Index Update: SGX’s iEdge S-REIT 20 Index Will Become The iEdge S-REIT Leaders Index

SGX has announced a change to the methodology and name of its iEdge S-REIT 20 index. This will be in effect at the close of 17 July 2020. As Syfe’s REIT+ portfolio seeks to track this index, we will be updating the portfolio as well to reflect changes made.

How will the iEdge S-REIT 20 index be changed?

In essence, the methodology will be revised to allow more REITs to be included in the index. Currently, the iEdge S-REIT 20 index holds 20 of the largest and most tradeable REITs in Singapore. After the change, the index will allow for an uncapped quota of REITs to be included, provided that other necessary criteria are satisfied.

The reason for this is simple. Since the launch of the iEdge S-REIT 20 index, the Singapore Exchange has seen an increasing number of new REIT listings. Capping the number of REITs to 20 limits the index in terms of its representativeness of the Singapore REIT market.

The market for REITs on SGX has increased significantly and there have been numerous new listings since the launch of the iEdge S-REIT 20, we therefore decided to implement a methodology that is not constrained by the top 20 only and thereby allow investors to participate in a broader and more diversified index that is representative of the growth of the S-REIT market.

Simon Karaban, Head of Index Services at SGX

Additional liquidity enhancements have also been introduced to the new index to improve its suitability for investable products. Reflecting these changes, the iEdge S-REIT 20 index will be renamed the iEdge S-REIT Leaders Index. 

These updates reflect the increasing sophistication of Singapore’s REIT market as more REITs are drawn to list here. The enhanced iEdge S-REIT Leaders Index will allow investors to access a broader range of quality REITs, and benefit from the more diversified exposure.

Will REIT+ portfolios be changed? 

After the close of 17 July 2020, Syfe will update the REIT+ portfolio to track the new iEdge S-REIT Leaders Index. AIMS APAC REIT, Ascendas India Trust, and First REIT will be added while Starhill Global REIT and SPH REIT will be removed. All in all, the REIT+ portfolio will hold 20 REITs.

Syfe REIT+ Composition, indicative as of 14 July 2020

Apart from the slight change in REIT composition, the REIT+ portfolio will now track the index more closely. We have reduced the tracking error to just 44 basis points (bps), which also means that the REIT+ portfolio will track the iEdge S-REIT Leaders Index with a very high degree of accuracy. The smaller the tracking error, the closer the portfolio return will be to the index return.

Syfe will update the REIT+ portfolio automatically after SGX changes their index to the iEdge S-REIT Leaders Index. No action is required from you. You will see the updated composition when you log in to your Syfe account next Monday, 3pm.

What this means for you

Index changes are common in the investing world. With all the enhancements made, the new iEdge S-REIT Leaders Index is great news for all investors. iEdge S-REIT Leaders Index now measures the performance of the most liquid REITs in Singapore. As such, your REIT+ portfolio will continue to be a broadly diversified S-REIT portfolio that gives you exposure to a broad range of REIT sectors such as industrial, commercial, retail, healthcare, and hospitality. Your top REIT holdings will continue to be familiar, well-known REITs such as Ascendas REIT, Capitaland Mall Trust and Mapletree Commercial Trust.

The index may be updated, but your REIT+ portfolio is still a great way for you to easily invest in S-REITs via a simple, low-cost platform. Our current fee structure still applies, and we continue to provide $0 brokerage fees and $0 trading costs for your REIT+ portfolio.

Amid a lower-for-longer interest rate environment, S-REITs’ attractive yields of around 5% on average certainly put them ahead of other income-generating assets. S-REITs also have the potential to grow further once the economy recovers. Want to capitalise on this opportunity? You don’t have to look further than the Syfe REIT+ portfolio.