2 Best Singapore REIT ETFs to Buy and Hold Forever
February 28, 2022
In stock markets, the war in Ukraine is dominating the headlines. But amid volatility, long-term investors should always be thinking about where stock prices will be in five or 10 years, and not just next month.
Singapore’s stock market provides a reasonable choice of Singapore REIT ETFs, so investors don’t need to buy specific REITs if they don’t want to.
With that, here are two of the best Singapore-listed REIT ETFs that long-term investors can buy and hold forever.
1. Lion-Phillip S-REIT ETF
The first REIT ETF on the list is Lion-Phillip S-REIT ETF (SGX: CLR), which listed on the local Singapore bourse in October 2017.
While it’s 100%-focused on Singapore-listed REITs, it does have diversity by both geography and property sector given the global nature of Singapore REITs.
The REIT ETF has a total expense ratio (which is a better reflection of the fund’s total expenses versus just the management fee) of 0.6% and holds around 28 REITs.
Its biggest holdings include your household REIT names in Singapore, with the top three REITs – as of 31 December 2021 – being Keppel DC REIT (SGX: AJBU), at a 9.9% weighting, CapitaLand Integrated Commercial Trust (SGX: C38U), at a 9.8% weighting, and Mapletree Industrial Trust (SGX: ME8U), at a 9.5% weighting.
Just over one-third of the ETF is in industrial REITs while another third is in retail REITs. The rest of the REITs are made up of various sub-sectors including Healthcare, Office, Diversified and Specialised (see below).
Source: Lion Global Investors/Morningstar as of 31 December 2021
The REIT ETF’s benchmark is the Morningstar Singapore REIT Yield Focus Index. Since inception, it has delivered a respectable annualised total return (with dividends reinvested) of 6.2%.
Investors should remember that this REIT ETF holds REITs that are only listed in Singapore.
2. NikkoAM-Straits Trading Asia ex Japan REIT ETF
Second on the list is the first REIT ETF to be listed in Singapore; NikkoAM-StraitsTrading Asia ex Japan ETF (SGX: CFA).
Launched in March 2017, it’s the largest REIT ETF with a fund size of close to S$340 million. Yet, in contrats to the Lion-Phillip S-REIT ETF, this one has more exposure to Asia Pacific REITs – as the name suggests.
Second and third spot, by weightings, are Singapore-listed CapitaLand Integrated Commercial Trust (with 9.9%) and industrial-focused Ascendas Real Estate Investment Trust (SGX: A17U), with a 9.7% weighting.
It also has exposure to specialty REITs in up-and-coming markets, such as India’s first listed REIT, Embassy Office Parks REIT (BOM: 542602), which is a large owner of office parks and commercial buildings in key Indian cities such as Mumbai and Pune.
The REIT ETF’s total expense ratio is the same as Lion-Phillip’s at 0.6%. The ETF holds over 40 REITs and differs from the Lion-Phillip ETF mainly via exposures, with the NikkoAM ETF having more exposure to the office and retail sub-sectors.
As a result, its annualised total returns, with dividends reinvested, of 5% since inception (they both listed in 2017) are slightly worse than the Lion-Phillip REIT ETF.
Investing no matter what the market does
One of the key factors that determines investors’ long-term returns is “time in the market”. To this extent, it’s important for investors to focus on staying invested – through thick and thin.
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.
In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.