Thursday, 23 March 2017

SHOULD WE INVEST IN REIT ETFs?

Last October, the Phillip SGX APAC Dividend Leaders REIT ETF was listed on the SGX, the first REIT ETF to be available here. It aims to track the performance of the 30 highest total dividend-paying REITs in the Asia Pacific Region. At the end of this month, another REIT ETF, the Nikko AM Asia ex-Japan REIT ETF would be listed, giving investors an additional investment option. With their high and consistent dividend payouts, REITs generally appeal to investors seeking regular passive income.

Some investors may be deciding between investing in individual REITs or the REIT ETF. We believe that REIT ETFs are more suitable for investors seeking diversification, with smaller capital available and with limited time to research thoroughly on individual REITs. On the other hand, investors with more capital may want to select a few individual REITs, given their higher dividend yields compared to the REIT ETFs.

Tuesday, 21 March 2017

HOW INTEREST RATES AFFECT REITS



The Federal Reserve has decided to raise interest rates for the third time since the 2009 financial crisis. While higher interest rates would usually depress prices of stocks with high dividend yields, such as REITs and utilities, their share prices held steady or went up after the decision for the interest rate hike was announced last week. The last two rate hikes negatively affected the markets, but this time, investors were relieved that the Federal Reserve did not indicate a more hawkish outlook.

However, rising interest rates will still affect REITs, due to their business model. REITs are often heavily reliant on debt to fund their properties, and rising rates would increase the cost of borrowing. In addition, investors usually include REITs in their portfolios as a proxy to bonds, and bonds tend to perform poorly in periods of rising interest rates.

Monday, 13 March 2017

IMPROVING VOLUMES FOR SGX



February has seen some heavy volume in the local market, as the Trump rally continues pushing markets to new highs. Securities daily average value (SDAV) in February was 1.409 billion, as reported by SGX. SGX provides monthly information on market statistics and weekly institutional and retail fund flows.



SeptemberOctoberNovemberDecemberJanuaryFebruary


SDAV
($ Million)


9849341,3329961,0471,409