Singapore real estate investment trusts (S-REITs) have long been a core investment sector in Singapore, and a valuable component of many income investors’ portfolios. Since the launch of Syfe’s first S-REIT focused portfolio in late January, many investors have been asking us for more ways they can take advantage of S-REITs’ long-term growth potential.
That’s why we – in collaboration with the Singapore Exchange (SGX) – have created a new 100% REITs portfolio that tracks SGX’s iEdge S-REIT 20 Index, the most liquid representation of the S-REIT market in Singapore.
What is Syfe’s new 100% REITs portfolio?
Simply put, it’s a way for investors of all stripes to easily invest in S-REITs via a simple, low-cost platform. The new 100% REITs portfolio tracks the iEdge S-REIT 20 Index and seeks to closely replicate its performance. The iEdge S-REIT 20 index clocked average total returns of around 20% in 2019, handily doubling that of the benchmark Straits Times Index (STI), which generated a return of 9.4%.
With the 100% REITs portfolio, investors can adopt an efficient index investing strategy with S-REITs to achieve market returns and broad diversification. The top five constituents of the index, and by extension the 100% REITs portfolio, are leading REITs easily recognisable in Singapore: Ascendas REIT, Mapletree Logistics Trust, Mapletree Commercial Trust, CapitaLand Commercial Trust, Mapletree Industrial Trust. All in all, the REITs that make up the new portfolio span all real estate sub-sectors – retail, commercial, industrial, residential, hospitality and healthcare.
Income investors will also be pleased to know that the iEdge S-REIT 20 index delivered a 5.1% dividend yield for 2019. With the 100% REITs portfolio, investors* can choose between having their dividends automatically reinvested or disbursed on a quarterly basis.
*The dividend payout option is available for Black and Gold tier clients.
How is it different from the previous REIT offering?
With the addition of our 100% REITs option, clients investing in the Syfe REIT+ portfolio can now choose between a risk-managed portfolio that combines S-REITs with Singapore Government Bonds (via the ABF Singapore Bond Index Fund), or a 100% REITs portfolio that replicates the iEdge S-REIT 20 Index.
In essence, the Syfe REIT+ portfolio has been expanded to provide investors with more choices and control over their investments.
The main difference between the two options are as such:
- Round-the-clock risk management. To defend against rising market volatility in adverse market conditions, the REITs with Risk Management portfolio uses a proprietary Automated Risk-managed Investing approach called ARI to limit downside risk. During periods of increased volatility, ARI increases the bond allocation to mitigate portfolio risk. When volatility abates, ARI will again increase the REITs allocation to deliver better returns.
- Full exposure to S-REITs. While the REITs with Risk Management portfolio has a bond allocation to cushion portfolios during market drops, the 100% REIT portfolio is purely focused on S-REITs. It allows investors to gain access to the largest and most tradable REITS in Singapore, all within one portfolio.
What are the REITs that now make up the REITs with Risk Management portfolio?
At this time of writing, the REITs with Risk Management portfolio has an allocation of 50.5% REITs and 49.5% bonds. The REIT allocation of this portfolio has been updated to track the iEdge S-REIT 20 Index as well. In other words, both existing and new investors of the REITs with Risk Management portfolio will now have exposure to the REITs that form the iEdge S-REIT 20 Index. This also means that additional REITs have been included in the REITs with Risk Management portfolio.
Which portfolio should investors choose?
Selecting the right portfolio is a crucial element of all investments. Before deciding which portfolio to invest in, investors should consider their risk appetite, investment horizon, and financial goals. Syfe’s risk questionnaire can help investors put these factors into perspective.
Generally, investors with a higher level of risk tolerance and a longer investment horizon may find the 100% REITs portfolio an attractive option. As with all Syfe portfolios, the 100% REITs portfolio has no minimum investment and no brokerage or withdrawal fees. Investors can dollar cost average into this portfolio to build up their REIT holdings month after month. With REIT prices currently lower than they were at the start of the year, the 100% REITs portfolio presents a good opportunity to accumulate quality REITs at bargain prices.
For investors who feel more comfortable with portfolios that don’t fluctuate too wildly based on market conditions, Syfe’s ARI algorithm ensures that the REITs with Risk Management portfolio is constantly maintained at 15% Downside Risk level. That level simply means there’s a 97.5% chance the portfolio will not lose more than 15% of its current value over the next twelve months. Amid the current market slump, investors who have made huge lump-sum investments are likely to appreciate how their portfolio values have dropped considerably less than the benchmark.
Syfe offers investors the option to own multiple portfolios, so it is possible to own both the 100% REITs portfolio and the REITs with Risk Management portfolio.
Investors can also switch between the 100% REITs portfolio and the REITs with Risk Management portfolio anytime through their Syfe account dashboard.
Both portfolios enjoy the same low management fees starting from 0.4% per annum. There are no brokerage fees, sales charges or withdrawal fees for both portfolios as well. More details can be found here. Investors new to Syfe stand to receive up to $100 cash bonus when they use the SYFEBONUS promo code to open an account here.
Still unsure which portfolio to choose? Schedule a free consultation with our dedicated financial advisors. They will be able to offer personalised investment advice that can help achieve your financial goals.