Phillip SGX APAC Dividend Leaders REIT ETF: Initial Impression
Source: poems.com.sg
What is Phillip SGX APAC Dividend Leaders REIT ETF?
Yes it is finally here! I spoke about this ETF to a group of investors back in July, and now it is finally here!
The Phillip SGX APAC Dividend Leaders REIT ETF is the first (surely won’t be the last) REIT ETF in Singapore. It is an exchange-traded fund that tracks 30 highest total dividend paying REITs in the Asia Pacific ex-Japan region. The eligible countries are:
- Australia
- China
- Hong Kong
- India
- Indonesia
- Malaysia
- New Zealand
- Philippines
- Singapore
- South Korea
- Taiwan
- Thailand
How are the REITs chosen?
The ETF has a few selection criteria as listed below:
- It must be a listed REIT (duh!)
- It must have a minimum median free float market capitalisation of US$240m (this ensures that the REITs are of a significant size, less likely to include those REITs in trouble)
- It must have a minimum median daily traded value of US$320,000 (this ensures that the REITs are sufficient liquid which allows the ETF to adjust its holding easily)
- The maximum weighting of any REITs is 10% (this will ensure that the ETF is well-diversified)
From the looks of it, it seems like the standard selection criteria. Although I would love to see them not just select the REITs based on “highest total dividend paying REITs“. This is because the highest paying REITs may not be the highest paying all the time. I would rather the ETF selects the REITs based on other fundamental criteria such as Price to Book ratio and Gearing Ratio. Essentially, choose the REITs based on their quality not just quantity. More on that next time!
What are the REITs included?
Currently, the ETF is made up of mostly Australia, Hongkong and Singapore REITs. You can see the proportion below.
Source: Phillip SGX APAC Dividend Leaders REIT ETF Product Info Sheet
Amongst the REITs, there are 14 Singapore REITs, including big names such as Capitaland Mall, Suntec REIT and Ascendas REIT. You can find the full list below:
What should I do now?
Based on the info sheet, the expected dividend is about 5%. Although this is not very high compared to other REITs, considering that you are so well-diversified, I personally think the dividend yield of 5% is not too bad. Furthermore, the backtesting of the ETF showed that the total return over a 5 year period is about 12% per annum.
I believe this serves as a good vehicle for those who wish to invest in REITs yet do not wish to pick individual REIT. The important thing is to have a longer investment horizon as we are not able to ascertain if the market will be up or down in the near term.
To subscribe, those who POEMS account, you can just contact your broker directly. The rest you may want to wait a while for further distributors to be announced! Just remember that the subscription deadline is 13 Oct.
More info can be found on POEMS.
See you next week!
Investing Always,
Pete
Please refer to the disclaimer here
