Exchange Traded Funds (ETF) – reits version


The Singapore equity market is really slow to say and there are only a handful of reits ETFs that were launched previously (that was like 3 to 4 years ago). Quite a number of people were rather yield starved back then and with that bullish USD interest rate hike (Before Covid-19) it was almost a guarantee that this will happen. I blame the media for setting off such rumours, the central bank will never act on just pure speculation but rather more than data and in today’s world, even more data that they can ever get. A big economy like the USA is something that most people watches although that has slowly diminished after successful propaganda by the emergence of our Chinese neighbours. Don’t get me wrong, it is kind of good that they are getting their act together, it is just that there’s much more skepticism more than ever since anything and everything can be fake. Profits over anything else some people say so I say stay alert.

Well, back to the point here. I was trying to look for yield related stuffs that could add on to the portfolio and when I did a quick filter away from reits, there isn’t much that is available on the SGX that is sizeable (i.e. blue chip enough) and so to diversify that reits risk thingy, I went into the details and tried to see if I could mimick the fund portfolio. As it turns out, it might be too much of a challenge.

Diversity lies in the location: Singapore, Hongkong, China, Australia with the scope to add on more countries according to the fund manager. (Exposes some FX risks along with fees, fund management, platform fees)

Diversity in the types of holdings: Office, retails, industrial, others and more diversified real estates (Exposes to certain sectors that are cyclical in nature)

Lower fees as compared to a fund, as it is structured as an ETF (Exchange Traded Funds), it’s annual management fees are also lesser than usual. (Cheaper but more passively managed)

Yield: approximately 4-5% p.a. nett for all the trouble, perhaps even using different brokers and also different FX rates. Believe it or not, institutions get a better Forex rate just because they have the size to do so and sometimes, the fees on the allocation can be rather cheaper than a retail. It’s pretty much how you value it. Some people prefer total control, counting the pennies (every cents counts) while some delegate with a little bit of fees paid that is reasonable to them.

NIKKO AM – Straits Trading Asia Ex Japan ETF (Check that out here: Nikko AM reits ETF) and Philips SGX APAC dividend Leaders reit ETF (Check that one here: Poems reits ETF)

Pretty much in similar context just that with Philips, the majority holdings will be Australian reits (about 60%) while Nikko AM will be the majority with Singapore reits (about 60%)

Always do your due diligence, after all everyone has different risk levels. There are always other options. ETFs are just one of the many tools.

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