BIGS LIVE: Quantitative REIT Strategy – the Passive and Active Approach

REITs were supposed to die at this point.

2 years ago mid-June, we have a scare that interest rate will rise. That rate hike didn’t happen.

Then 1 year ago the hike started. REITs being interest sensitive instruments, are supposed to be adversely affected in their net rental income and property prices.

Yet for the past year, the REIT sector in Singapore have been doing well. On average, we reached a 12 to 16% value appreciation, not to mention getting a 5 to 6% dividend yield.

We know this is not always the case, but as an investor how can you fine tune your reit portfolio?

In our upcoming BIGS Live, we bring one blogger and one professional to share with you some of the nuances of active investing in REITs and the passive way of investing in REITs.

This sharing will suit the investors who are currently investing in REITs.

You may have a few things to figure out:

1. How does another investor use REITs for accumulation versus how you do it?
2. Is there another REIT selection method compared to what is often talked about?
3. A real example of a wealth withdrawal with REITs
4. Should I reduced my active management by using a passive REIT ETF?

We have 2 speakers for the evening.

Christopher Ng have been investing in REITs and dividend stocks since he realize the advantage of investing this way from the research he has done.

He has done it through

• the 2000s
• accumulated heavily in the Great Financial Crisis by funneling a large part of his work income when REITs was trading at 15-25% dividend yield
• he has done it through the climb and massive draw-down of 2013
• the Singapore draw-down of 2015.

Quantitative REIT Selection

 

Chris is rather quantitative in the way he forms his portfolio.

Whether it is dividend investing or looking at whether new method works, he takes out the feelings and emotions, the subjective factors and focus on the numbers.

So in this sharing, he will explain quantitatively what works better after sieving through the data on local REITs.

Super Charge Your Wealth Accumulation and Wealth Withdrawal Through Leverage

Through certain brokers such as Kim Eng and UOB, you can borrow money on margin to boost your returns.

You can borrow to purchase part of the asset.

What you need to know is that, in a REIT, they are already borrowing loans on a corporate level to purchase their assets. So when you do this it is essentially leveraging on something leveraged. (Do note: this is not pertaining to REITs only, you can margin on other stocks)

Chris has setup a satellite leveraged REIT portfolio for a specific purpose.

Through his sharing, you can understand how he set the leveraged satellite portfolio up, what he is trying to achieve and how does he ring fence the risks when it comes to the leverage.

While I do not do it myself, I am always intrigued about whether leveraging can be carried out for a specific scenario.

You might have thought about the feasibility. Now is your chance to review and discuss.

The Passive Quantitative REIT Approach

One of the REIT ETF released & managed by Phillips Capital is the Phillip SGX APAC Dividend Leaders REIT ETF.

It was released some one year ago in the period where sentiments was not good and went through a period where the price was not doing very well.

Since then prices have recovered.  From the bottom the price appreciation is approximately 14%

This ETF allows you to purchase a basket of REITs listed in Asia, participating in the growth of the retail, commercial and industrial property sector in a passive manner.

Not too long ago Phillips Capital collaborate with OCBC’s Lion Global to release a pure Singapore REIT ETF called Lion-Phillip S-REIT ETF.

You may have some questions on your mind when it comes to these 2 rather fresh ETFs focused on REITs:

1. With the good dividend yields of Singapore REITs, does it make sense for us to diversify across Asia?
2. What are the unique attractiveness of the other REIT market in Asia?
3. Can you realistically hold these REIT ETF passively?
4. Can you hold only this REIT ETF, which means you are invested in just one sector across Singapore or Asia?
5. Does the tax situation on these ETFs make them less attractive to forming your own REIT portfolio?

Join Us in the Session

We hope that you can join us for the session.

The session is conveniently located at Raffles City Tower on a 22nd Nov, Wednesday.

You can find out more at the official page here>>

I will be there.