Syfe REIT+ vs CSOP iEdge S-REIT Leaders Index ETF: Which REIT Investment Should You Choose?

Singapore REITs remain resilient in 2022, and continue to provide investors with passive income and attractive dividend yields. If you’re looking to build a diversified REIT portfolio, the iEdge S-REIT Leaders Index is one option to consider.

The index is one of Singapore’s most popular REIT indices. It tracks the largest and most liquid REITs in Singapore, including household names like Ascendas REIT, Mapletree Commercial Trust, and CapitaLand Integrated Commercial Trust. By focusing on liquidity, it captures Singapore REITs with the highest investor interest and fund flows. For instance, demand for warehousing space accelerated during the pandemic and looks set to stay elevated amid the shift to e-commerce. Given the strong market interest in this sector, industrial and warehouse REITs now make up more than 40% of the iEdge S-REIT Leaders Index.

Source: SGX

What’s more, the iEdge S-REIT Leaders Index has historically outperformed compared to other major global REIT indices.

Given the popularity of the index, there are now two ways for Singaporeans to access it: Syfe REIT+ and CSOP iEdge S-REIT Leaders Index ETF. (Investors cannot invest directly in an index.)

Not sure which to choose? We compare both options.

What is Syfe REIT+

Launched in 2020, Syfe REIT+ is a portfolio of 20 REITs that aims to closely track the performance of the iEdge S-REIT Leaders index. 

Instead of fully replicating the index, Syfe REIT+ is built using an optimised allocation of 20 REITs to achieve a tracking error of less than 0.5% p.a. This strategy balances index representation (i.e. minimise tracking error) with trading liquidity (i.e. minimise trading costs). 

Syfe REIT+ is not an ETF. When you invest in the REIT+ portfolio, you own actual units of all the underlying REITs. This is different from a REIT ETF where your funds are used to purchase that particular ETF – itself a product that is traded on the SGX.

What is CSOP iEdge S-REIT Leaders Index ETF?

Like Syfe REIT+, the ETF is designed to track the iEdge S-REIT Leaders Index ETF. It pursues a full replication strategy, so it holds all 28 REITs tracked by the index. 

The fund was launched in November 2021 by CSOP Asset Management, a Hong Kong-based offshore asset manager. Given the recency of the launch, no tracking error data is currently available for the ETF.

Dividends

In 2021, Syfe REIT+ delivered a dividend yield of 4.8%. For 2022, the dividend yield is estimated to be 5.5%.

CSOP iEdge S-REIT Leaders Index ETF projects its 2022 dividend yield to be 5.3%. Given its recency in the market, there is no dividend track record yet for the ETF.

When you invest in Syfe REIT+, your dividends are automatically reinvested for you at no extra cost. According to our calculations, dividend reinvestment can add an additional 0.5% in returns each year. This covers a substantial part of our tiered fees ranging from 0.35% to 0.65% per year.

Dividends are credited to your Syfe REIT+ portfolio as and when the underlying REITs distribute their dividends. For Syfe Black and Gold tier clients, there’s also an option to have your dividends paid directly into your bank account each quarter. 

When you invest in the CSOP iEdge S-REIT Leaders Index ETF, your dividends will be credited directly into your bank account on a semi-annual basis. Dividends are not automatically reinvested for you. If you wish to reinvest them, you’d have to do so manually through a broker and pay the relevant commissions for that transaction. 

Fees and expense ratio

Syfe REIT+ has a management fee of 0.35% to 0.65% per year, depending on the amount invested. This covers all trading, rebalancing, and dividend reinvestment costs. Since Syfe buys the underlying REIT holdings directly, there is no expense ratio involved.

As per their website, CSOP iEdge S-REIT Leaders Index ETF currently has a management fee of 0.5% per year, though that may increase to a maximum of 0.8%. The ongoing charges (total expense ratio) of 0.6% takes management fee into account and includes other fees for administration and recordkeeping, among others.

Minimum investment and brokerage charges

Both Syfe REIT+ and CSOP iEdge S-REIT Leaders Index ETF are accessible options for investors. 

However, investors who plan to dollar cost average each month should note that brokerage charges can add up. In this case, Syfe REIT+ could be the more efficient option since there are no brokerage commissions payable, regardless of how often you invest.

Syfe REIT+ vs CSOP iEdge S-REIT Leaders Index ETF: Which is better?

Both Syfe REIT+ and CSOP iEdge S-REIT Leaders Index ETF offer investors diversified exposure to Singapore REITs. They have similar top holdings and sector allocations that closely track the index.

The main difference lies in dividend reinvestment. Syfe REIT+ reinvests your dividends for you while CSOP iEdge S-REIT Leaders Index ETF does not. What’s more, there are no brokerage charges with Syfe, no matter how often you invest. This is good news for investors who like dollar cost averaging.

Want to get started with Syfe REIT+? Simply sign up for an account using Singpass! There’s no minimum investment and no lock-in period. 

Correction: An earlier version of this article incorrectly referred to the total fees charged by CSOP iEdge S-REIT Leaders Index ETF as between 1.1% to 1.4%. This article was updated on 7 June 2022.

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