Samsung Asset Management Hong Kong (SAMHK) has rolled out an ETF providing targeted exposure to high-yielding real estate investment trusts (REITs) trading in the developed Asia Pacific region.
The ETF provides exposure to high-yielding REITs in major Asia Pacific markets.
The Samsung S&P High Dividend APAC ex NZ REITs ETF has listed on the Stock Exchange of Hong Kong (HKEX) and is available in US dollar (9187 HK) and Hong Kong dollar (3187 HK) share classes.
SAMHK has partnered with leading index provider S&P Dow Jones Indices for the launch with the fund tracking the S&P High Yield Asia Pacific-Ex New Zealand REITs Select Index.
The ETF comes with an estimated expense ratio of 0.75% which includes a management fee of 0.65%.
Jaekyu Bae, CIO and Deputy CEO at Samsung Asset Management, commented, “Over the past decade, REITs have developed into an important force in Asia Pacific’s booming property market. In 2019, APAC REITs raised a record-breaking amount of capital at over US$14 billion.
“The listing of the Samsung S&P High Dividend APAC ex NZ REITs ETF is the evidence of SAMHK’s firm commitment in bringing broad, timely, and relevant investment options to global ETF investors.”
Robin Lo, Managing Director and Head of APAC at S&P Dow Jones Indices, added, “We are pleased to have licensed the S&P High Yield Asia Pacific-Ex New Zealand REITs Select Index to SAMHK to serve as the basis for the first REITs ETF in Hong Kong. We look forward to having more collaborations in the future with SAMHK, one of Asia’s leading financial institutions”.
Methodology
The underlying index consists of the 30 REITs with the highest 12-month trailing dividend yields from the parent S&P Asia Pacific REIT Index, excluding those domiciled in New Zealand.
Constituents are weighted by float-adjusted market capitalization subject to country and security caps of 30% and 10% respectively.
REITs must have a median daily trading volume for the past three months that is greater than US$3 million to be eligible for inclusion.
The index is reconstituted and rebalanced semi-annually in June and December with buffer rules helping to limit unnecessary turnover. An additional monthly review serves to promptly remove REITs that have eliminated, suspended, or reduced their dividends to such an extent that they would not qualify for the next reconstitution.
The index is broadly evenly split between REITs listed in Japan (33.6%), Australia (30.5%), and Singapore (26.8%) with the remaining portion of the index exposed to REITs based in Hong Kong. Constituents are diversified across multiple sectors from office and apartment buildings to hotels, warehouses, hospitals, shopping centers, and parking lots. They currently command a mean average market cap of US$2.48 billion.
The top ten holdings contribute just over 60% of the fund’s total weight. Notable holdings include Stockland (10.8%), Fortune REIT (9.0%), Vicinity Centres (6.5%), Japan Retail Fund Investment (6.4%), and United Urban Investment Corp (5.6%).
Dividends are expected to be paid on a semi-annual basis, with the underlying index currently showing an indicative yield of 5.73% (all data as of 30 September). In terms of overall performance, the index has delivered an annualized net total return of 7.49% over the past 10 years.
While the fund is the first pure-play REITs ETF in Hong Kong, there are two existing real estate-oriented ETFs on HKEX that invest in both REITs and real estate development and operating companies. They are the Lippo Select HK & Mainland Property ETF (2824 HK), which tracks the China-focused Lippo Select HK & Mainland Property Index, and the BMO MSCI Asia Pacific Real Estate ETF (3121 HK), which replicates the MSCI AC Asia Pacific Real Estate Index.