S-REITs Market Finds Support Amid Stabilising Rates
The S-REITs sector seems to have found its bottom. After a sluggish start to the year, S-REITs made a strong comeback in March, with the iEdge S-REIT Leaders Index delivering a +4.80% month-to-date (MTD) return.
A key driver behind this rebound is the stabilising interest rate environment. Softer inflation and slower growth expectations have kept a lid on US Treasury yields, with the 10-year yield easing from 4.8% in mid-February to 4.3% in mid-March. This has also led to lower Singapore rates, providing support for S-REITs.
Adding to the momentum, the Monetary Authority of Singapore’s (MAS) S$5 billion programme to boost local shares has acted as a catalyst. Government initiatives have particularly benefited Singapore’s blue-chip stocks, and S-REITs have been among the key winners.
Your Syfe REIT+ Portfolios Continue to Outperform
The REIT+ (100% REITs) portfolio has delivered a YTD return of +2.54% (as of March 18, 2025), continuing to outperform its benchmark, the iEdge S-REIT Leaders Index, which posted a +2.48% YTD return.
Since its launch in April 2020, the portfolio has delivered an excess return of +5.06% compared to the benchmark (as of March 18, 2025). This steady outperformance is a result of our ongoing optimisation process, which prioritises a selection of top 20 S-REITs that are SGD-denominated, highly liquid, and managed by reputable managers.
A Turnaround in Sight
We believe 2025 could be the year S-REITs stage a turnaround.
The key factor is the significant improvement in the interest rate environment compared to the past two years. Local market rates, such as 3-month SORA, have declined notably over the last 12 months, dropping from 3.7% to 2.6%. With the Fed expected to cut benchmark rates two to three times this year, rates are likely to continue trending lower.
Lower interest rates can lead to reduced refinancing costs for S-REITs, which are to positively impact S-REITs’ financial performances in the coming quarters. Additionally, government initiatives to strengthen Singapore’s equity market may attract more long-term institutional investors to the sector.
Currently, the REIT+ (100% REITs) portfolio offers an estimated dividend yield of around 6.5% p.a., well above other yield-generating instruments, such as 10-year Singapore government bonds, which has a yield of 2.7%. Given these conditions, we believe now is an opportune time to accumulate S-REITs.
Main Changes from the Index Rebalancing
During this semi-annual rebalancing exercise, there is no new inclusion/exclusion from iEdge S-REIT Leaders index. Due to our selection criteria of SGD-denominated REITs only, the iEdge S-REIT Leaders Index includes the USD-denominated Digital Core REIT (DCREIT), while the REIT+ portfolios exclude it.
Please find below the updated list of constituents and their respective allocations after the rebalancing and Syfe’s optimisation process.
Updated List of Constituents
Note: The data is accurate as of 28 February 2025. Due to market conditions, actual portfolio weightings may slightly deviate from those listed.
Syfe REIT+ Strategy
Launched in partnership with the SGX, REIT+ is an optimised portfolio of the 20 most well-known Singapore REITs. Instead of fully replicating the iEdge S-REIT Leaders index, we use an optimisation process to construct an index-tracking portfolio.
Our selection focuses on REITs that are SGD-denominated, liquid, and backed by a decent market capitalisation and reputable management teams. The optimisation process, especially the exclusion of USD-denominated REITs such as Manulife US REIT (Ticker: MUST SP), has contributed to the outperformance of REIT+ portfolios.
Additionally, our investment team manages corporate actions like rights issues and acts in your best interest. Dividends are also automatically reinvested to enhance your returns.
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