5 Things For Investors To Know About A New Singapore REIT Index

Late last year, bourse operator Singapore Exchange Limited (SGX: S68) had launched a number of new stock market indices.

Among them was the SGX S-REIT 20 Index, a market capitalisation-weighted index that measures the performance of the 20 largest and most tradable real estate investment trusts (REITs) in Singapore’s stock market. The index had registered 5.2% in total returns from the start of 2016 to 6 April this year.

But wait, there’s more. A recent report from the bourse operator contained five things about the SGX S-REIT 20 Index that investors may want to sit up and take note of (data as of 6 April 2016, unless otherwise mentioned). Here they are:

  1. The index had a dividend yield of 7.2%. The highest yielding REITs were CDL Hospitality Trust (SGX: J85) and Frasers Commercial Trust (SGX: ND8U). The former had a yield of 7.7% while the latter’s stood at 7.5%.
  2. The SGX S-REIT 20 Index is geographically diverse. More than half the trusts have property assets located outside of Singapore. Most of the overseas assets are based in Asia. This includes countries such as China, Hong Kong, Vietnam, Japan, Indonesia, South Korea, the Philippines, and Malaysia. Ascott Residence Trust (SGX: A68U) is the most diverse with a presence in at least seven different countries.
  3. The REIT-focused index is also diversified in terms of sector. The largest group are the Retail REITs, which make up nearly 30% of the index’s weightage. Major retail-focused REITs such as CapitaLand Mall Trust (SGX: C38U) and Mapletree Commercial Trust (SGX: N21U) are heavyweight representatives.
  4. The second largest group are the Industrial REITs, which make up a quarter of the SGX S-REIT 20 Index. Ascendas Real Estate Investment Trust  (SGX: A17U), which is also a Straits Times Index (SGX: ^STI) component, is the largest representative from the Industrial sector. Mapletree Industrial Trust (SGX: ME8U) is another major contributor.
  5. In third place are Office REITs. CapitaLand Commercial Trust (SGX: C61U) is an important piece here. In fact, the newly-crowned constituent of the Straits Times Index is the largest contributor to the SGX S-REIT 20 Index, taking up a 10% weightage.

Exploring the SGX S-REIT 20 Index components can help us better understand the universe of REITs in Singapore. This may give us a head-start on our investing homework that follows.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.