CSOP to launch S-REIT ETF on SGX

Nov 16th, 2021 | By | Category: Alternatives / Multi-Asset

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Hong Kong-based CSOP Asset Management is set to launch its second ETF in Singapore.

Ding Chen, Chief Executive Officer of CSOP Asset Management

Ding Chen, Chief Executive Officer of CSOP Asset Management.

The CSOP iEdge S-REIT Leaders Index ETF will provide exposure to the city-state’s most liquid real estate investment trusts (known as S-REITs).

The fund will list on Singapore Exchange on 18 November and will be available with Singapore dollar (SRT SP) and US dollar (SRU SP) trading lines.

Singapore has one of the largest and fastest-growing REIT markets in the Asia Pacific region, exhibiting a compound annual growth rate of 11% over the past decade to reach a total market capitalization in excess of S$110 billion. (Data from Bloomberg as of the end of 2020).

The S-REITs market delivers diversified exposure across real estate assets including residential properties, shopping malls, offices, and hotels. Courtesy of the high payout ratio specified by regulation, S-REITs offer one of the highest dividend yields compared with other major asset classes in Singapore.

Methodology

Sub-advised by JLP Asset Management Asia, an investment manager specializing in public real estate markets globally, the ETF gains its exposure to Singapore’s S-REITs market by tracking the iEdge S-REIT Leaders Index.

The index consists of S-REITs with market capitalizations above S$500 million and average daily trading volumes in excess of $500,000.

Constituents are initially weighted by float-adjusted market capitalization and then adjusted to increase the weight of S-REITs with greater liquidity. The weight of any single S-REIT is capped at 10%, and the index is reviewed semi-annually.

As of the end of October, the index contained 28 S-REITs with a total market capitalization of S$69.0 billion. Its latest 12-month dividend yield was 4.06%, while the index has delivered an annualized net total return of 9.98% over the past five years.

Ding Chen, CEO of CSOP Asset Management, said: “We are pleased to list the CSOP iEdge S-REIT Leaders Index ETF on SGX. S-REITs are well known for their sustainable income stream and potential capital appreciation, therefore offering an attractive proposition for yield-seeking investors. The ETF provides investors with a low-cost, transparent, and fuss-free portfolio. I believe the successful listing of this product will appeal to investors seeking a diversified REITs portfolio and will be a good addition to Singapore’s ETF market.”

Ng Kin Yee, Managing Director and Head of Data, Connectivity, and Indices at SGX, added: “We are delighted to partner with CSOP Asset Management as it brings to market the first ETF tracking the iEdge S-REIT Leaders Index – the benchmark index for Singapore’s REITs market and one of the most widely referenced iEdge indices. The index measures the performance of the largest and most liquid REITs listed in Singapore; with this new ETF, investors can have easy, efficient, and diversified access to the S-REITs market that continues to grow and attract assets across geographies and segments.”

CSOP made its ETF debut in Singapore in September 2020 with the launch of the country’s first ETF tracking government bonds issued in mainland China. The ICBC CSOP FTSE Chinese Government Bond Index ETF (SGD: CYC SP; USD: CYB SP) has quickly found an audience with investors, currently housing S$1.9bn (approx. $1.4bn). The fund comes with an expense ratio of 0.25%.

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