Previously I had written a guide on choosing from the three REIT ETFs available in Singapore.
Kevin, the author of Turtle Investor, had suggested adding a fourth REIT ETF option – Syfe REIT+.
I will look at Syfe REIT+ with the same process which I went through for the other three Singapore REIT ETFs.
- The underlying purpose of the fund and the index it tracks
- The efficiency of the fund.
And if you would like to consider Syfe, I have a promo code that will help you get additional amounts credited to your account. More details on how to get it at the end of the article. Click here to jump to that section if you already made up your mind and want to invest with Syfe.
So here goes.
iEdge S-REIT 20 index
The iEdge S-REIT Index, widely regarded as Singapore’s S-REIT benchmark, is a free-float, market-cap-weighted index that measures the performance of Singapore REITs.
The iEdge S-REIT 20 Index is a subset of the iEdge S-REIT Index with only 20 of the most liquid REITs.
For the constituents of this index, there is a higher concentration in industrial REITs compared to the other three REIT ETFs.
However, this index is narrower in focus compared to the other three ETFs – it only the 20 largest (blue-chip) S-REITs.
If we compare the market-cap-weighted REIT ETFs, The NikkoAm-StraitsTrading APAC ex Japan REIT ETF offers better diversification.
Here is a comparison among the four choices:
Efficiency of the Fund
Unlike the three other REIT ETFs, Syfe REIT+ is neither an ETF nor a unit trust. But if we need to choose between the two fund structures, it resembles the unit trust (mutual fund) structure more.
Please refer to this article about the difference between ETF and Mutual funds.
A quick recap:
|Buying and Selling||Traded on secondary market like stocks between investors.||Bought and sold directly from the fund company or a platform|
|Price||Varies throughout the trading hours||The NAV of the fund is the price calculated at the end of the day|
|Liquidity||Has liquidity because ETF are traded like stocks.||No concept of liquidity|
You cannot buy and sell Syfe REIT+ from the market. You will have to buy it directly from Syfe. Therefore, there is no concept of liquidity or bid-ask spreads for buying the fund, unlike an ETF.
When you fund your REIT+ account, the Syfe fund manager (or software/algorithm) will proceed to buy the individual REITs that make up the iEdge S-REIT 20 Index. Hence, the liquidity and the bid-ask spreads are that of the individual REITs traded on the market.
The expense ratio of the fund is tiered.
- 0.65% for any amount less than 20k invested
- 0.5% for 20k to less than 100k invested
- 0.4% for 100k or more invested.
However, I cannot find any details on the tracking error.
The real cost Advantage
Since there are no buying and selling commission fees, Syfe REIT+ becomes a cheaper option if you plan to make regular small contributions.
For a regular ETF, you could arrange for an RSP (Regular Savings Plan) which automatically purchases the ETF every month via your online broker. However, usually, there is a minimum commission sum which can be costly for small contribution amounts.
For example, if you wanted to contribute $500 monthly to purchase the Lion Phillip S-REIT ETF (CLR) via FSMOne:
|ETF||Trade commission||Min commission for RSP||Monthly contribution||Real Commission Cost|
The costs each month calculated amounts to 0.20%. You will need a minimum of $1250 monthly contribution get the effective 0.08% commission.
You could also opt to reinvest dividends for the Syfe REIT which will help you make full use of your money if you do not need the dividend payout.
Unit trusts, by the way, also offer the same costs savings – no buy and sell commissions and allows dividend reinvestment. So if there were a low-cost REIT unit trust option, it would be as good as Syfe REIT.
Additional benefits of a roboadvisor
A roboadvisor offers a suite of financial services which includes and not limited to financial planning, portfolio management, and risk management.
The crucial advantage of Syfe lies here.
If you want a fuss-free, low maintenance option, Syfe will meet your requirements.
Syfe will help you construct a risk-adjusted portfolio of bonds and REITs. It will help you rebalance if your asset allocation goes out of line with your risk appetite.
It also offers a risk management algorithm, called ARI, that helps you reduce losses by combining Global Market Portfolios (GMP) and Risk Parity Portfolio (RP).
Syfe had released an article featuring how well ARI performed during the recent market crash in March.
So, what are GMP and RP?
From my understanding, and please correct me if I am wrong:
- GMP means that you diversify across global markets to reduce risk. GMP will be less relevant for the REIT+ portfolio, which only focuses on Singapore REITs.
- RP implies that before the market crashes, you move more assets from stocks to bonds in your portfolio; when the market recovers, you shift your assets from bonds to stocks.
These strategies make sense but implementing them well is the hard part.
The devil is in the details.
So, should you opt-in or opt-out of ARI? It depends.
Opting out for passive investors make sense, after all, we passive folks are prepared to ride down with the market.
Opting in makes sense for active investors who would want to protect their downside as much as possible.
An additional note
It was difficult for me to find any information on the Syfe REIT+ portfolio. Usually, for a unit trust, I could find a prospectus, a fact sheet and some other information on the fund.
It is only after signing up for an account that I could view more details on the fund.
Syfe REIT+ offers retail investors a unit-trust-like-fund alternative to the existing REIT ETFs provided in Singapore. It is not really a fair comparison.
The benefits of Syfe REIT+ over an ETF are:
- Liquidity is not an issue; liquidity is an essential factor for ETFs because they are traded on the market.
- No trade commission when buying and selling the fund
- No bid-asks-spreads when buying and selling the fund
- Offers dividend reinvestment at no extra cost
- No minimum contribution sum
- Portfolio management
- Risk management to protect against downside risk
The drawbacks are:
- Limited diversification – only 20 of Singapore’s biggest REITs
- The fund is more opaque (maybe it is not such a bad thing)
As for me, I signed up for Syfe to do this research. I chose the Syfe REIT+ portfolio with 100% equities and opted out of ARI.
I will update on its performance at the end of the year. It will be interesting to compare its performance with the Lion Phillip S-REIT ETF.
For additional perks, out please use this referral code: SRPSTTW7Y
You will get the following additional amounts credited depending on the initial deposit:
- $10 additional credited to your funds if you deposit more than $500
- $50 additional credited to your funds if you deposit more than $10,000
- $100 additional credited to your funds if you deposit more than $20,000
It will be credited after 5 business days after you funded the minimum amount. However, you will have to keep the funds for 6 months with Syfe to keep the bonus.
When you click get started, you will be asked a series of questions to create your portfolio. Once you have completed all the questions, Syfe will recommend a portfolio.
Once you confirm your portfolio, you will be prompted to sign up.
At the sign up, be sure to enter the referral code: SRPSTTW7Y
$10 additional is 2% of $500 which covers the expense ratio for the first year; $50 is only 0.5% of $10,000; $100 is 0.5% of $20,000.
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