New REIT ETF for both trading/investing, performance ‘index’

Phillip SGX APAC Dividend Leaders REIT ETF is a ‘First-in-Class’ SG REIT ETF that gives investors an opportunity to buy into a basket of dividend leaders. It also doubles as a benchmark index – savvy investors can use it to pick out-performers in this asset class.


Phillip SGX APAC Dividend Leaders REIT ETF

This real estate investment trust exchange traded fund (thank heavens for abbreviations that was a mouthful) started trading last week on 20 October 2016 on the Singapore Exchange. The fund manager is Phillip Capital Management. According to Dealing Manager Sky Yao at Phillip Securities,

This ETF gives investors an exposure in Asia ex Japan REITs issuing high dividends. Considering Asia economic prospects of increasing population, growth in mid-tier income families and increasing urbanisation, there are a myriad of factors that pose a strong case to purchase this ETF. Investors need to appreciate the reality that there is a new norm of low growth, low bond yields and relatively low global interest rates which is further fuelled by events like Brexit. We now see capital inflow into “yielding assets” in Asia. The search for yield still remains making REITs an attractive asset class to have in any portfolio. This particular ETF will be useful for retail investors with little time to analyse performance of each stock in the REIT Universe.


This is great product for yield-seeking investors. REITS are attractive dividend-investments to hold over long term. It is not easy to pick the right one especially at a time when real estate is not doing well however. Just yesterday, this Bloomberg piece reported ‘Singapore’s Mall Vacancies Jump to Highest Level in a Decade‘. There are many kinds of REITS including commercial, shipping, hospitality, healthcare and so on. Not all are retail focused but it is a minefield for investors to navigate now that the broad market sentiment is not at it’s best. Buying into a ETF basket that reduces the risk of individual-Reit-picking comes to mind. At the moment I am in the evaluation mode only. I think this REIT as the first in it’s class serves a particular niche. I am a chart person however, not a fundamentals guy so the chart picture is important. Unfortunately there is very scant data since it’s just listed. Therefore this ETF in my keep-in-view mode only at this moment.

Phillip SGX APACDIV Reit ETF S$ daily chart

Phillip SGX APACDIV REIT ETF S$ daily chart (Ticker: BYJ.SG)


Buy a basket to diversify or buy the leader of the basket to outperform

Besides potential investment, I think that this REIT ETF has potential to be a benchmark ‘index’. Since it is positioned to be a basket of ‘dividend leader’ REITS, performance of individual REITS in this high dividend category can be compared against the performance of the ETF itself. Readers should be familiar with this idea of relative performance such as the ‘winners and losers’ feature that I do for Straits Times Index and it’s constituent stocks at the end of every quarter – something like this. In this example, the Straits Times Index delivered an end of Q3 performance of 1%. An investor who wants to outperform the index should immediately eye the top of the table leaders or any stock doing more than 1%.

Straits Times Index components winners and losers ending Q3 2016

Straits Times Index components winners and losers ending Q3 2016

A benchmark serves an investor this way – instead of diversifying, giving up the chance for outperformance by buying into a basket, an investor can strive to achieve outperformance by buying into individual constituents that are proven to outperform the basket/index itself. I will come back to this topic – to compare relative performance of component REITS against the Phillip SGX APAC Dividend Leaders REIT ETF itself once there is more data.

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