Chinese REITs were launched for the first time this year, with nine listed in June 2021.
The move was aimed at enhancing the vibrancy of China’s real estate sector and promoting economic growth.
China is not alone, with Asian REITs entering a new age of growth.
An accelerating global shift of power towards Asia, coupled with the emergence of new economy property segments, have investors sitting up to take notice.
If you are keen to participate in the growth of Asia’s real estate sector, the NikkoAM-StraitsTrading Asia Ex Japan REIT ETF (SGX: CFA) (SGX: COI) might be the ETF for you.
But before you buy, here are 10 key facts you need to know. (figures are as of 30 September 2021, unless otherwise stated)
- The objective of the ETF is to replicate the FTSE EPRA Nareit Asia ex Japan REITS 10% Capped Price Index. The Index is designed to represent general trends in real estate equities in both developed and emerging markets of Asia, excluding Japan.
- As of 29 October 2021, the Index consists of 43 REITs, although the number of constituents may change from time to time.
- The 43 index constituents have a total market capitalization of US$70.2 billion, with a median of US$849 million.
- Each index constituent has a weightage cap of 10%, although market movements may cause some holdings to exceed 10% in between rebalancing dates. The index is reviewed quarterly in March, June, September and December.
- CapitaLand Integrated Commercial Trust (SGX: C38U) forms 10.4% of the ETF and is its largest component. It is followed by Ascendas REIT (SGX: A17U) and Link REIT (SEHK: 0823), each occupying 9.8%.
- Retail REITs have the largest allocation in the ETF, occupying a 36.3% weight. The next largest segments are Industrial REITs and Office REITs, with respective weights of 30.5% and 12.7%.
- Boasting a fund size of S$324.5 million, the ETF is the largest REIT ETF in Singapore by fund size.
- Since the fund’s inception in March 2017, the ETF has rewarded investors with an annualized return of 6.17%, assuming all dividends are reinvested.
- In the same period, the benchmark index has provided an annualized return of 7%, leaving the fund’s tracking error at 0.83%.
- The fund’s expense ratio is capped at 0.60%, a similar amount compared to other REIT ETFs.
Get Smart: Participate in Asia’s growth
Governments around the world are looking to spur economic growth.
Many are doing so by promoting REITs as a viable investment asset class.
REITs offer property owners a way to recycle capital, freeing up funds for further projects and developments.
In Asia, places such as South Korea, Hong Kong, and the Philippines have established regulations that are REIT-friendly and that encourage the listing of more REITs.
With instant exposure to 43 REITs from around Asia, the NikkoAM-StraitsTrading Asia Ex Japan REIT ETF is an easy solution for investors looking to participate in Asia’s fast-growing real estate market.
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Disclosure: Herman Ng owns shares of CapitaLand Integrated Commercial Trust and Ascendas REIT.
