A new exchange-traded fund (ETF) that invests in real estate investment trusts (REITs) is coming to town.
Nikko Asset Management and Straits Trading Co Ltd (SGX: S20) will launch the NikkoAM-Straits Trading Asia Ex Japan REIT ETF on 29 March 2017. The ETF will track the FTSE EPRA/NAREIT Asia ex Japan REITs Net Total Return SGD Index. EPRA stands for the European Public Real Estate Association while NAREIT stands for the National Association of Real Estate Investment Trusts.
Let’s dig in to find out a little more about the new REIT ETF. Here’re five quick things investors may want to know:
1. The ETF will consist of Singapore-listed REITs with the remaining 30% coming from REITs listed in Hong Kong, China, and Malaysia.
2. Ascendas Real Estate Investment Trust (SGX: A17U), which owns industrial and business park properties in Singapore and Australia, will be the biggest contributor to the REIT ETF with a weightage of 10.28%. Other heavy-hitting REITs in the ETF include CapitaLand Mall Trust (SGX: C38U), the Hong Kong-based Link Real Estate Investment Trust, Suntec Real Estate Investment Trust (SGX: T82U), and CapitaLand Commercial Trust (SGX: C61U). The five REITs above will collectively make up over 46% of the REIT ETF.
3. In terms of the property-sector breakdown, Industrial & Office REITs will account for 44.4% of the ETF. This is followed by Retail REITs, which will occupy 40.4%. It’s worth noting that the two groups will be close to 85% of the ETF’s make-up.
4. Singapore will form the bulk of the geographical exposure at 58.8%. Next up is Hong Kong with 21.4%. China is in third place with about 12% coverage within the REIT ETF.
5. The REIT ETF has not published its expense ratio as the fund is not incepted yet. According to the prospectus, the current management fee is 0.5% of the deposited properties and has a maximum cap of 0.7%.
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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 shares of CapitaLand Mall Trust. Motley Fool Singapore contributor Chin Hui Leong owns shares in CapitaLand Mall Trust and Suntec REIT.