Phillip SGX APAC Dividend Leaders REIT ETF

The Phillip SGX APAC Dividend Leaders REIT ETF seeks to provide investors a high level of income and moderate long-term capital appreciation by tracking the performance of 30 publicly traded REITs in the Asia Pacific ex-Japan region.
Intraday NAV USD Intraday NAV SGD NAV USD NAV SGD Total Assets USD
0.999 1.343 0.993 1.339 18,678,355
Intraday NAV updated as at 20/09/2017 05:10 PM NAV and Total Assets updated as at 19/09/2017
Listing Date : 20 October 2016                       Listing Price: USD 0.9335, SGD 1.301

 

 

Fund Prospectus            Product Highlight Sheet              Product Info Sheet            Annual Report            Indicative Holdings

 

The Phillip SGX APAC Dividend Leaders REIT ETF is the first ever ETF focusing on Asia Pacific REITs allowing investors a convenient and easy way to gain broad exposure to the best REITs and their prime real estate assets in the region. The ETF follows a smart beta strategy which will rank and weight the underlying REITs according to total dividends paid in the preceding 12 months, with the aim of enhancing returns above that of traditional market-cap weighted ETFs. The ETF provides investors with a unique opportunity to benefit from the continued growth of Asia Pacific via stable rental income received from high-quality real estate assets as REITs typically distribute most of its income as dividends to its shareholders

The SGX APAC Ex-Japan Dividend Leaders REIT Index is the underlying benchmark index for this ETF. 

The ETF paid its first semi-annual dividend in April 2017. Annualised Dividend Yield stands at 4.2% p.a. (net of tax). Find dividend information here.

 

5 Benefits of The Phillip SGX APAC Dividend Leaders REIT ETF

Attractive and Stable Dividend Income

The fund receives significant dividend income from the underlying REITs and in turn, aims to make semi-annual distributions to investors. The fund's underlying index, the SGX APAC ex-Japan Dividend Leaders REIT Index has a dividend yield of 4.8% (as at 30 September 2016)

High-Quality REITs in Asia EX Japan

The ETF will rank and weight the underlying constituent REITs based on the total dividend paid by the REITs in the previous 12 months, ensuring only the largest and highest dividend paying REITs are invested in. Poor performers are weeded out. Investors can be assured of exposure to a diversified portfolio of top 30 APAC ex-Japan REITs with a proven track record of paying attractive dividends.

Liquidity and Transparency

The ETF being listed on the SGX-ST, is traded like a regular share. This allows a higher level of liquidity compared to traditional unit trusts. As the ETF is listed in both USD (primary currency) and SGD, this further increases the flexibility and liquidity of the ETF. The full constituent list is also easily accessible allowing transparency.

Low Cost

The annual management fee is only 0.30%. There are no sales charges applicable. (Brokerage charges may apply)

Reputable Index Provider

SGX Index Edge, one of the reliable index providers in Asia manages the index. 

As this is an Exchange Traded Fund, existing units can be traded easily like normal stock at Singapore Exchange over lots of 100 units. Normal stock trading procedure can be followed to buy and sell units. No sales charges apply. However, respective brokerage charges may apply.

To subscribe to new units, the following participating dealers can be contacted

Phillip Securities Pte Ltd

Phone: +65 65311555

Website: www.poems.com.sg

ABN AMRO Clearing Bank N.V.

Website: www.abnamroclearing.com

Commerzbank AG

Website: https://www.commerzbank.com/

UOB Kay Hian Pte Ltd

Phone: +65 6536 9338

Website: http://www.utrade.com.sg

 

Asia Pacific REITs receive high rental income from its prime Asian properties which it then distributes to its shareholders. The dividend yield from REITs in Australia, Singapore, and Hong Kong are significantly higher than their respective ten-year government bond yields with yield spreads that are more attractive than US, UK or Japan REITs. Over the recent years, the Asian REIT asset class has seen major investments from global professional investors such as sovereign wealth funds and pension funds, attracted to prime Asian assets paying significant and stable rental income.

Five key highlights of the Asia Pacific REIT Sector

Stable Rental Income from Real Estate Assets

High rental income which is then distributed as dividends to its shareholders makes large and established investors in need of stable income financial instruments

Quality Asian REITs with Prime Real Estate Assets

Many prominant APAC REITs hold iconic assets in prime locations are hence able to maintain dividend distributions to its investors even when the general market is underperforming as was seen during the global financial crisis

Exposure to Asian Growth

Investing in Asian REITs is a unique strategy of gaining exposure to the long-term economic growth and urbanization taking place in the region particularly for emerging Asian economies through relatively less volatile real estate sector

Diversification of Real Estate Exposure

Beneficial for individual investors looking for exposure to commercial or foreign real estate

Growing Institutional Money Flows

Insurance funds, pension, and sovereign wealth funds seeking to increase exposure to high-quality real estate have become increasingly prominent investors in APAC REITs

Click here for Yield Spread and Comparison of various REIT markets.

Investment Objective

The Phillip SGX APAC Dividend Leaders REIT ETF seeks to provide a high level of income and moderate long-term capital appreciation by tracking the investment results of 30 publicly traded equity REITs in the Asia Pacific ex-Japan region. 

Benchmark Index

SGX APAC Ex-Japan Dividend Leaders REIT Index

Index Methodology

The index measures the performance of 30 REITs that pay the largest total dividends while observing size, representation, free-float and liquidity constraints.

Eligible Countries

Asia Pacific ex-Japan, including Australia, China, Hong Kong, India, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan and Thailand 

Exchange Listing

Singapore

ETF Replication Method

Physical Replication

Dividend Distribution

Semi-Annual

Management Fee

 0.30% per annum

Manager

Phillip Capital Management (S) Ltd

Designated Market Makers

Commerzbank AG, Flow Traders Asia Pte Ltd

Participating Dealer

Phillip Securities Pte Ltd, Commerzbank AG, ABN AMRO Clearing Bank N.V., UOB Kay Hian Pte Ltd

Trustee

DBS Trustee Limited

Trade Existing Units
Investors can trade existing units in the Fund (in board lots of 100 units) with cash in the same way as they buy or sell stocks on the Singapore Exchange through their stockbroker (after 9:00 AM, 20th October). Institutional investors can consult their market makers to buy or sell existing units.

Cash Subscription of New Units*
For subscription of new units in the Fund, investors need to go through the authorised participating dealers

Market Makers
Market makers are appointed to put up the bid and offer prices on the Exchange by using the NAV of the Fund as a reference.

Fees & Charges
Usual brokerage and clearing fees apply

For Institutional Investors
Please consult participating dealers on how to buy and sell the Fund for new units and in-kind subscription.

Q:           What is the difference between Exchange Traded Funds (ETFs) and Unit Trusts?

A:            While both are collective investment schemes (CIS), ETFs seek to replicate the performance of an index by buying underlying securities according to their index weights. Comparatively, unit trusts are actively managed, where the fund manager seeks to outperform the index instead of just replicating its performance. Because of its passive nature, ETFs charge lower management fees thus  lowering cost for investors.

 

Q:           As an investor, how do I buy or sell units of this ETF?

A:            There are two main methods to which ETF units could be transacted; 1) apply for buying/selling of units through an approved participating dealer, 2) transact units on-screen through the exchange (SGX). For the first channel, participating dealers would collate orders from the investing public and directly apply for the creation/redemption of units from the ETF issuer. As for on-screen trading through SGX, investors would trade ETF units on the secondary market with quotes provided by market-makers and other market participants.

 

Q:           Which regions in Asia Pacific does this ETF focus?

A:            This ETF focuses on listed REITs in the Asia Pacific Ex-Japan region.

 

Q:           What are the trading currencies of this ETF?

A:            The ETF will have two trading currencies on SGX: USD and SGD.

 

Q:           How does dual currency trading work?

The ETF shares can be traded in two different currency denominations on the SGX-ST, i.e. USD, and SGD. Investors can buy and/or sell units in the ETF in USD or SGD, regardless of the currency in which it was first bought and/or sold. Each unit of the two currency counters entitles an investor to one unit of the same ETF.

Unit holdings in the ETF will be consolidated in investors’ CDP accounts so the total number of units can be viewed at a glance – for example, 1,000 USD-denominated units and 1,000 SGD-denominated units will be reflected as 2,000 units in an investor’s CDP account.

In most cases, the traded prices in the two currency counters of an ETF should theoretically be equivalent or close to each other, taking into account the prevailing foreign exchange rate. However, in certain situations, due to market supply and demand factors in the respective counters, the price relationship and difference between the two counters might not necessarily be the foreign exchange rate between both counters.

 

Q:           Why is dual-currency trading offered for the ETF? What are the benefits and risks for investors?

The dual-currency trading feature of the ETF provides investors with the flexibility to buy and sell the ETF units in USD or SGD. Local investors who wish to simplify the manner in which they access the risk and return of the Index will benefit from the denomination of the ETF in SGD, as they do not have to initiate a foreign exchange transaction with their broker to facilitate the settlement. Also, investors can assess the Singapore dollar equivalent of their position in real time.  Also, the dual currency ETFs are fungible, meaning an investor can buy and/or sell the ETF in USD or SGD regardless of the currency in which it was first bought and/or sold. Unit holdings in the ETF will be consolidated in investors’ CDP accounts. Therefore investors who own both the USD and SGD denominated ETF units will not have separate unit holdings at CDP.

As the Fund’s Net Asset Value is determined by the USD, investors who purchase and sell the ETF units in SGD will be subject to the risk of fluctuations in the value of the Singapore dollar vis-à-vis the US dollar. For detailed information about the foreign exchange risk associated with investing in the ETF, please refer to the Fund Prospectus.

 

Q:           What makes up total expenses for the ETF?

A:            Apart from management fees (0.50%), there are other fees such as index licensing, trustee and auditor fees, etc. Total expense ratio (TER) of the ETF will be capped at 0.65% of AUM.

 

Q:           What is the distribution policy of the ETF?

The Manager will endeavour to make a semi-annual distribution in respect of the Fund. Distributions, if any, will be payable within two months after the end of each semi-annual period of each year. However, investors should note that such distribution is not guaranteed and is subject to all times to the discretion of the Manager. Distributions will be paid in the base currency of the ETF (i.e. USD). There is currently no dividend reinvestment service.

 

Q:           What are the tax implications for investing in this ETF?

A:            As the ETF is domiciled in Singapore, there will be no capital gains tax or dividend withholding tax charged to Singapore individuals. However, on the ETF level, distributions received from underlying REITs would be subjected to dividend withholding and corporate taxes. The fund would be charged 15% withholding tax on dividends received from Australia, 17% corporate tax for dividends received from Singapore. No withholding or corporate tax would be charged for dividends received from Hong Kong.

 

Q: Is there a natural limit on the capacity of the ETF?

A: According to Bloomberg data, the aggregate free float-adjusted market capitalization of the Index’s 30 constituents stood at approximately US$116bn as of 21 September 2016. Assuming a 5% ownership of the Index’s underlying investment universe as the ETF capacity constraint, the ETF assets can reach US$5.8bn before facing any scale issues.

 

Q:           The ETF tracks the SGX APAC ex-Japan Dividend Leaders REIT Index (“the Index”) which only includes REITs in the Asia Pacific Ex-Japan region, and weighs them according to total dividends paid over the past 12 months. Is there any rationale for this methodology? Currently, the index also has >60% exposure to Australia, does the fund intend to hedge its currency exposure?

A:            The current low-interest rate environment warrants investors to seek yield from instruments other than bonds. We think that REITs are a good alternative to high yield bonds, with an easy-to-understand business model coupled with regular dividend payments. REITs in the Asia Pacific Ex-Japan region also offer comparatively higher dividend yields, when compared to their counterparts in the US & UK. Market prices of REITs may also outrun their ability to pay out dividends, and since REITs are mainly considered income instruments, we think that REITs should be weighed according to total dividends paid over the course of the preceding year. These are the main reasons why we have collaborated with and engaged SGX to create the SGX APAC Dividend Leaders REIT Index.

Apart from the reasons discussed above on the why the index was created, the main aim of the ETF is to track the performance of the index as closely as possible. Australian REITs currently constitute a large proportion of the index because as a whole, they are larger in terms of market capitalization and pay out larger amounts of dividends, according to the index methodology. As such, the ETF would seek to replicate index constituents’ weighs as closely as possible, with no intention to hedge against currency exposure.

 

Q:           Why is the ETF’s base currency USD when the underlying investments are mostly denominated in AUD, HKD, and SGD?

A:            The Index, which comprises REITs from countries within the Asia Pacific ex-Japan region, is based in US Dollar. It is typical for an international portfolio that consists of investments denominated in multiple currencies to be valued at USD, which is widely used as the standard unit of currency in international markets. The ETF is also offered in SGD for the convenience of local investors who might prefer to transact with SGD.

 

Q:           If any of the ETF’s underlying REITs get suspended, how will this affect the ETF’s performance and what would be the manager’s response?

A:            Certain actions or corporate events (e.g. mergers and acquisitions, voluntary administration) may cause a stock to be suspended for a period while residing within an equity index. The Index Provider will keep suspended stocks within the Index for up to one calendar month from the date of suspension. Typically, stocks are removed from the Index if they do not resume trading within one calendar month from the suspension of trade. The impact of stock suspensions on the index performance may vary, depending on circumstances. The Fund Manager will still seek to track the investment results of the Index, and will not seek temporary aggressive or defensive positions that are reflective of market appearance.

 

Q:           How does the ETF Manager handle corporate actions such as rights issues?

A:            The Manager takes into account some factors to make informed decisions about the most efficient way to manage corporate actions (such as mergers and acquisitions, rights issues, spin-offs, stock splits or the receipt of interest/dividends). Corporate actions may generate trading costs or other implicit costs related to the corporate activity in the underlying investment.

To give a couple of examples:

  1. Dividends paid by the underlying stocks of the ETF are reinvested by the Manager, as keeping them in the portfolio would create a cash drag on the fund performance.
  2. A rights issue is an offer to existing holders of securities where they are given the right to subscribe for additional new securities at a given subscription price. Where the subscription price is lower than the prevailing market price, the Manager will accept the rights in full and may have to sell existing shares in the portfolio to do so, depending on the capacity of the ETF. The Manager will base its decisions on a range of factors such as fund costs and the risk-return profile of the portfolio (so that it remains within reasonable limits compared to the underlying Index).

Regarding the Index, the treatment of all corporate actions, corporate events, and general events are fully described in the SGX Corporate and Index Actions Policy. The document acts as a reference point for index stakeholders that are required to make adjustments as a result of corporate activity that could affect the underlying composition of an equity index.


Important Information

 

This webpage and the information herein is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in the product (“REITs ETF”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. The information is subject to change at any time without notice. The value of the units and the income accruing to the units may fall or rise. You should read the Prospectus and the accompanying Product Highlights Sheet

(“PHS”) for disclosure of key features, key risks and other important information of the REITs ETF and obtain advice from a financial adviser ("FA") before making a commitment to invest in REITs ETF. In the event that you choose not to obtain advice from a FA, you should assess whether the REITs ETF is suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM or any of its Participating Dealers ("PDs").

The REITs ETF is not like a typical unit trust as it is intended for the units of the REITs ETF (the "Units") to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its net asset value ("NAV") or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units can be done through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus for more details.

Investments are subject to investment risks including the possible loss of the principal amount invested, and are not obligations of, deposits in, guaranteed or insured by PCM or any of its subsidiaries, associates, affiliates or PDs. Past performance is not necessarily indicative of the future or likely performance of the REITs ETF. There can be no assurance that investment objectives will be achieved.

The regular dividend distributions, either out of income and/or capital, are not guaranteed and subject to PCM’s discretion. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the NAV of the REITs ETF. Past payout yields (rates) and payments do not represent future payout yields (rates) and payments. Please refer to for more information in relation to the dividend distributions.

Any use of financial derivative instruments will be for hedging and/or for efficient portfolio management. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the REITs ETF.

The information does not constitute, and should not be used as a substitute for tax, legal or investment advice. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the investments mentioned herein or related thereto.

This information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The REITs ETF is not offered to U.S. Persons.

The information provided herein is based on certain information, conditions and/or assumptions available as at the date of this publication that may be obtained, provided or compiled from public and/or third party sources which PCM has no reason to believe are unreliable; and may contain optimistic statements/opinions/views regarding future events or future financial performance of countries, markets or companies. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. You must make your own financial assessment of the relevance, accuracy and adequacy of the information in this webpage.

Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss or consequences arising whether directly or indirectly as a result of your acting based on the Information in this webpage.