughts what’s the best Singapore REIT ETF to buy.

Ready? Let’s dive in.

What’s a Singapore REIT ETF?

Singapore REIT ETFs are passive funds that track an index. Their returns are usually the same as the index performance. 

Singapore REIT ETFs are professionally managed, and automatically rebalances the fund according to the index.

For example, the 5 Singapore REIT ETFs track the following index:

Source: Singapore REIT ETFs’ factsheets, Dividend Titan

 

Don’t let the complex indices confuse you. 

What you need to know is this — ETF annual cost (expense ratio), frequency of distribution, dividend yield, sector and country breakdown.

 

 

Why Singapore REITs ETF?

Now, the thing is, Singapore REIT ETF is a powerful tool if you don’t want to pick individual stocks. Singapore REIT ETFs simply buy top holdings of the index it tracks. 

This way, the performance of the index actually determines how a Singapore REIT ETF performs. 

And you don’t have to risk losing your money in buying a bad REIT, since it’s all diversified in the ETF. 

Unlike a unit trust, you don’t have to pay huge fees of 1-1.5%/year, or performance fees. 

This is the cheapest way to invest in a basket of REITs. 

So far, annual expense ratio for all the Singapore REIT ETFs is between 0.45% – 0.95%.

Not too bad.

Source: Singapore REIT ETFs’ factsheets, Dividend Titan

 

#1: Phillip SGX APAC Dividend Leaders REIT ETF

Launch date: 20 Oct 2016

Dividend payout: half-yearly

Dividend yield: 4.46% (as at March 2022)

This is the first Singapore REIT ETF launched in 2016.

Phillip SGX APAC Dividend Leaders REIT ETF tracks the top 30 dividend paying stocks in the index, ranked by total dividends paid.

What’s interesting is this Singapore REIT ETF invests across Asia, except Japan. What you’ll realize is the ETF buys into many Australia property groups and Hong Kong REITs.

For example, this ETF gives you access to Link REIT, Hong Kong’s biggest retail REIT, which owns and operates some of Hong Kong’s biggest heartland malls.

And it also buys into Australia’s major property groups — Scentre Group, Stockland and Goodman Group.

Source: Phillip SGX APAC Dividend Leaders REIT ETF factsheet

 

What I like is these are major companies in the top 30 holdings of the ETF. 

Some are even bigger than our Singapore REITs.

Sometimes, bigger can also mean safer.

Plus, this Singapore REIT ETF helps diversify out of Singapore, which isn’t too bad.

Source: Phillip SGX APAC Dividend Leaders REIT ETF factsheet

 

What I don’t like about the Phillip SGX APAC Dividend Leaders REIT ETF is its very small fund size — only S$17 million. Why this matters? 

Smaller funds get less attention from the fund manager. Like any products, if the fund size doesn’t grow, it might not make business sense to continue it. 

Fund managers can just shut down the product and move on to another more profitable product.

Another problem is its high expense ratio — 0.95%. 

As at March 2022, this Singapore REIT ETF’s dividend yield is 4.46%. After paying for the expense ratio, that’s only 3.51% dividend yield. Not that worth it.

Expense ratio is the total cost investors pay (including management fees, trustee fees and custodian fees.

Why buy this Singapore REIT ETF? If you’ve overloaded yourself with too many Singapore REITs, and you’re looking to diversify, this REIT ETF diversifies into Australia and Hong Kong. 

 

#2: CSOP iEdge S-REIT Leaders Index ETF

Launch date: 21 Nov 2021

Dividend payout: half-yearly

Dividend yield: 5.3% (projected for 2022)

Here’s what I like about this Singapore REIT ETF — you don’t have to bother picking the best industrial and office Singapore REITs. 

All the work is done for you in CSOP iEdge S-REIT Leaders Index ETF.

Source: CSOP iEdge S-REIT Leaders Index ETF factsheet

 

CSOP iEdge S-REIT Leaders Index ETF was launched in Nov 2021 to track the iEdge Leaders S-REIT Index — top holdings are Singapore’s biggest industrial and office REITs.

CICT is in top position because of its office exposure.

Here’s the interesting thing — compared to other REIT indices, the index that CSOP follows — iEdge Leaders S-REIT Index has a slightly better performance compared to other indices.

Source: CSOP iEdge S-REIT Leaders Index ETF factsheet

 

Which means this Singapore REIT ETF projects to pay a higher dividend yield of 5.3%. After paying its expense ratio of 0.6%, that’s about 4.7%.

Not too bad for buying a diversified REIT ETF.

What I don’t like about this is there’s no track record for this ETF.

Plus, it doesn’t have a big fund size — only S$73 million. Just bigger than the previous Phillip REIT ETF. 

Again, smaller funds risk getting neglected and eventually gets shut down if it’s not profitable to the fund manager.

 

Sidenote: when picking ETFs and funds, you want to choose funds that have been around for long. This reflects reputation and you know the fund manager is in for the long term. 

Track record is just as important for picking Singapore REITs ETF.

Source: CSOP iEdge S-REIT Leaders Index ETF factsheet

 

#3: Nikko AM-Straits Trading AXJ REIT ETF

Launch date: 17 March 2017

Dividend payout: quarterly

Dividend yield: 4.7% (based on last 12 months dividends)

I’m surprised to see Straits Trading partner up with Nikko Asset Management for this Singapore REIT ETF. 

What’s interesting is this REIT ETF started with only S$42.6 million as seed capital. But it has grown to S$246 million over the last 5 years. Impressive.

Nikko AM-Straits Trading AXJ REIT ETF is the biggest amongst the 5 Singapore REIT ETF.

Both Nikko Asset Management and Straits Trading are well-known in the finance industry. And also astute investors in their own fields. 

This Singapore REIT ETF’s expense ratio is 0.6%, pretty standard. 

And the ETF tracks the top 30 REITs in the FTSE EPRA Nareit Asia ex Japan REITS 10% Capped Index.

What’s different from CSOP iEdge S-REIT Leaders Index? Well, Nikko AM-Straits Trading REIT ETF focuses on retail, where Link REIT is part of the top 10 holdings — also a pretty solid Hong Kong REIT. 

If you want a diversification of retail, industrial and office REITs, you can consider this Singapore REIT ETF. 

What I like about Nikko AM-Straits Trading REIT ETF is it’s been around much longer than the other REIT ETF. 

And its performance has been pretty solid, paying a dividend yield of 4.7% as at March 2022. Not too bad. 

This is the only Singapore REIT ETF whose performance is above NAV, or net asset value.

Another thing is it tracks the index very closely, its 3-years annual tracking error is 0.31% — many active funds are at least 4-7%. It’s really not much difference from the index.

Pay out is quarterly so you get more income frequently.

 

There’s really not much to dislike about this Singapore REIT ETF, except you easily just copy what this ETF buys, and save up on the expense ratio. 

If you already have most of the Singapore blue-chip REITs, there isn’t a huge drive to buy this REIT ETF.

Source: Nikko Asset Management-Straits Trading AXJ REIT ETF factsheet

 

#4: Lion-Phillip S-REIT ETF

Launch date: 30 October 2017

Dividend payout: half-yearly

Dividend yield: 4.88% (March 2022)

 

This Singapore REIT ETF is a replica of the NikkoAM-Straits Trading AXJ REIT ETF — Top holdings and sector composition are almost the same. 

Source: Lion-Phillip S-REIT ETF  factsheet

 

Lion-Phillip S-REIT ETF tracks the Morningstar Singapore REIT Yield Focus Index. 

The Lion-Phillip S-REIT ETF was launched in Oct 2017, a partnership between 2 big local fund managers — Lion Global and Phillip Capital.

The only difference is the payout — Lion-Phillip S-REIT ETF pays a half-yearly dividends instead of quarterly, and has a slightly higher dividend yield of 4.88%. 

That’s pretty much about it. 

Otherwise, this Singapore REIT ETF’s top holdings are your usual CapitaLand, Keppel, Mapletree family of Singapore REITs. 

The difference is Lion-Phillip has a higher weightage to Keppel DC REIT and Parkway Life REIT is in the top 10 holdings of this REIT ETF.

 

Source: Lion-Phillip S-REIT ETF factsheet

 

#5: UOB APAC Green REIT ETF

Launch date: 23 Nov 2021

Dividend payout: quarterly

Dividend yield: up to 4% (projected)

This Singapore REIT ETF deserves a special mention. 

I know, its projected dividend yield isn’t fantastic. But what’s different from the other REIT ETFs is its top 10 holdings has completely no Singapore REITs. 

This offers the best diversification away from most Singapore retail investors’ portfolio.

The UOB APAC Green REIT ETF strategy tracks Asia-Pacific REITs that invest in “green” REITs — landlords promoting sustainability efforts. This means having green office design, or green-certified spaces.

Honestly, I find this Singapore REIT ETF more suited for institutional investors who have a mandate to invest sustainability investments.

What I don’t like obviously is the expected lower dividend yield. Assume they pay 4% dividends. After fees of 0.45%, that’s a low 3%. Not that impressive.

The way I see how to play this REIT ETF — if you’ve a much lower expectation for yield and want to do good for the world, by all means this is a great vehicle to invest in. 

Plus, it provides diversification away from your traditional Singapore blue-chip REITs. 

Amongst all the Singapore REIT ETFs, this gives the best diversification. You might already own CapitaLand, Keppel, Mapletree the usual big boys. This is refreshing look from the usual Singapore REITs.

The bad news? The yield is too low for my liking.

Source: UOB APAC Green REIT ETF factsheet

 

Singapore REIT ETFs Performance any Good?

These Singapore REIT ETFs track the REITs Index. 

Performance won’t differ much amongst all the ETFs.

Source: Yahoo! Finance

This is because these REIT ETFS they pay out their dividends to investors. 

So they don’t reinvest income. 

That’s why, you can’t expect a huge growth in these REIT ETFs’ NAV. It’s more stability you’re looking for.

What’s more, their dividend yield (before fees) is about mid-4%.

Source: Singapore REIT ETFs’ factsheets, Dividend Titan

Buying $100,000 worth of Singapore REIT ETF would give you an annual $4,000+ income. Way better than putting cash in the bank. You can also combine this with other Singapore dividend stocks

And good for risk averse investors. 

 

What’s the risk buying Singapore REIT ETF?

Okay, one big issue for Singapore REIT ETF is it will always buy the top holdings from the index. This means, more often, the REIT ETF will buy REITs at a higher price.

The bigger the REIT’s market cap, the higher chance it gets into the index. 

And the REIT ETF will capture this in their fund. 

 

My final thoughts

There isn’t a one size fit all Singapore REIT ETF. 

I suppose these ETFs help to complement what REITs you already have or don’t have in your portfolio.

After writing this, I realized I’m not a big fan of Singapore REITs ETF. 

Disclosure — I don’t own any Singapore REIT ETFs yet. I’m a big fan of buying individual Singapore REITs

Even though the annual expense you pay to the ETF is cheap, about 0.6% for most of the REIT ETFs, the net dividend yield you’re getting is a high 3%, or low 4%. Which isn’t that fantastic.

I’m better off picking off individual REITs.

But what’s interesting to note here is it really helps take away the time and effort to individually pick stocks. 

With these Singapore REIT ETFs, I simply choose the basket of stocks I want to own. 

Plus, these Singapore REIT ETFs can help diversify my portfolio. Which is great for someone who doesn’t have a big capital to buy many individual stocks.

 

So… what’s the best Singapore REIT ETF to buy?

If I’m starting out with no REITs in my portfolio, I’d say the best Singapore REIT ETF to buy so far is the NikkoAM-Straits Trading AXJ REIT ETF.

First, the REIT ETF’s fund managers are reputable local players in the finance industry. They have the biggest fund size amongst all the other REIT ETF. 

And they pay out a more frequent dividend distribution. I like that.

NikkoAM-Straits Trading AXJ REIT ETF has been around for a long time and has proven to track pretty closely to the index, with a tracking error of 0.3% per year. 

Not too bad. 

What’s more, it owns most of the Singapore blue-chip REITs — CapitaLand, Keppel, Mapletree families. So you don’t have to pull your hair out picking which blue-chip REITs to buy

If in doubt, just buy the basket. 

Sometimes, investing can be simple.

Willie Keng, CFA

Founder, Dividend Titan

 

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