Last Updated on January 3, 2022 by Chin Yi Xuan

Are you looking to invest for stable & reliable dividend yield? If yes, I’m sure you’ll like this post – read on!

For dividend investors, REIT has always been a solid choice due to its nature of consistent dividend pay-outs and lower price swings relative to normal stocks.

In particular, Singapore REIT (SREIT) has always been well received by investors. Why?

Singapore’s attractive tax conditions (0% withholding tax on dividends), coupled with SREIT being one of the largest REIT markets in Asia Pacific make SREIT a favorite among investors’ portfolios.

SREIT Growth over the past years
SREIT has experienced an 11% compounded annual growth rate (CAGR) over the past decade.

What if there is a way for us to invest in all leading SREITs at once? Wouldn’t it be amazing?

In this post, let’s explore CSOP iEdge S-REIT Leaders Index ETF, a REIT Exchange-Traded Fund (ETF) that allows you to invest in all leading SREITs at once!

Before this, here are some related posts that you may want to read:

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Highlights of CSOP iEdge S-REIT Leaders Index ETF

CSOP iEdge S-REIT Leaders Index ETF

  • CSOP iEdge S-REIT Leaders Index ETF is a Singapore-listed REIT ETF that tracks the iEdge S-REIT Leaders Index. (SGD Stock Code: SRT | USD Stock Code: SRU)
  • With SRT/SRU, investors get to invest in a basket of most liquid SREIT listed in the Singapore Stock Exchange (SGX), with consistent dividends and relatively low volatility.
  • CSOP iEdge S-REIT Leaders Index ETF is a solid choice for investors looking for stable & competitive dividend yield, as well as investors looking to hedge against inflation.

Recap: An ETF is an instrument that tracks the performance of an index. ETFs can be bought & sold just like usual shares in the stock market.

ETF is an amazing investment choice for beginners and experienced investors alike.
ETF is an amazing investment choice for beginners and experienced investors alike.

What is the iEdge S-REIT Leaders Index?

Launched in 2014, the iEdge S-REIT Leaders Index is an index established to measure the performance of the largest and most liquid REITs listed in the Singapore Stock Exchange (SGX).

To ensure that the REITs tracked by the index are the most liquid REITs, the iEdge S-REIT Leaders Index employs a liquidity-adjustment strategy.

Essentially, what this strategy does is it’ll only capture SREITs with high investors’ interest, fund flows, and REITs that are most relevant to the latest sector rotation.

In other words, the REITs tracked by the iEdge S-REIT Leaders Index are always the most relevant REITs according to the market condition.

iEdge S-REIT Leaders Index Methodology
Unlike conventional market-cap weighting approach, iEdge S-REIT Leaders Index liquidity filter is more agile to shift in investors’ interest & market condition.

As an example, with the ongoing pandemic, industrial REITs become an important part of the index (>40%), considering the strong market interest with REITs involved with logistics, warehousing, and manufacturing.

In short, when compared to the conventional market-cap weighting strategy in other ETFs, the iEdge S-REIT Leaders Index is more robust and versatile to shifts in market conditions.

iEdge S-REIT Leaders Index sector allocation
With the pandemic, industrial REITs that deal with logistics, manufacturing, and warehousing business are able to thrive.

iEdge S-REIT Leaders Index Dividend Yield & Performance

So, how did the iEdge S-REIT Leaders Index perform over the years?

From 2017 to 2021, the iEdge S-REIT Leaders Index has been generating consistent annual dividend yield of 4.6% – 5.8%. 

Furthermore, it is projected to generate 5.4% and 5.6% yield for 2022 and 2023 respectively. In other words, the yield can be a great hedge against rising inflation as well. 

iEdge S-REIT Leaders Index Dividend Yield (2017 - 2023)

When compared to other REIT indexes, the iEdge S-REIT Leaders Index recorded the highest 5-year annualized return of 8.37%. In addition, it also has the highest expected dividend yield of 5.4% in 2022, with relatively low volatility.

In other words, the iEdge S-REIT Leaders Index is one of the most competitive REIT indexes in the market that takes into account of volatility. 

iEdge S-REIT Leaders Index performance vs other REIT indexes


Invest in the CSOP iEdge S-REIT Leaders Index ETF (SGD: SRT/USD: SRU)

As for all indexes, we cannot invest directly in them. Instead, we can invest in an index via ETFs that track the performance of the index.

Similarly, we can invest in iEdge S-REIT Leaders Index via the CSOP iEdge S-REIT Leaders Index ETF. 

The CSOP iEdge S-REIT Leaders Index ETF is listed in the SGX on 18/11/2021, in SGD (ticker: SRT) and USD  (ticker: SRU) respectively:

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 CSOP iEdge S-REIT Leaders Index ETF
TickerSRT (SGD), SRU (USD)
Unit Price (9/12/2021)SGD 0.976 | USD 0.716 (minimum transaction of 10 units)
Ongoing Expense Ratio~0.60% annually
Fund SizeSGD 114 million
Dividend DistributionSemi-annually (in SGD)
ETF RebalancingSemi-annually (March & September)
Replication ApproachReplication strategy

Advantages of investing in CSOP iEdge S-REIT Leaders Index ETF vs individual SREITs

The iEdge S-REIT Leaders Index displayed several advantages compared to investing in individual SREITs. Here are 3 of them:

Firstly, investors get to diversify their REIT exposure with a small capital instead of just one or two.

This is a capital-efficient way to invest in a diversified REIT portfolio.

Invest in a diversified reit portfolio through CSOP iEdge S-REIT Leaders Index ETF
Invest in a diversified REIT portfolio through CSOP iEdge S-REIT Leaders Index ETF

Secondly, by design, the iEdge S-REIT Leaders Index filters & rebalances according to the most liquid SREITs in the market.

In other words, investors can invest passively and do not have to worry about which REIT to invest in. 

Lastly, the iEdge S-REIT Leaders Index also shows more stability compared to individual SREITs. 

iEdge S-REIT Leaders Index low volatility vs other individual SREITs
iEdge S-REIT Leaders Index low volatility vs other individual SREITs

 


Top holdings of CSOP iEdge S-REIT Leaders Index ETF (SRT/SRU)

csop iEdge S-REIT Leaders Index ETFAs of the time of writing, there are 28 SREITs that are made up of the ETF’s holdings. Each individual REIT holding is capped at 10%.

Here are the top and notable REIT holdings of SRT/SRU: 

  • Capitaland Integrated Commercial Trust (CICT) [10.04%]

CICT is the first and largest REIT listed on SGX with a market cap of SGD 13.5b as of August 2021.

CICT owns and invests in quality income-producing assets primarily used for commercial (including retail and/or office) purposes, located predominantly in Singapore.

Notable properties: Plaza Singapura, The Atrium @ Orchard

Plaza Singapura (CICT)
Plaza Singapura
  • Ascendas REIT [9.90%]

Ascendas REIT is Singapore’s first and largest listed business space and industrial REIT with a ~SGD15.9b portfolio.

Its portfolio is diversified across 4 segments including business spaces, logistics and distribution, industrial properties, and data centers.

By geographical diversification, Ascendas REIT invests in properties across Singapore, Australia, the US, and UK/Europe.

ascendas reit
Ascendas REIT’s business is spread across logistics, business spaces, and more. (Source: Ascendas REIT website)
  • Mapletree Logistics Trust (MLT) [9.39%]

MLT is Singapore’s first Asia Pacific-focused logistics real estate investment trust with an asset under management of SGD10.7b as of Jun 2021.

MLT invests in a diversified portfolio of quality, well-located income-producing logistics real estate in Singapore, Hong Kong, China, Japan, South Korea, Australia, Malaysia, Vietnam, and India.

mapletree logistics trust geographical breakdown
Mapletree Logistics Trust business geographical breakdown (Source: MLT website)

p.s. Click HERE for the most updated REIT holdings of CSOP iEdge S-REIT Leaders Index ETF


Risks of CSOP iEdge S-REIT Leaders Index ETF

Similar to all REIT investments, there are several key risks that you need to take note of while investing in CSOP iEdge S-REIT Leaders Index ETF:

#1 Interest Rate Risk

Since REITs are real estate businesses that make use of loans for financing, swings in interest rate can impact REIT to a certain extent.

Generally, an increase in interest rate will increase the operating cost for REITs due to a hike in interest repayment. As a result, this will reduce the underlying profit of REITs. 

#2 Income Risk 

REITs are also susceptible to changing market conditions. As an example, hospitality REITs that own hotels may thrive during holiday seasons, but could take a blow in their revenue during non-peak days. 

Fortunately, CSOP iEdge S-REIT Leaders Index ETF copes with this by adjusting its REIT holdings (semi-annually) with the most liquid and relevant REITs, which captures investors’ interest and fund flows. 


Who should invest in CSOP iEdge S-REIT Leaders Index ETF

For who - CSOP iEdge S-REIT Leaders Index ETF

  • For investors looking to invest for stable, and higher than average dividend yield.
  • Investors looking to hedge against inflation.
  • Investors looking for a capital-efficient way to invest in a diversified SREIT portfolio with exposure to quality local & global real estate.

My Recommended Broker to Invest in CSOP iEdge S-REIT Leaders Index ETF:

Use ProsperUs by CGS-CIMB to invest in SRT/SRU!The CSOP iEdge S-REIT Leaders Index ETF is not listed locally. Instead, it is being traded in the Singapore stock exchange in either SGD (ticker: SRT) or USD (ticker: SRU).

As such, you’ll need a reliable stock broker with access to the Singapore stock exchange in order to invest in this ETF.

If you need a reliable stock broker, I’d highly recommend ProperUs to you. ProsperUs is a regulated broker from CGS-CIMB, with global access to 30+ different stock exchanges (US, SG, HK, China, Japan, Malaysia, UK, Canada, and more!).

In addition, with ProsperUs, you get access to a variety of instruments such as stocks, ETFs, mutual funds, futures, options, FX, and CFD!

Check out my full review on ProsperUs HERE.

p.s. From today till 31/3/2022, key in my exclusive promo code ‘MONEY20’ while you register, and get a FREE SGD50 cash top-up & up to RM300 e-wallet credits when you open a ProsperUs account! More details and T&C HERE.

Use ProsperUs to invest in SRT/SRU


No Money Lah’s Verdict

As a whole, the CSOP iEdge S-REIT Leaders Index ETF is a great option for investors looking to invest for stable and higher-than-average yield.

Considering SREIT being one of the most established REIT market in Asia, investors can diversify into a portfolio of quality real estate even with a small capital.

Do you have any questions on the CSOP iEdge S-REIT Leaders Index ETF? Feel free to let me know your thoughts & questions in the comment section below!


About CSOP Asset Management

I first discovered the iEdge S-REIT Leaders Index through CSOP Asset Management (AM).

If you have been investing purely in the Malaysia or US market, it is likely that you have not heard of CSOP AM before. However, CSOP AM is huge in the China & Hong Kong market:

Established in 2008, CSOP AM is the first offshore entity established by a regulated Chinese asset manager with Hong Kong’s Securities & Futures Commission (SFC) type 1 (dealing in securities), type 4 (advising on securities) and type 9 (asset management) licenses.

With this background, CSOP AM manages the biggest renminbi (RMB) equity & fixed income ETF listed in offshore China.

In 2019, CSOP AM sets up their office in Singapore, with the goal to bring their expertise closer to Southeast Asia’s investors (psst… that’s us).


Disclaimer

The purpose of this post is purely for sharing and should NEVER be taken as a buy/sell recommendation. Please do your own research AND/OR reach out to a licensed financial planner before making any investment decision.