Singapore’s First REIT ETF

The long-awaited Real Estate Investment Trust (REIT) ETF is finally here.

Yesterday afternoon, Philips Capital management announced the launch of the first Asia Pacific REIT ETF to be listed on the Singapore market.

The REIT ETF will track the recently-launched SGX APAC Ex-Japan Dividend Leaders REIT index. This comprises the top 30 REITs listed across the Asia Pacific exchange, excluding Japan.

The weighting of each REIT in the ETF will be determined by the total dividends paid by each in the preceding twelve months. What this means is that a REIT that paid out the most in dividends would have the highest weighting.

According to Philips, the ETF will represent over 70% of the region’s REITs by total market capitalisation.

Philips also stated that by having the weighting method described above, the ETF will provide investors with a transparent and low-cost access to a diverse portfolio or REIT’s.

For some perspective, this is how the REIT ETF would have performed over the past twelve months if it had been formed.

The ETF would have a total returned of 19.97% for the twelve months ended 29 July 2016. This would imply a yield of 4.53% over the period.

One reason why investors might be interested in the ETF is because of the positive outlook. The Asian REITs market could provide investors with an opportunity to capitalise on the long-term economic growth in Asia. This growth could be supported by increasing urbanisation and rising incomes.

The REIT ETF’s initial offer period will be until 10am on 13 October 2016. Trading will begin at 9am on 20 October.

The issue price is expected to be between US$0.88 to US$1.1. There will also be a secondary currency listing in Singapore dollars, which will be based on an exchange rate of US$/S$ of 1.35. The ETF will pay out distributions on a semi-annual basis.

The REIT ETF could provide investors with another option when considering REIT investments. With the ETF holding 30 REIT’s it also provides investors with a good diversification strategy. But that is only if you like REITs. Not everyone does.

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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 Esjay does not owns shares in the ETF mentioned.