• Today’s listing of the UOB APAC Green REIT ETF with an AUM of more than S$80 million, brings the number of REIT ETFs listed for trading on SGX to five, with their total AUM of S$780 million+, representing close to an 80% increase from a year ago.
   
• The underlying Index of the ETF, the iEdge-UOB APAC Yield Focus Green REIT Index, focuses on environmental indicators when assessing REITs – energy consumption, water consumption, GHG emissions, and green building certifications, while maintaining a highly competitive dividend yield.
   
• Both the iEdge-UOB APAC Yield Focus Green REIT Total Return Index and iEdge APAC REIT Total Return Index have recovered from broader REIT Sector declines in 2020, both surpassing February 2020 highs on 10 June 2021. This has brought the annualised total return of the iEdge-UOB APAC Yield Focus Green REIT Total Return Index to 8.4%.
   
• Of the 50 iEdge-UOB APAC Yield Focus Green REIT Index constituents, nine are listed in Singapore. This includes CICT, all four of the Mapletree Group sponsored REITs, FLCT, Suntec REIT, Keppel REIT, and the Business Trust Ascendas India Trust. Together the nine constituents make up 16% of the Index.

With initial Assets under Management (“AUM’) of S$83 million, the UOB APAC Green REIT ETF began trading on SGX today. The second ETF to be listed within a week is benchmarked to the recently launched iEdge-UOB APAC Yield Focus Green REIT Index. This Index is comprised of 50 high-yielding REITs across the Asia-Pacific region, that meet environmental factor assessments by the global real estate sustainability benchmark (“GRESB”). GRESB is an industry-led organisation that was founded in 2009 that provides actionable and transparent ESG data to financial markets, collecting, validating, scoring and benchmarking ESG data to provide business intelligence, engagement tools and regulatory reporting solutions for investors, asset managers and the wider industry. As of October 2021, more than 140 institutional investors, representing over US$47 trillion AUM, use the GRESB benchmarks better understand the performance of their portfolios.

The iEdge-UOB APAC Yield Focus Green REIT Index focuses on environmental indicators when assessing REITs – energy consumption, water consumption, GHG emissions, and green building certifications. In short, by applying the green tilt, the 50 current constituents of the Edge-UOB APAC Yield Focus Green REIT Index emit 7% less GHG emissions, consume 12% less water and 9% less energy than the non-green market-cap weighted version of the Index, while maintaining an competitive dividend yield. The average yield across the last 10 years for the Index is approximately 4.7%, while the ETF maintains an annual total expense ratio of 0.8%.

The logic of the green tilt comes from the fact that properties enclose people, and thus properties maintain one of largest carbon footprints, which according to the UN Environmental Program contribute 30% of global GHG emissions, while consuming 40% of world’s energy. Hence, there is an increasing focus on climate in this industry with a heightened environmental and social awareness. This is seeing corporate tenants reassess their strategies to meet sustainability targets, and portfolio investors reassess their exposure to stranding or transition risks. NAREIT maintain that REIT stakeholders have become increasingly impacted by and interested in corporate ESG performance, and that the ESG journey for REITs and publicly traded real estate is urgent, and has been accelerating. For the past three years, NAREIT has published annual report of the REIT industry’s ESG performance details the state of sustainability efforts in the publicly traded US REIT industry.

Both the iEdge-UOB APAC Yield Focus Green REIT Total Return Index and iEdge APAC REIT Total Return Index have recovered from declines in 2020, both surpassing February 2020 highs on 10 June 2021. This has brought the annualised total returns of the iEdge-UOB APAC Yield Focus Green REIT Total Return Index and iEdge APAC REIT Total Return Index to 8.4%. The premium of global REIT yields to Gov Bonds provided support for the global REIT market for a number of months in 2021. From the time 10 year UST yields topped out on 31 March near 1.75% through to their lows in early August near 1.20%, global REITs rallied by approximately 15%. By comparison, since 3 Aug, 10 year UST yields have returned to ~1.60%, with global REITs gaining 3%.

At the latest September Semi-Annual Rebalance the Index was mostly weighted to Diversified REITs, Retail REITs and Office REITs, with 40% of the Index constituents listed in Japan, 36% listed in Australia listings, 16% weighted to Singapore listings and 8% weighted to Hong Kong listings.

Of the 50 iEdge-UOB APAC Yield Focus Green REIT Index constituents, nine are listed in Singapore. This includes CapitaLand Integrated Commercial Trust, all four of the Mapletree Group sponsored REITs, Frasers Logistic & Commercial Trust, Suntec REIT, Keppel REIT, and the Business Trust Ascendas India Trust. This provides for a diverse representation of the S-REIT Sector, and while the iEdge-UOB APAC Yield Focus Green REIT Total Return Index has recovered to pre-COVID levels, not every constituent has recovered. For instance,  REITs that thrive with open borders like Suntec REIT are still trading below their early 2020 highs, while others, that cater to trade and logistics rather than consumers and hospitality, recovered earlier. For instance, Mapletree Industrial Trust had recovered from its March 2020 low within three months. With the uneven economic recovery an unfortunate symptom of COVID-constrained global growth, both Suntec REIT and Mapletree Industrial Trust have delivered diversified five year annualised total returns of 5% and 18% respectively.

With the listing of the UOB APAC Green REIT ETF today, SGX lists five REIT ETFs for trading with AUM of more than S$780 million, representing an approximate increase of 80% from a year ago. The table below details the broader ETF suite listed on SGX with AUM of S$12.1 billion as of 19 Nov. The table is sort by 2021 year to 19 Nov total returns, with all total returns denominated in SGD.

Source: SGX, Refinitiv, Bloomberg (Data as of 19 November 2021)

Investing in ETFs

ETFs are investment funds listed and traded intraday on a stock exchange. The majority aim to track the performance of an index and provide access to a wide variety of markets and asset classes, including local stocks, international securities, bonds, commodities or money markets.

Each ETF gives investors access to the performance of the asset that comprises the underlying index. Investing in the ETF is also less costly if one was to build a similar portfolio by buying the individual stocks. It also provides exposure to international markets and asset classes that may be inaccessible to individual investors.

ETF Microstructure Changes

Note that effective 17 Jan 2022, following changes will take place for all ETFs listed on SGX:
1. Reduction of standard board lot size of ETFs listed on SGX to 1 unit.
2. Existing forced order range +/- 30 ticks for all ETFs will be revised to +/- 10%.

To find out more about ETFs, click here.