Since Singapore had its first Real Estate Investment Trust (‘REIT’) listing in 2002, it has done remarkably well in establishing itself as a REIT hub in Asia Pacific. Today, it has successfully attracted REITs with overseas assets to list on the Singapore Stock Exchange (‘SGX’). Success of the REIT sector can be attributed to its popularity with the local investment community as well as strong regulatory support from the government. Great market interest and participation necessitates investment options beyond individual REIT investing. Syfe saw a gap in the market and introduced its Syfe REIT+ portfolio – a functional, simple and yet elegant solution that retail investors have long been yearning for.
Investing In Individual REITs
It is a well-known fact that the local investment community loves REITs as putting properties and high dividends together proved to be a winning formula. Heartland Boy is not shy to admit that he is one of those who loves REITs. In fact, he is an active investor who analyses, reviews and select his own REITs. By leveraging on his circle of competency, he hopes to pick high-quality REITs that will outperform the market. However, he is acutely aware that the Do-It-Yourself (‘DIY’) method has its own limitations. For instance, it is very difficult and costly to achieve portfolio diversification. Given that there are over 40 REITs and Business Trusts listed on the SGX, the transaction costs to buy each of them will be a costly affair especially for those beginners starting with limited investment budgets.
Investing In REITs via ETF
The evolution of REIT investing took a major leap when 3 REIT Exchange Traded Funds (‘ETF’) comprising Phillip SGX APAC Dividend Leaders REIT ETF, Lion-Philip S-REIT ETF and NikkoAM-StraitsTrading Asia ex-Japan REIT ETF began to list on SGX in the last 4 years. By tracking various REIT Indexes, these ETFs allow retail investors to gain instant diversification by simply purchasing a unit of them.
Retail investors have to fork out total ETF expenses fee ranging from 0.6% – 0.7% and also pay commissions to brokerage houses for every transaction done. It is the requirement to pay brokerage commission that renders regular Dollar-Cost-Averaging (‘DCA’) a costly endeavour. This is where Syfe saw a gap in the market and launched its popular product- Syfe REIT+ to address it.
Investing in REITs via Syfe
In a collaboration with SGX, Syfe launched Syfe REIT+, the only REITs robo-advisory investment product that is passive in nature. It tracks the 20 largest and most liquid REITs in Singapore via the iEdge S-REIT Leaders Index. One thing to note is that Syfe REIT+ is not an ETF. When you invest in the portfolio, your funds are used to purchase each of the 20 underlying REITs. This is different from a REIT ETF where your funds are used to purchase that particular ETF product.
Some of the REIT constituents are shown in Diagram 1.
Diagram 1: Weightage of top 10 REITs (out of 20) in Syfe REIT+ Portfolio (Source: Syfe)
There are several advantages that Syfe REIT+ offers:
1) Lowest fee in the market
Fees are the lowest in the market, ranging from 0.4% to 0.65% depending on the client’s Asset Under Management (‘AUM’) tier as shown in Diagram 2.
Diagram 2: All-in fee levied by Syfe depends on AUM level (Source: Syfe)
As fees are charged based on AUM and not transactions, this makes it highly affordable for investors who would like to invest via a DCA method. Furthermore, no minimum sum is required as clients can hold fractional units. Clients can invest any amount at any time with no brokerage fees charged. They can also decide whether they would like to commit to monthly deposits. This is entirely optional and can be stopped or amended anytime without incurring any penalty.
2) Hassle-free investing
Active REIT investing is a lot of work and the effort required should not be underestimated. Syfe REIT+ will help to manage all corporate actions/corporate events for the clients. These include common corporate actions such as dividend issuance, rights subscription or merger & acquisition exercises. Dividends issued will automatically be reinvested to purchase more units. According to Syfe’s calculations, dividend reinvestment can add an additional 0.5% in returns each year. This almost covers their tiered fees of 0.4% to 0.65%. Customers in Black or above tiers have the option of receiving their dividends as quarterly payouts.
By tracking the iEdge S-REIT Leaders Index, the portfolio will also be automatically re-balanced to ensure that investors hold on to the top 20 largest and most liquid REITs listed on SGX. For ease of convenience, customers can monitor the performance of their portfolio(s) via the Syfe mobile app.
3) REITs with Risk Management
Besides the REIT+ portfolio, investors can also opt for the REITs with Risk Management portfolio which helps to reduce portfolio volatility by investing in AAA-rated Singapore bonds.
Leveraging its proprietary Automated Risk-managed Investments (‘ARI’) approach, Syfe adjusts the ratio of REITs and Bonds in your portfolio in response to market volatility. Simply put, when markets are more volatile, the robo-advisor pulls back on your REITs allocation and increases your bond allocation. That said, the REITs with Risk Management portfolio will always have a minimum 50% allocation to REITs. Conversely, when markets are less volatile, customers get higher REITs allocation and lesser bond exposure (the long-term portfolio composition is around 70% REITs and 30% bonds). While this portfolio may have slightly lower returns over the long-term as compared to the 100% REITs option, you will also experience lower volatility in years like 2020 where REITs were broadly affected by the coronavirus pandemic.
Diagram 3: Comparison of performance between REIT+ and REITs with Risk Management portfolios in Yr 2020 (Source: Syfe)
4) Session with wealth expert
As shown in Diagram 2, regardless of which tier a customer is in, there is at least 1 complimentary session with a Syfe wealth expert. This consultation usually begins with an understanding of the customer’s financial needs and investment objectives. Thereafter, the wealth expert will review the customer’s current portfolio (if any) and help in optimising their fund allocations. A follow-up meeting face to face can also be scheduled if required.
Since we are living in the Covid-19 period, Heartland Boy had a digital consultation with Syfe’s wealth advisor. The session lasted approximately 45 minutes and the bulk of which was spent on clarification of queries that Heartland Boy had. It was definitely a very useful session as having someone to speak to cleared all the doubts that he had.
Who Is Syfe REIT+ Suitable For
With the advantages aforementioned, Syfe more than adequately addresses the gap in the REIT market with Syfe REIT+. This product would definitely appeal to these groups of people who wants to gain exposure into the REITs sector but:
- Lack the knowledge due to the confusing jargon used in the REIT industry
- Have no time to research and pick quality REITs
- Have no interest in active investing
If you belong to any of these groups, you may want to consider the Syfe REIT+ portfolio. If you sign up using the promo code “HEARTLANDBOY”, you will enjoy 6-month fee waiver on all deposits up to $30,000. This translates to savings of $75 from $150 worth of annual fees for an AUM of $30,000! That’s right, that is how competitive Syfe’s fees are for those looking to create a diversified portfolio via a DCA method with low fees. I set up my own account and the money was securely processed and credited.
Do note that investing in Syfe is only available via cash and not for CPF nor SRS at this juncture.
Disclaimer:
This article is written in collaboration with Syfe but the views expressed here are entirely from Heartland Boy. This article is only for information and not financial advice and has no regards to any person’s investment and financial needs. Past performance of a product is not indicative of its future performance. This is not an offer, recommendation or solicitation to buy or sell any products. This advertisement has not been reviewed by the Monetary Authority of Singapore.
Information is correct as at 30 November 2020
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