6 Things Investors Need to Know About a New REIT Index ETF in Singapore

Earlier today, bourse operator Singapore Exchange Limited  (SGX: S68) announced the launch of a new index.

The announcement had two key messages. First, the index is the APAC ex Japan Dividend Leaders REIT Index. Second, the aforementioned index will be used as the benchmark index for a new exchange-traded fund (ETF) that will be issued by Phillip Capital Management Limited.

I dug into the index factsheet to find out more. Here’re six things investors might want to know:

  1. The SGX APAC ex Japan Dividend Leaders REIT Index, true to its name, comprises of REITs from the Asia Pacific region. But, REITs from Japan are not included, hence the ‘ex Japan’ portion of the name.
  2. The index is dividend weighted and has 30 constituents. It captures 70% of the region’s REIT universe by market capitalisation. The index make-up will be reviewed semi-annually in March and September.
  3. As of 29 July 2016, the REITs come from three countries, namely, Singapore, Hong Kong, and Australia. Australia makes up the majority with 61% of the index. Singapore contributed 27% while the rest comes from Hong Kong.
  4. From a REIT classification standpoint, commercial REITS make up almost 73% of the index. 16.5% are considered as diversified REITs while another 9.7% falls under residential REITs. A small sliver (0.9%) are specialised REITs.
  5. The SGX APAC ex Japan Dividend Leaders REIT Index has been backtested. It had a net total annualised return of 9.78% over the last five years (as of 29 July 2016).
  6. The Hong Kong-listed Link REIT has the highest weighting within the index at 11.32%. The largest Singapore REITs in the index are Ascendas Real Estate Investment Trust (SGX: A17U) and CapitaLand Mall Trust (SGX: C38U). The former has a weightage of around 4.4% while the latter has a weightage of about 3.5%. The SGX APAC ex Japan Dividend Leaders REIT Index has a dividend yield of 4.5% on 29 July 2016.

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